Poletown closing comes with a stiff financial setback for city

Last week we reported some good news/bad news about the GM Poletown plant.
The good: The plant will remain open.
The bad: It will be shut down for as long as two years, to retool the plant for the production of electric-powered pickup trucks.
That’s bad news for Hamtramck because, during that time, the city won’t receive the approximately $700,000 to $800,000 a year GM pays to Hamtramck in lieu of property taxes.
That is a huge chunk of change for the city, and it will be quite a hit to the city budget.
Worse, the yearly-payment-in-lieu-of-taxes deal with GM depends on how many employees are working at the plant. It is believed that the workforce will shrink when the Poletown plant resumes operation – meaning the city won’t be getting $800,000 a year even when production resumes.
We stress this again because there will be adjustments to the city budget. Those cost-saving cuts will likely upset some folks.
There really aren’t any good options.
More disturbingly, we have heard some candidates for city council vow to cut taxes – particularly the city income tax.
This is naïve at best, and at worst, outright reckless. These folks clearly do not understand how the city operates.
We are hoping those claims were empty campaign promises made to win votes. Otherwise, the city will be heading toward an even more serious financial blow.
Nov. 8, 2019

46 Responses to Poletown closing comes with a stiff financial setback for city

  1. Nasr Hussain

    November 10, 2019 at 11:27 am

    Did you ever ask yourself: Why do people leave Hamtramck to the suburbs no matter what their race or religion is?

    Did you ever wonder: why do businesses not invest in Hamtramck and run away from spending in money here forcing some residents to beg for drug establishments, which no respectable city wants, to set shop here?

    Did you every ask yourself: How come we do not have highly educated and wealthy people residing in our city and why we have hard time finding talents to run for our city council positions and commissions?

    Did you ever contemplate on why our city employees getting paid generous or not-so-generous salaries choose to live in other places and commute daily here instead of the easier option to live in Hamtramck?

    Income tax is “one” of the main reasons.

    If someone becomes a millionaire in Hamtramck, why would he/she stay here, invest here, participate in political life here, or donate here if he/she has to pay $20,000 in taxes to the city while he can easily move a few miles away and save this much.

    You may ask, who do we make up the difference?
    Easy, have a correct assessment of the real estate property values. In the past years, the assessments were going down for certain people while the values where going up (An anomaly that only happens in Hamtramck).

    If the income tax as eliminated and its burden transferred to real property taxes that will come out to probably $200 increase in property taxes which is not that much compared to the taxes already being paid, the hassle of preparing and “hand delivering” the return and the most important aspect which is: representational damage this tax is doing to Hamtramck.

    People will have one more reason to stay in Hamtramck. Business will start opening locations here. House equity for its resident will go up even higher and the city will make more money on the long run (if implemented along with the removal of some restrictions in our ordinances that prevent growth) and provide better services.

    The city has a two years surplus now. Why don’t we give it a try and see how does it work out. If it didn’t, we can easily reinstate this tax.

    As residents, we have to believe in Hamtramck and its potential as an asset not as a liability as some of the people running it now are thinking.

    If any council-member is afraid of taking this bold step and fears the consequences, then I implore them to place this proposal on the ballots in the next election and let the residents of the city decide.

    For us to keep to walk on the same path that led us to bankruptcy a few times and not try something new is the definition of madness.

  2. Nasr Hussain

    November 10, 2019 at 12:10 pm

    Hi Charles,
    If you decide to run the piece please correct the spelling mistakes, I submitted it without checking it over.

  3. csercombe

    November 10, 2019 at 12:26 pm

    will do, thanks. It is online now.

  4. Resident

    November 12, 2019 at 9:15 pm

    Nasr – please do tell us more. Are you suggesting Headlee Override? Even Headlee Override has limits. Proposal A caps taxable value.

    Thanks,
    -Resident, an income and property tax payer

  5. Nasr Hussain

    November 13, 2019 at 8:37 am

    What I am proposing is a correct & fair assessment of
    property values in Hamtramck.

  6. Nasir Hussain

    November 13, 2019 at 9:45 am

    Along with the removal of red tape the hinders development in Hamtramck preventing the city from collecting more revenues.

