By Charles Sercombe
Hamtramck’s financial picture just improved a whole lot.
City officials signed off on an agreement with Detroit to resolve a dispute over how much tax revenue should be shared from the GM Poletown plant. The dispute arose two years ago. Detroit officials abruptly stopped making payments to Hamtramck, which severely threatened the financial solvency of the city.
Detroit is now agreeing to hand over $3.2 million and will agree to continue the revenue sharing plan that was worked out in 1986. That means Hamtramck will receive $1.4 million a year and possibly more, said Finance Director Nevrus Nazarko.
Hamtramck, in return, will have to hand over the $3.2 million it has been holding in escrow in lieu of paying water and sewerage service fees owed to Detroit until the dispute was settled.
Detroit also contended that it had overpaid Hamtramck by $7 million in recent years. That allegation has been withdrawn.
Mayor Karen Majewski said the payment and agreement are only a temporary fix to the city’s daunting financial problems.
“It solves the immediate problem,” she said, “but not the long term.”
Just how pressing is the city’s financial picture? It’s so precarious that at Tuesday’s council meeting, the council had to transfer $600,000 from the city’s street repair fund to cover payroll next week.
That loan will be repaid by the settlement amount Detroit owes the city.
But down the road, the city faces a $600,000 cut in state revenue, as well as increased costs for employee health insurance and pensions.
The city has also applied for a $2.5 million emergency loan from the state to stabilize finances, but City Manager Bill Cooper warned the council on Tuesday that even with that aid, the city will go broke within 10 to 12 months.
The financial challenges facing the city keep piling on.
Gov. Snyder is now requiring cities to meet new financial guidelines that could result in the loss of hundreds of thousands of dollars for Hamtramck.