City’s money woes are not going away

By Charles Sercombe

City Manager Bill Cooper says it’s just a matter of time.

In fact, he says, he’s got a specific day when the city’s money will run out: June 30.
He’s told the city council about it, and asked to have the state Treasury Department step in a take a look at the city’s finances.

The council said no way.

That was over a week ago.

So, what’s Cooper doing?

“We’re continuing on working to control our expenses, but no matter what we do, we’re going to run out of money,” Cooper told The Review.

And what happens when the city runs out of money?

“When we hit that point we’ll have no choice,” he said.

That choice would be to place a call to Lansing and ask for help.

Councilmember Robert Zwolak has one suggestion, though: Go to the banks, and borrow money that can be paid back from this summer’s property tax collection.

Cooper said that’s an option he will consider, but he warns that it’s only putting off the city’s financial problems for another year.

By June, he projects the city will have a $1.5 million budget deficit. By 2013, he says, the city will be faced with a $3.4 million deficit.

How did Hamtramck get in this mess?

There are a few key things that precipitated this crisis. One was American Axle closing two years ago, which resulted in the loss of $500,000 a year in taxes.

Gov. Rick Snyder cut tax revenue sharing to all communities after he took office. Hamtramck’s portion was reduced by $600,000.

The national housing crisis also affected the city when property values cratered, resulting in a “nosedive,” Cooper said, in property tax collection. Housing values have continued to decrease, and it’s estimated another $350,000 will be lost.

At the same time these revenue sources dried up, the city’s expenses continued to climb – especially employee health insurance and the ongoing crippling costs of carrying over 100 retirees.

Cooper said the city desperately needs to cut costs, as well as attract new revenue sources.

“We need places like American Axle to come back,” he said.

There is one plan that has been floated around, a plan that locals fear the most: Merge struggling cities like Hamtramck and Highland Park into Detroit, and call it a day.

That move would take some complicated legal maneuvering, and no doubt there would be challenges made.

Cooper said he doubts that would ever happen.

“You can’t take a town like Hamtramck, with its history, and fold it in Detroit,” Cooper said.

Another option might be for Hamtramck to provide police and fire services for Highland Park. That’s an idea that Cooper is in the initial stages of following through on.