Tough financial times ahead

 

By Charles Sercombe
A perfect storm of financial setbacks means the city has to raid its budget surplus.
City officials passed a budget for the new fiscal year, which starts July 1, that includes (for the first time in several years) going into deficit spending – for a total of $2.1 million.
But fortunately, the city has a budget cushion of $6 million to absorb the hit.
Initially, the deficit spending was going to be at $1.8 million, but the city council decided it wanted to continue the city’s alley repaving program and budget for likely lawsuit costs and settlements.
The alley project was given $200,000 – down from $300,000 last year.
And instead of adjusting the budget later in the year for lawsuit settlements, the council agreed to pencil in that cost – estimated at $100,000 – now instead of later.
Those additions pushed up the total to $2.1 million in deficit spending. The city’s total budget is $17 million. Almost half of that is spent on police and fire services.
Up until now, the city had been operating not only with a balanced budget, but was also enjoying certain savings that fed into a growing budget surplus.
But the good times appear to be over.
One of the leading causes for the setback was the loss of a federal SAFER grant that covered the salaries of 14 firefighters. Last year that totaled $500,000, said City Manager Kathy Angerer.
Federal terms of the program have changed this year to favor non-full-time departments.
Other increased costs included higher employee salaries (which were set into their union contracts), health and pension costs, among other items.
In the meantime, city officials are also bracing for a loss in revenue from the GM Poletown Plant, which is scheduled to close down in January.
That will mean a loss of about $850,000 a year that GM pays in lieu of property taxes. The agreement for the payment depends on whether the plant is in production.
In a couple of years, the city will likely be hit with a loss of $1.1 million a year from the Wayne County jail currently operating here on Conant. A new jail is being built in Detroit for the county to consolidate all of its jails.
Those revenue losses will be staggering to say the least. The state Treasury Department is helping the city administration look for alternative revenue sources, and how to redevelop the Poletown and jail sites.
May 31, 2019

16 Responses to Tough financial times ahead

  1. Nasr Hussain

    June 2, 2019 at 12:08 am

    Some good news:

    https://europe.autonews.com/suppliers/italian-supplier-plans-factory-detroit

    Continuing to redo the same actions hoping to get different results is a form of insanity.

    The only hope of this city is the removal of restrictions on business development in its ordinances.

    Abolishing the city’s income tax should be the first step to attract businesses and investment to our city.

  2. Dennis Nowak

    June 2, 2019 at 2:00 pm

    @Nasr Hussein:

    Abolishing the city income tax is a recipe for financial
    disaster for the City of Hamtramck.

    Ask the City Treasurer, City Manager and Finance Director what implications that action you propose will have on the city’s ability to meet its obligations.

  3. Nasr Hussain

    June 2, 2019 at 4:08 pm

    I don’t need to ask. The city have been through bankruptcy twice with this tax revenue stream. And projected to go into it again , by the persons you are referring me to ask, with income tax still here.

    This is the best time to try something different. The budget surplus will allow us to go for a year or two without income tax and see the difference. If nothing changes, then it can be easily re-instituted.

    We pay the highest insurance rates and water rates. Income tax is something that is under our control to get rid of.

    Only failing cities like Detroit, Pontiac, Flint and Highland Park have income tax. Successful cities don’t.

    It made sense when the city was full of factories but now the burden mostly falls on struggling city residents.

    Besides, it discourages wealthy people and businesses from staying in the city and causes continuous flight or the residents to the suburbs where there is no such tax.

  4. Nasr Hussain

    June 2, 2019 at 4:17 pm

    Even our city leaders, who have a choice, do not live in Hamtramck with income tax being one of the reasons they don’t.

    Less Stress…More Residents..More Income

    https://www.clickondetroit.com/news/study-finds-hamtramck-is-most-stressed-city-in-michigan

  5. Nasr Hussain

    June 2, 2019 at 4:19 pm

    Not to mention other “leaders” who fake residency in Hamtramck.

    What Hamtramck needs is people with more “brain-power” not “money”. Hamtramck can be one of the richest cities in Michigan if managed correctly.

