For the first time in several years, city officials are faced with a budget deficit.
Fortunately, the city has a $6 million budget surplus to dip into. In addition to what the city would usually spend, a perfect storm of declining revenues and increased costs requires dipping into that surplus — to the tune of $2.1 million dollars.
Obviously, the city can’t continue its spending this way. This new budget, however, gives city officials some breathing room to plan ahead.
Why are we now in a financial jam after having several years of clear sailing?
A number of reasons – most notably the loss of a federal grant, called the SAFER grant, that paid for the salaries of 14 firefighters. That amounts to about $500,000.
Hamtramck has enjoyed this grant for the past several years. The terms of the grant have changed, and by the feds new formula Hamtramck no longer qualifies for it.
There are other variables that are out of the control of city officials: rising healthcare costs, rising pension costs and an increase in salaries for city union employees – which includes police officers and firefighters.
On the bright side, the state of Michigan is helping the city administration to figure out a way toward a balanced budget.
We have said this before, and it’s worth repeating: The remedy will require some drastic cuts, and/or shifting how the city provides basic services.
It’s guaranteed to upset a lot of folks.
May 31, 2019