For many cities, region’s economic woes spell financial disaster

By Charles Sercombe

Hamtramck is not alone when it comes to a financial crisis.

Just about every community in the metro region — and most cities throughout the state — is facing tough financial decisions. For many, including Hamtramck, the future looks mighty bleak – to point where a state takeover is possible.

So how did things get so bad? Well, unless you’ve been living in an underground bunker with no connection to the outside world, there’s been a global economic collapse. The Midwest – and especially Michigan – has been hit the hardest in what some have called another 1930s-era Great Depression.

Locally, that means people have lost their jobs which in turn has led to house foreclosures. For the city government, that means less tax revenue from businesses and manufacturers and homeowners.

On top of that, Hamtramck has a huge so-called legacy costs – pension and contract obligations with its union employees.

The sad fact is, Hamtramck can no longer afford the workforce it has or the retirees it is obligated to carry.

These are scary times indeed.

But that doesn’t mean the city hasn’t tried to work within the existing financial framework. City Manager Bill Cooper has asked the city’s union employees to accept a temporary 5 percent pay cut. The city’s four unions rejected that.

He has also asked the City Council to increase property taxes by 2.3 mills, which would put the tax rate at the maximum limit before voters would have to step in to approve further increases.

A majority of councilmembers rejected that.

How are other cities handling their looming deficits?

In Warren, the mayor is asking for 15 percent pay cuts from his union workforce, and he is asking for a tax increase. There will also be positions cut.

In Detroit, the mayor is asking his workforce to take a 10-percent pay cut. Troy is laying off police officers and closing down its library.

While Hamtramck’s unionized workforce has rejected pay cuts, the city’s non-union employees have no choice. The appointees and court employees are being forced to take a 5 percent pay cut. But, Cooper said, it will at least be in the form of a non-paid day off. Non-union employees will have to take 13 unpaid days off in the coming year.

Cooper said he is not immune to the pay reduction.

A quote: “That’s the first thing I told the unions.”