  7. Tea Party Patriot

    November 13, 2019 at 1:38 pm

    Property owners are going to be in for a shock when they get updated assessment amounts.

  8. Nasr Hussain

    November 13, 2019 at 2:28 pm

    That’s why we need the income tax eliminated sooner than later. The assessed values will go up anyways since the city has hired a professional company to do the assessment.
    & a higher assessment means a higher equity and net worth for them.

  9. csercombe

    November 13, 2019 at 8:38 pm

    Keep in mind the income tax brings in over $2.5 million a year.

  10. Resident

    November 13, 2019 at 8:47 pm

    Higher assessed value doesn’t mean higher taxable value if the property doesn’t change hand. Proposal A of 94 limits the rise of taxable value to 5% or the rate of inflation, whichever is smaller. A homeowner who holds onto his property, his taxable value is not going to go up much even if the assessed value quadruples…How do you come up with extra revenue without adding more millage?

  11. Nasr Hussain

    November 14, 2019 at 3:27 am

    5% annual increase or the rate of inflation rise will cover the lost revenue of income tax in a few years. Take into consideration, as a resident, that your property tax bill will increase whether income tax is eliminated or not.

    Hamtramck residents are already paying too much whether its their water bills, higher insurance costs and fees. Some relief has to be provided.

    In an interview with council member Ian Perrotta and our city clerk it was strangly noted that some rsidents of Hamtramck illegally keep their suburban adresses on their licenses to avoid higher insurance rate, I will assume also to avoid income tax, depriving themselves from the right to vote here and having their voices heard. Is that what we want?

  12. Resident

    November 14, 2019 at 7:55 pm

    Last post clears things up… Higher assessed value will also result in higher taxes when property changes hand.

    No harm in exploring the idea of eliminating the income tax.

  13. Other Resident

    November 15, 2019 at 9:52 am

    I bet Nasr thinks that if you drive a car off a cliff it will be fine, too, as there is more ground just a short fall away.

  14. Nasr Hussain

    November 15, 2019 at 10:32 am

    @other resident
    Actually you car will turn into an airplane that will soar in the heavens.

    Imagine how many wealthy & professional people & companies will move into Hamtramck to escape Detroit’s income tax and start investing in our city.

    We have a two years surplus. Give it a try, what do we have to lose.

  15. Resident

    November 16, 2019 at 12:23 am

    @Nasr – Income tax applies to employees only, not on employers or businesses. Hamtramck’s tax rate is low compare to that of Detroit. Income tax – 1% Hamtramck vs 2.4% for Detroit. Property tax (for year 2017) – 57.87 mills for Hamtramck vs 69.56 mills for Detroit. Detroit’s businesses will realize savings if they move to Hamtramck right now. It is highly unlikely that these businesses will be flocking to Hamtramck once income tax goes away. Furthermore, these businesses probably will be looking for property tax rebate if they want to move to Hamtramck.

  16. Other Resident

    November 16, 2019 at 12:00 pm

    Nasr, you are ignorant and arrogant and that is a dangerous combination.

  17. Nasr Hussain

    November 16, 2019 at 1:04 pm

    @Resident
    Not to employees only, also to the income realized by any company doing business here, or any person living in Hamtramck.

  18. Nasr Hussain

    November 16, 2019 at 1:04 pm

  19. Nasr Hussain

    November 16, 2019 at 1:16 pm

    The best solution will be to place this issue on the ballot and let the residents of Hamtramck decide.
    They are the ones who will bear any consequences of this action whether good or bad.

  20. Resident

    November 16, 2019 at 5:53 pm

    @Other Resident, using adjectives are not necessary. I don’t believe Nasr’s intent is bad. I actually appreciate his idea. It is providing readers an opportunity for discussion… There is no harm in sharing knowledge and educating each other.

