by Scott McClallen
The city of Dearborn plans to restructure health care benefits and cut spending as it faces a $22 million deficit equivalent to firing 349 full-time employees.
The Metro Detroit city cited rising costs for the deficit, including $3.2 million in wage and benefit increases, $2.7 million for deferred fleet maintenance, and $1.2 million for increased fuel and other supplies.
However, budget details note the city has consistently spent more than it collected in revenue.
Dearborn Mayor Abdullah Hammoud (pictured above) told residents at a public meeting last week: “You are not going to lose benefits,” Fox2 reported. “At no point in time will the rug ever be pulled away from them, we never want to do that.”
“There are some modest changes that have occurred to retirees,” he continued. “There will be a $250 deductible for those who have Medicare, if you don’t have the means of affording, there’s no deductible and for those not eligible for Medicare there’s a $500 deductible.”
The city is trying to solve the $22.2 million deficit through the following:
- $6.4 million by restructuring health care benefits.
- $3.5 million by deferring capital projects.
- $1.8 million by reducing annual required contributions.
- $950,000 via slashing a technology and innovation credit.
- $515,000 by lowering contracting costs.
- $500,000 by cutting a facility lease credit.
- $400,000 by reducing staffing.
Dearborn reported lost $11.5 million from property tax decreases over fiscal year 2022.
The city reported some boosted revenue, including $2.2 million collected in police enforcement, $1.4 million from census revenue sharing, and $1 million from permit fees and sharing services.
As of June 2021, Dearborn’s Other-Post-Employment Benefits health care benefits were 67% funded. A March 29, 2022 briefing says as of June 2021 Dearborn’s pension systems are better funded than its retiree health care system.
“Unlike the pension systems, the retiree health care system faces significant cost increases each year, which increases the annual liability for the city,” the brief says.
The city of Dearborn hasn’t responded to multiple requests for comment.
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Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org.
Photo “Mayor Abdullah Hammoud” by Mayor Abdullah Hammoud and “Dearborn, Michigan” by WeaponizingArchitecture CC4.0.
