Financial watch continues

  By Charles Sercombe

Now that the state’s relatively new emergency manager law has been struck down by state voters, what does this mean for Hamtramck?

“Basically, we’re in a holding pattern,” said Acting City Manager Kyle Tertzag.

Hamtramck is like many other cities and school districts that are teetering on the brink of financial collapse. In other words: We’re about to run out of money.

The new emergency law, called Act 4, gave managers sweeping powers, including the ability to tear up union employee contracts and renegotiate them.

Act 4 replaced a prior law called Act 72 that gave limited authority to what was called an emergency financial manager. Hamtramck had an EFM several years ago who was appointed by the state to take over financial control of the city.

That EFM, Lou Schimmel, managed to negotiate outsourcing much of the city’s services, but he could not undo contract terms.

Hamtramck’s financial woes were corrected, but after Schimmel left an economic tsunami occurred in this country that lead to massive cuts in state budgets and huge declines in property values.

Hamtramck lost about $3 million per year from various revenue streams.

And that’s the amount that city officials can’t overcome in finding savings — unless city employees, including police, fire and pensioners, agree to concessions.

Actually, police officers have already agreed to changes in their contract. City officials have yet to come to terms with firefighters, and have not yet approached retirees.

In the meantime, city officials are waiting to hear back from the state about an emergency $3 million loan. That loan will keep the city afloat for awhile, but eventually the money will run out.

On Thursday, the city council was scheduled to meet in a special meeting to continue discussing the financial situation.

Tertzag said he hopes to have a budget deficit elimination plan to present at the meeting.

Last week the council was given three possible financial scenarios, which included how long the city could last with an emergency loan and skipping certain payments.

The rosiest picture painted was that the city could make it through its budget year, which ends June 30.