  21. Jessica R.

    November 16, 2019 at 10:26 pm

    Nasr, you are completely uneducated on this issue. People do not leave Hamtramck because of a 1% income tax. We most certainly do not have a “two year surplus” in the city budget either. We might have a couple of million dollars if that. The elimination of the income tax would result in the city losing about two million dollars a year. How quickly do you even think you’d be able to measure the success of eliminating the income tax? You couldn’t. There are far too many other variables. By the time you realized it wasn’t working, it would be too late. The city would be hurting beyond repair financially and city services like police, fire, city services workers, city hall employees etc. would be absolutely decimated. The income tax is a small price to pay to keep this city moving forward and is very common for urban environments across America. City services cost money and are expensive to maintain. Urban areas require the highest level of services. If you want to pay little in taxes I suggest you move out to the countryside where you’ll be lucky see ever see an ambulance, have county police protection with one officer for the whole county per shift, and receive no other municipal services.

  22. Nasr Hussain

    November 17, 2019 at 10:44 am

    @Jessica R.

    Same fear-mongering tactics were used when Dodge main, American Axle & other employees left Hamtramck, but guess what, Hamtramck Kept on thriving.

    A city that its mere existence depends on a 1% income tax, as you claim, will die sooner or later.

    The worst case scenario is that Hamtramck will go into bankruptcy and the state will take over which has already happened in the past and was not the end of the world for Hamtramck.

  23. Nasr Hussain

    November 17, 2019 at 11:49 am

    The elimination of the income tax will incentivize our city to pursue development and remove all the red tapes it places on people who want to build in Hamtramck and make it flourish.

    For example, Dr. Sam Bilani wants to build a collection of nice townhouses on Brombach St. I think he presented the project to the city, as I recall, in mid 2017. Does it make sense that two years has passed and he’s going into the third and the project has not been approved yet.

    It the city was in real need of money, they will never treat projects that will make the city richer this way.

    Look at our industrial district. There is a reason no respectable manufacturer wants the move in there. The city ends up with only “actual” trash businesses moving there because other cities won’t take them and at the same time giving them tax abatements that offset their income tax.

    Income tax made sense when Hamtramck was full of factories and big corporations, now its burden is mainly carried by poor people living in the city.

  24. Jessica R.

    November 17, 2019 at 12:16 pm

    Nasr, again you’re wrong. Hamtramck has never gone through bankruptcy. We had a state appointed emergency financial manager. They are two vastly different things. Your laissez faire attitude about the financial implications is grossly disturbing. You’re also looking over another element of this puzzle which you can’t seem to understand. The state requires the city to submit a balanced budget. If you eliminate the income tax the budget will be in a deficit with that cut alone. What city services should we cut now so we can eliminate the tax and keep a balanced budget?

  25. csercombe

    November 17, 2019 at 12:36 pm

    just to set the record straight on the Bilani project: He had to change his original plan because DTE said the proposed housing would be too close to its power lines. He has since revised the plan, and it was approved by the city council. That was a month or so ago. He has since modified the plan again. The city council gave tentative approval again. Remember, codes have to be followed. They are not there as “red tape” but to ensure the public’s safety.

  26. Nasr Hussain

    November 17, 2019 at 12:51 pm

    @Jessica R.

    A balanced budget can be achieved if you have competent people running the city.

    We pay hundred of thousands of dollars settling needless lawsuits caused by the city’s thoughtless actions. (A quarter of million alone to our former DPW director Steve Shaya)

    We lowered property values assessed for hundred of property owners in the tax season 2017-2018 for no apparent reasons.

    We pay 3/4 of our permit fees to an outside companies that are only interested in milking the resident for these fees.

    If you think that our current management can not manage an elimination of a “1%” income tax, then they should step down and let someone more competent run it.

  27. Nasr Hussain

    November 17, 2019 at 12:57 pm

    @Charles

    & how long did the the DTE matter take of his time to rectify? I doubt it was the whole 2.5 years.

    Most existing codes are not for public safety but just for aesthetic reasons which need to be changed.

    A building with over 75% glass-front is more dangerous to the public than one with much less.

    This is not also a unique case, a lot of people complain about the snail pace the city approval process takes if you’re not well-connected.

  28. Nasr Hussain

    November 17, 2019 at 3:30 pm

    some of city budget interesting comparisons:

    2009/2010 City manager budget 210,678.00
    2019/2020 342,475.00

    2009/2010 Court 567,730.00
    2019/2020 800,044.00

    The issue here is not an issue of money. You can keep pouring in more millions into the city’s budget and I am sure that city officials will find ways to spend it and keep the city on the verge of bankruptcy.