  6. Reader

    June 3, 2019 at 12:36 pm

    Nasr, who are the leaders that fake residency in Hamtramck? If you know of someone doing this then you should report it.

  7. Nasr Hussain

    June 5, 2019 at 11:37 am

    Correctly assessing Hamtramck’s property values, many whose assessments were astonishingly lowered while their values are skyrocketing, will eliminate the need for the income tax.

  8. Nasr Hussain

    June 5, 2019 at 11:42 am

    A solution of our income tax burden which many officials are ignoring because they like it better when “their” property values are assessed lower, including commercial ones, in a very hot Hamtramck real estate market.

    Search by name:
    https://bsaonline.com/SiteSearch/SiteSearchDetails?SearchFocus=All+Records&SearchCategory=Name&SearchText=karen+majewski&uid=621&PageIndex=1&ReferenceKey=41+004+01+0409+000&ReferenceType=0&SortBy=&SearchOrigin=0&RecordKeyDisplayString=PULA-002627-0000-01&RecordKey=10%3d5665&RecordKeyType=10%3d8

    Charles, This will be a great investigative article for your newspaper.

  9. csercombe

    June 5, 2019 at 2:48 pm

    the city is in the process of re-assessing all properties, and yes, some folks are going to be shocked!

  10. Nasr Hussain

    June 6, 2019 at 7:49 pm

    Just for clarification purposes, what was meant by city leaders who don’t live here are appointed positions like: fire chief, city manager, police chief, & other dept. heads.

    As for those who “fake” are some elected leaders whose residency is required to run for election of which we had a few cases before and some “suspected” cases now.

  11. BKaras

    June 7, 2019 at 2:02 pm

    Mr. Hussain, Not all cities that adopted a city income tax are failing cities; what about Grand Rapids, Lansing, Saginaw, Battle Creek to name a few? These are thriving cities that have local income taxes. There are 24 cities in the State of Michigan that have adopted a local income tax since 1964.

  12. nasr hussain

    June 7, 2019 at 7:00 pm

    Bkaras, you can’t compare apples and oranges.

    Thriving cities with income tax like Grand Rapids have a very high number of manufacturing businesses (like Hamtramck did in the past) and its income tax generates more than 75 millions in revenue.

    By contrast, its property taxes are lowered to attract businesses and manufacturing, only generating around 13 million per year. (Take a log at their budget, page 86)

    https://www.grandrapidsmi.gov/files/assets/public/departments/fiscal-budget/budget-office/fy-2017-final-fiscal-plan.pdf

    Hamtramck has a fierce competition from the surrounding suburbs, not the far away cities you’ve mentioned. Let’s make it more attractive to business and residents by eliminating this income tax.

  13. nasr hussain

    June 7, 2019 at 7:15 pm

    Lansing’s income tax was approved by the residents in return for a reduction in their property taxes.

    “Shall Section 11.1 of the East Lansing City Charter be amended to authorize an excise tax on income for 12 years commencing January 1, 2019 implementing reduction of the City property taxes from a maximum of 20 mills to a maximum of 13 mills and requiring the net income tax revenue to be dedicated as follows: 20% to police and fire protection; 20% to the maintenance and improvement of streets and sidewalks, water and sewer systems, and parks, and recreation, and city-owned facilities; and, 60% to supplemental payments for unfunded pension liabilities for retired city employees.”

    Voters are asked to vote “yes” (in favor) or “no” (against). The proposal requires a majority “yes” vote to pass.

  14. nasr hussain

    June 7, 2019 at 7:37 pm

    Correction, that was East Lansing.

    As for Lansing, its income tax generates 39 millions compared to Hamtramck’s 2 million and take into consideration that it’s the state’s capital, where government employees have no choice to leave, and that it has a huge manufacturing base.

    Battle Creek, huge manufacturing base, its income tax revenue is way more than its property taxes.

    https://battlecreekmi.gov/DocumentCenter/View/5028/FY-2019-Budget-Brochure

  15. Nasr Hussain

    June 8, 2019 at 9:59 pm

  16. Nasr Hussain

    June 12, 2019 at 8:31 pm

    Looks like on of the candidates is supporting this cause:
    https://www.facebook.com/mohamned.hassan.73

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