By Charles Sercombe
Hamtramck officials decided they won’t bother waiting for Detroit to write the city a check.
At a special City Council meeting held on Tuesday, the council agreed to dip into an escrow account and withdraw $500,000 to cover next week’s employee payroll and pay some bills.
Fortunately, city officials had earlier set up the escrow account to hold water and sewer fees that were owed to Detroit. Hamtramck and Detroit had been embroiled in a dispute over how much tax money was owed Hamtramck from GM’s Poletown plant.
While that matter was being hashed out, Detroit refused to release past tax money collected from the plant, which led to city officials here to withhold water and sewer payments to Detroit.
Over several months, the city accumulated $3.2 million – the exact amount Hamtramck claimed Detroit owed the city.
The dispute was settled over a month ago, with Detroit agreeing to cut Hamtramck a check for $3.2 million and Hamtramck agreeing to release the escrow account to Detroit.
Well guess what? Detroit has been dragging its feet on cutting that check, and in the meantime Hamtramck’s coffers dried up. Despite repeated pleas from Hamtramck officials to release the check, Detroit failed to respond.
So … City Manager Bill Cooper asked Detroit if he could use money from the escrow account to avoid payless paydays. Detroit agreed, Cooper said.
This is the second time within a month that the city has had to scramble to avoid a payless payday. The city previously raided its road repair fund to the tune of $600,000.
As for why Detroit has delayed payment to the city, Cooper could only guess.
“They (Detroit officials) keep saying they need to work things out, something with the state,” Cooper said.
Cooper also said that state officials have not gotten back to him about the city’s request for an emergency state loan worth $2.5 million. Even with Detroit’s payment and the state loan, city officials say they have a year at best before the city goes broke.
Why is that?
Like many other communities in the state, Hamtramck’s state revenue sharing has been slashed while health insurance and pension costs keep going up. The city is facing a $4 million deficit.
“We need to close the gap,” Cooper said, in what might be the understatement of the year.
Just how do you “close” a $4 million budget hole?
Councilmember Catrina Stackpoole said a large chunk of it will have to come from contract concessions and benefit cuts from police officers and firefighters.
So far, police and firefighters have resisted significant cuts.
Looming in the background of this financial crisis is the possibility that if the city runs out of money, the governor could appoint an emergency financial manager who could ultimately rip up union contracts and force concessions.
Gov. Snyder is urging communities to merge services, including police and fire.
The council will next meet in a budget work session on Wednesday (April 27) at 6:30 p.m. in City Hall.