  29. Dennis Nowak

    November 17, 2019 at 5:21 pm

    It is a tragedy that the City of Hamtramck is no longer under state supervision.

    Emergency Cathy Square and the subsequent Receivership Transition Advisory Board ruled the city with an iron hand financially and brought it back into the black after the city was drowning in as sea of red ink.

    Ms. Square also chose the elegant and suave Katrina Powell to rule for the next 2-1/2 years. She guided the city to a multi-million dollar in operating financial surplus. She beat the retiree union members in federal court and otherwise brought financial stability to our beloved city.

    We miss Square, Powell, and others like Mark Stema who have been instrumental in saving our city from financial disaster.

  30. Jessica R.

    November 17, 2019 at 6:54 pm

    Nasr, once again you are wrong. I k ow Dr. Bilani on a personal level and he’s updated me on his proposed project. Apparently there are/were issues with both the building department and the fire department as it pertains to safety issues. While I don’t disagree with you that the city is particularly fond of contractors who squeeze residents and typically cost more than in house work(look no further than our legal department), you are dead wrong to think any civic leaders can negotiate their way through losing yet another two million dollars in general fund money. You should probably stay in your lane when it comes to municipal finance. This isn’t the school board and it’s obvious that you don’t have a solid understanding of what’s in play here with finances for the city. It appears as if you have more of a vested personal interest to save money on your own tax bill.

  31. Resident

    November 17, 2019 at 8:38 pm

    For 2018, income tax represented 9.43% (2,733,969) of all revenues which included water fund, state revenue sharing, and funds earmarked for specific purposes. Funds earmarked for specific purpose can not be used for anything else (i.e., street funds needs to be used on streets). Property tax revenue was 7,016,695. Income tax represented an additional 39% of property tax revenue.

    If income tax is to be eliminated, property tax revenue will have to go up significantly. Looking at property tax revenue for last few years, @Nasr, I don’t understand why property tax revenue went down. Hot housing market. Fair market value is up. Why is taxable value down? Income tax gets eliminated or not, real estates should be assessed fairly.

    The following link provides revenue and expense breakdown: https://michigan-localunits.budget.socrata.com/#!/year/2018/revenue/0/type/CITY/0/localunitid/5441/0/expensedescription?x-return-url=http:%2F%2Fmicommunityfinancials.michigan.gov%2F%23!%2Fdashboard%2FCITY%2F2636280%3Flat%3D42.395387%26lng%3D-83.055951%26zoom%3D10%26showSidebar%3Dyes&x-return-description=Return

    -Resident

  32. Nasr Hussain

    November 18, 2019 at 9:44 am

    The arguments can go back and forth forever. The best resolution will be to place this issue on the ballots and let the residents decide.

  33. Nasr Hussain

    November 18, 2019 at 10:08 am

    @Dennis
    Exactly, the worst case scenario will be for an emergency manager to be appointed. He or She will show us how the states balances cities’ budgets, as it did in several cities, without the need for an income tax.

  34. Other Resident

    November 18, 2019 at 12:11 pm

    The best solution is to boil down an incredibly complex issue into a single question of “tax or no tax” and leave it up to residents to make the decision without them understanding the potential ramifications? Sounds like Brexit, and we all know how well that worked out. Nasr’s way of thinking is short-sighted and lacks the nuance needed for people to actually take him seriously. While we’re at it, we might as well ask elementary school students what they want to eat everyday for lunch. If they all have cavities in 6 months we can just change it back, no problem.

  35. Nasr Hussain

    November 18, 2019 at 1:17 pm

    @Other Resident

    your argument:

    City resident = Ignorant elementary school children who your brilliant brain has to manage speaks volumes of the arrogant mentality that have led us to state receivership before.

  36. Jessica R.

    November 18, 2019 at 5:33 pm

    Nasr,

    You haven’t been able to give any real answers as to how to fox the problem. In fact you keep demonstrating that you really have no understanding of municipal finances. For example you cited an increase in “court expenses”. Court expenses don’t even come from the general fund. The income taxes have no bearing on that item. You just continue to spew dangerous propaganda against the income tax. Your stop gap for the argument is either let the uneducated voters decide on a very complex issue(which frankly you can’t even understand and it seems like you want to) or worst case scenario the state comes back in and takes over our city again. You need to stand down and stop preaching about an issue you ultimately don’t understand and know just enough about to be dangerous for the community on.

