By Charles Sercombe
Hamtramck’s government workforce will be trimmed by 11 positions, but that cut in spending still won’t be enough to prevent a budget deficit.
At Tuesday’s City Council meeting, the council adopted a budget for the next two years that also includes a 13 percent increase in water and sewer rates. Councilmembers Cathie Gordon, Kazi Miah, Mohammed Hassan and Tom Jankowski twice rejected a motion to raise the city’s property tax rate to its maxim level.
The 2.3 mill tax increase was proposed by Councilmember Catrina Stackpoole, which was based on a recommendation by City Manager Bill Cooper. It is estimated the tax would have generated about $500,000 a year. For the average homeowner, the increase would have cost an extra $65 per year.
Without that millage increase, the city will finish the fiscal year next June 30 $575,000 in the hole. That deficit will be covered by the city’s $2.5 million rainy day fund. But that fund won’t last forever. At the rate the city’s expenses will increase and revenues decrease, the rainy day fund will be drained within two years.
While the increase in property taxes won’t stave off the city’s shortfall in revenue, City Manager Cooper said “it will buy us some time.”
But the four councilmembers who voted the tax increase down were adamant despite the dire warning by Stackpoole and Cooper.
“We just can’t keep running to the residents,” said Miah, who campaigned on a platform pledge to not raise taxes and to cut spending.
But Stackpoole said that without the millage increase, the city would be “cutting into the bone” and threatens “to cut the life out of the city.”
She said it’s a false assumption the public would be against raising taxes in order to minimize cuts in services. She said in the past voters approved tax increases to support the library, recreation and even the Detroit Zoo.
The road to approving the budget took many twists and turns in several hours-long budget work sessions, with some councilmembers flip-flopping on what action to take, which is not necessarily unusual while figuring out a complex budget.
If city officials are unable to balance future budgets, there is a possibility that the state would step in and appoint an emergency financial manager to take financial control of the city. Hamtramck was under the control of a financial manager until four years ago.
Hamtramck was in perfect financial shape until about a year ago when Detroit withheld a $2.1 million payment from the GM Poletown plant. Part of the plant is located in Hamtramck, and the city has an agreement on property tax revenue sharing with Detroit. Detroit officials say part of that agreement has expired.
Hamtramck officials are attempting to negotiate with Detroit to restore the payments. As of now, Detroit owes an additional $1 million, Cooper said.
Talks are scheduled for June, but those involved in the discussion are skeptical Detroit will reverse its position. If that’s the case, there are few options for the city to take to reduce costs. The primary option is to merge the police and fire departments with Detroit or Wayne County – which is an option that will prove to be political dynamite.
Councilmember Tom Jankowski has already fired the first shot. He has said in work sessions that it’s time to take on the two unions and force them to make major concessions. He has said the city can no longer afford the demands of the police and fire unions.
If the state were to step in, chances are there would be a merging of services or merging the city with Detroit.