State loan now looking iffy at best

By Charles Sercombe

Will Hamtramck still get a $2.5 million state emergency loan?

That’s a question floating around the city now that Hamtramck and Detroit worked out a deal on how much tax revenue monies each city will share from GM’s Poletown plant.

Part of that agreement calls for Detroit to hand over a check to Hamtramck worth $3.2 million from tax money withheld for the last two years. This September, Detroit is due to give the city at least $1.4 million from taxes collected from the plant.

Hamtramck could receive more than that amount, depending on a number of factors.

On top of that, income taxes will soon come in, and later in the summer, property taxes. In other words, the city doesn’t appear to be facing the financial crisis it projected earlier in the year.

Not so fast, said City Manager Bill Cooper. While the city’s financial picture is certainly rosier, the city still has more money going out than coming in.

“The Detroit payment will only last for eight to 10 months,” Cooper said. “We’re going to need it (the loan) at some point.”

Cooper said he won’t be surprised if the state rejects the loan request.

“That’s fine, we can go back,” he said. “We already did the paperwork.”

Cooper said the financial windfall is offset by a cut of $600,000 in state revenue this coming year as well as increasing costs for employee health insurance and pension costs.

Also, the city could lose hundreds of thousands of dollars more if it doesn’t measure up to new budget conditions set by Gov. Rick Snyder.

Snyder is insisting that cities reduce labor costs by forcing public employees to kick in 20 percent of their health care costs. Snyder also wants cities to privatize or merge services.

Snyder campaigned on a promise to “reinvent” Michigan, but community leaders across the state have become increasingly vocal in their criticism of Snyder’s expectations.

Communities are saying Snyder is setting them up for financial failure in order to allow a state-appointed emergency financial manager to take over and rip up union contracts and merge communities.

Cooper said he will soon be negotiating new contracts with three out of the city’s four public employee unions. He said everyone knows what is at stake.

He said he will seek a 20 percent co-pay in health costs, but he’s not going to force the issue.

“I’m trying not to do this in a heavy-handed approach,” he said.

On the other hand, if the unions refuse, they may ultimately have no choice anyway.