City hopes state settles Detroit dispute

By Charles Sercombe

Hamtramck officials took their dispute with Detroit to Lansing on Thursday.

Unfortunately, they didn’t get back in town before we went to press that afternoon.

City Manager Bill cooper said Hamtramck and Detroit officials were asked to meet with state Treasurer Andy Dillon to see if a settlement could be reached on the dispute over how much tax revenue Hamtramck is due – if any — from the GM Poletown plant.

Detroit is saying that it has overpaid Hamtramck $7 million in recent years and has been holding up yearly payments for two years now.

Hamtramck denies it was overpaid and regardless of the disagreement, Detroit has been unfairly holding up yearly payments, amounting to $2 million a year.

Cooper said without the yearly payments, the city is heading into a $3.5 million budget deficit and payless paydays by March.

In the meantime, Hamtramck has been holding up water and sewer service payments to Detroit, but that money is not being tapped into. Instead, it is being held in an escrow account until the matter is resolved, which could take years to wind through the courts.

It was hoped that state officials could mediate the dispute. Cooper said state treasury officials initially sided with Detroit’s version of the dispute until recently when Hamtramck officials gave a point-by-point counter-argument.

Cooper said he’s not sure which way state officials are leaning now. However, even if the state sides one way or another, it’s not legally binding.

That means if either Hamtramck or Detroit doesn’t agree with what state officials decide, the matter will still move forward through the courts. But time is not on Hamtramck’s side.

Cooper has warned that the city will find itself without cash to meet employee payroll come March.

Several weeks ago city officials asked the state for permission to file for bankruptcy, but state officials said there is no legal standing to take that action. It’s a loose end in state law that lawmakers may actually tinker with to make it easier for cities to file for bankruptcy before they find themselves bankrupt.

If Hamtramck becomes broke, the state could immediately appoint an emergency financial manager, who in turn can recommend the state to allow the city to file for bankruptcy.

Current state law requires an emergency financial manager to make that recommendation, not cities acting on their own.

Another option for the city, and recommended by the state, is to apply for an emergency loan. However, a majority of City Councilmembers have refused to apply for the loan. Cooper said that resistance to seek state help has baffled state officials.

The issue of a state loan will likely be on the agenda for next Tuesday’s council meeting.