City layoffs needed to balance budget
By Charles Sercombe
Hamtramck’s financial picture is about to turn ugly.
Although that’s not exactly breaking news, just how deep the city’s deficit will go has taken a shocking turn. City Manager Bill Cooper said the budget projections have been changing almost constantly as news from Lansing and from here continues to worsen.
The state is expected to slash how much tax revenue it shares with communities, but that percent has been going up and down in recent weeks as legislators argue over how to balance the state’s own budget mess.
Cooper said he’s expecting a loss in state revenue sharing to equal $400,000 a year for the next three years.
By the year 2012, Cooper estimates that Hamtramck will face a $4.2 million deficit – but that could actually worsen if the state continues to suffer more financial losses from reduced tax collection.
The state’s budget woes are directly tied into the loss of manufacturing, jobs and foreclosures on houses.
Michigan is said to be in the worst financial shape in the country and it will likely take many more years to recover. One thing seems to be for sure: manufacturing in this state is permanently gone.
Further compounding Hamtramck’s financial woes is the loss of tax collection from the Poletown Plant, estimated at $1.9 million a year. It was just discovered that Hamtramck’s agreement with Detroit on sharing revenue from the plant expired four years ago. Cooper said he is working on a plan to continue some sort of revenue collection from the plant.
Hamtramck’s other major taxpayer, American Axle & Manufacturing, closed last year, which means a loss of $500,000 a year from income taxes and property taxes.
The city’s deficit will grow from $2 million this year to $3.9 million next year and finally $4.2 million in 2012.
To keep the city’s budget balanced, which is required by state law, Cooper is asking city employees to take a wage freeze for the next three years as well as a 5 percent salary cut for all employees, Cooper included.
He’s also asking the unions to suspend minimum staffing levels and for pensioners to agree to an adjustment and employees to agree to increase their medical co-pays.
On top of this, the city would have to increase its property tax collection by almost 3 mills, to the legal limit of 20 mills.
Even with the employee concessions and tax increase, Cooper said he would still have to lay off eight police officers, nine firefighters. three full-time City Hall employees and three part-timers.
If the city unions refuse to make concessions, 17 cops and 16 firefighters will be laid off.
Cooper said that although the city has a $2 million rainy day fund, he recommends against tapping into it to save jobs. He said if the money was used to save jobs, it would run out by June 30, 2010.
Cooper laid out the grim news last Thursday in a council work session. Newly elected council candidates Tom Jankowski, Kazi Miah and Mohammed Hassan were also invited to sit in.
As if that news wasn’t bad enough, Cooper said Gov. Jennifer Granholm is talking about possibly reducing state revenue sharing by an additional 20 percent next year. That would be a loss of $300,000 a year to Hamtramck.
It wasn’t all doom and gloom, however. Cooper said there is a good chance that a so-called green technology plant will locate here and generate anywhere from $250,000 to $1 million a year for the city.
Plans for the plant call for locating it at the former Missant site on Conant. Tons of garbage will be hauled to plant, sorted, cleaned and then made into a biodegradable product. Plant owners have promised that odors would be kept at a barely noticeable level.
The former BASF site on the I-75 service drive and Caniff may also be developed into an office space.
Cooper said he’s also relying on the city’s two traffic enforcement officers to generate a sizable chunk of money through fines.
Cooper said he will a have plan in place before the beginning of the new year. City employee layoffs will come as soon as the beginning of the year.
Councilmember Cathie Gordon said she “resents” having public safety pay the steepest price in terms of layoffs.
Cooper pointed out that it is unavoidable since public safety costs represent 70 percent of the city’s budget.
Gordon suggested seeing what savings could be made by eliminating the part-time special events coordinator, the DDA manager and have the county take over city assessor duties.
Cooper disagreed with Gordon’s suggestions, saying the city needs the events coordinator as well as the DDA and that having the county taking over the city assessor’s job would actually be more expensive. However, he agreed to crunch the numbers on how much the city would save by those cuts.
Councilmember Alan Shulgon predicted that when the federal stimulus package ends, the state is probably going to be forced to make additional revenue cuts by another 50 percent.
Councilmember Abdul Algazali, who was just defeated in a run for mayor, said this discussion should have been held before the election.