  37. Resident

    November 18, 2019 at 8:53 pm

    According to 2019-2020 adopted budget, budget surplus will be 4.5M for 2020-2021. As @Nasr suggested, there is enough money to try for 2 years without income tax.

    Looking at expenses on adopted budget, there are ways to realize savings without any cut to Police, Fire, and EMS services.

    Can’t City Council do this on its own? Grant income tax holiday for 2 years? Without requiring voter approval? This will guarantee a fall back option if the approach fails.

    Even though I agree with many things @Nasr says, I am NOT for elimination yet.

  38. Nasr Hussain

    November 19, 2019 at 10:58 pm

    A city with no income tax will be more attract more residents and employees to remain in Hamtramck and non-resident and businesses to move here.

    2 million in revenue is not hard to replace with new ideas and revenue streams.

    We will work hard through the, soon to be revitalized, Hamtramck Chamber of Commerce to achieve this and make Hamtramck flourish again.

    @Jessica

    We will inform the “uneducated” residents about the pros of the elimination of income tax and you do your best to “educate” them about its cons and we will let them decide for themselves, they are the ones who will live with the consequences of this decision whether good or bad.

  39. Other Resident

    November 20, 2019 at 10:36 am

    Houses are selling for over 200k, there is no problem attracting residents. Businesses are what is needed, and when they realize the city can’t pay for basic services because its incompetent leaders made a politically easy decision and let the residents vote out the income tax they are going to go somewhere else like Hazel Park. Nasr, you do not know what you are talking about and with every comment your ignorance only shows more.

  40. Nasr Hussain

    November 20, 2019 at 2:42 pm

    Hamtramck budget went down from in $24,789,983.20 in 2009/2010 to $17,502,438.98 in 2019/2020 ( The difference is almost double the income tax revenue) despite the constant claims, by the same people who could not manage the city and handed it over to emergency managers, that the city will fail if the income tax was eliminated at that time.

    If we don’t take these wise & brave decisions now, we will always be one step closer to bankruptcy.

    @Jessica

    With this much knowledge in your posts about the city budget, I assume that you’re an employee with the city who is in fear of losing their job in case another emergency manager is appointed. But I assure you that ,by being brave and taking the right decisions, your job will be maintained and you might even get a raise.

  41. Nasr Hussain

    November 20, 2019 at 3:29 pm

    *Correction, the budget went down over 3X the income tax revenue and the basic services are still here and will still be here once this tax is eliminated.

  42. Nasr Hussain

    November 20, 2019 at 3:30 pm

    &, forgot to mention, with a current surplus.

  43. Jessica R.

    November 20, 2019 at 5:58 pm

    Nasr,

    No I don’t work for the city. I’m gravely concerned for what would happen with losing another two million dollars a year though. I’ve lived here for many many years and have paid attention to the politics and have a background in finances. I’d be willing to bet that you don’t even live in Hamtramck. You are just spewing garbage. Maybe you should watch some city council meetings and learn something about your local government.

  44. Nasr Hussain

    November 20, 2019 at 6:30 pm

    Jessica

    what is the worst case scenario that you can envision if this tax is eliminated. Is it a state take-over?

  45. Resident

    November 20, 2019 at 10:34 pm

    @Nasr, 2009-2010 budget amount that you referenced, I believe it includes water fund. For 2019-2020, the revenue is 15,627,420 – not 17,502,438 as you referenced. Your amount includes 1,875,018.98 deficit spending or using money from surplus.

    I wonder what General Administration is! It is spending over a million in 2019-2020 budget. Every department is budgeted separately. So, there could be a lot of savings from General Administration.

  46. Nasr Hussain

    November 21, 2019 at 10:17 am

    http://www.thehamtramckreview.com/city-budget-notice/

    That was the budget that the city council adopted by resolution.

    It just proves that no matter how much money they’re given, they’ll always find ways to spend it.

Leave a Reply

Your email address will not be published. Required fields are marked *