State still won’t budge on bankruptcy

Charles Sercombe

No means no – at least when it comes to the state Treasury officials’ answer to Hamtramck’s ongoing request to file for bankruptcy.

City and state officials met on Monday (Nov. 29) to discuss Hamtramck’s request to take the unusual move. City Manager Bill Cooper described the meeting as tense at first but “cordial.”

A couple of weeks ago, Hamtramck made national news for asking to file for bankruptcy. Cooper has said that it’s necessary to file for bankruptcy to avoid payless paydays by the end of January.

Unfortunately for Cooper and city officials, it takes approval by the state to allow Hamtramck go into bankruptcy.

Going into bankruptcy, Cooper said, would allow him to tear up labor contracts, seek less expensive health insurance plans and skirt minimum staffing requirements in the police and fire departments.

The unions representing police, fire and city employees have refused significant contract concessions despite a looming $3.3 million deficit and payless paydays by the end of January.

Hamtramck’s request appears to be a first for the state. Cities usually wait until they are dead broke before seeking protection in bankruptcy.

Gov. Jennifer Granholm’s administration instead offered the city four loan options to tide the city over for the next several months.

Cooper rejected that offer, saying it will only delay dealing with Hamtramck’s labor costs, and he also pointed that a loan will only add to the city’s financial deficit.

State officials remained unfazed.

“We agreed to disagree,” Cooper said.

But that’s not the end of the story.

Gov. Granholm will be leaving office in a few weeks after being termed out. That means Gov.-Elect Rick Snyder might have a whole different view of Hamtramck’s financial woes.

Cooper said Snyder’s Treasurer appointee, Andy Dillon, attended Monday’s meeting. Cooper said Dillon was “non-committal to what the new administration might do.”

“The new administration did not slam the door in our face,” Cooper said.

Guessing just how Snyder will react has been like reading tea leaves. He has not spoken directly on the matter, but judging by the people he is appointing to his cabinet, it appears there will be severe financial cuts to communities.

Snyder has also said that public employees – which presumably include Hamtramck’s – must make financial sacrifices.

There is also talk that Snyder might force communities to merge services, and even possibly merge totally with other communities.

For Hamtramck, that option would be devastating. Both Detroit and Highland Park, our immediate neighbors, are arguably in worse shape.

Hamtramck’s financial picture took a nosedive several months ago when a dispute arose with Detroit. Detroit is claiming it has overpaid Hamtramck several million dollars in a tax revenue sharing plan it has with the city regarding GM’s Poletown plant.

The plant straddles Detroit and Hamtramck.

The dispute is now in court. But in the meantime, Hamtramck says Detroit is unfairly withholding $3 million.