State and city officials to meet Monday
Topic: How to fix city’s finances
By Charles Sercombe
Hamtramck has once again found itself in the eye of a media storm.
The city made national headlines last week, and may well have become the national poster child for financially distressed cities.
Hamtramck stunned folks from here and to there for boldly asking permission from the state to file for bankruptcy. Normally, cities first go broke and are then taken over by a state-appointed emergency financial manager.
Hamtramck officials rewrote that script by seeking bankruptcy before the money dries up, which City Manager Bill Cooper has warned will be by the end of January.
So why the urgency to file for bankruptcy?
That move will allow city officials to tear up binding labor contracts, to and seek less expensive benefit packages and eliminate minimum staffing levels. Cooper said those moves could save the city upwards of $3 million a year. Hamtramck’s labor unions have refused significant contract concessions.
The state, however, was not thrilled with that plan. Instead – in a surprising move – state officials offered loans to survive another year or so.
Cooper rejected that counter-offer because he said it would only put off the city’s financial troubles, but increase the city’s debt load as well.
City Attorney James Allen submitted a four-page letter to Gov. Jennifer Granholm urging her to think creatively.
“We live in a brave new world,” Allen wrote, “one where the old stigmas cost less than they used to.”
Allen stressed that the loan won’t solve anything.
“The Department of Treasury’s loan offers are appreciated, but they do nothing to get at the problems we face,” Allen said. “In fact, because these are obligations that must be repaid, they only push off into the future the problems we failed to confront today – and they rob us of our ability to pay future obligations.”
The solution, Allen said, is lowering the city’s labor costs, which he said consume 80 percent of the city’s $18 million budget.
Cooper said that by the end of January, the city will be $3.3 million in the hole and without cash on hand to meet employee payroll or pay bills.
Hamtramck is far from alone in this predicament. Because of shrinking tax collections from the loss of manufacturing jobs and plants, the state has been forced to scale back on what it contributes to local communities.
Also, in the face of this economic slump, the housing market collapsed and housing forfeitures shot up.
In short, there is less and less money to go around. State officials said they are refusing bankruptcy for Hamtramck because it would open the “floodgate” for hundreds of other communities to follow the same path.
But these are changing political times. Gov. Granholm is leaving office at the end of December and incoming Gov.-Elect Rick Snyder said one of his first priorities will be forcing public employees to make sacrifices.
Snyder’s appointee for the position of state treasurer is Andy Dillon. Dillon and other Treasury Department officials will meet this Monday with Cooper and city officials to discuss Hamtramck’s financial condition.
The thinking locally is that, if Snyder is sending his appointee, there might be a chance that Hamtramck will be allowed to file for bankruptcy.
