Tough talk about city finances

By Charles Sercombe

The budget ax is slicing and dicing in City Hall.

Well, at least threats of budget cuts and layoffs are flying.

At Tuesday’s City Council meeting, the council issued a series of orders to begin deep cuts in the city budget. The decision on what cuts – if any – will be made is expected to happen at the next regular council meeting.

The talk of cuts could have been a signal to city unions that the time for contract concessions is now, not later.

Councilmembers stressed that action needs to be taken to let state officials know they are serious about wiping out a projected $3.3 million budget deficit and the possibility of payless paydays come Feb. 1.

On top of the council’s list of things to do is an order to each department head to come up with a 20 percent budget cut. For many departments already cut to the bone, that means only one thing: lay off employees and essentially ground down city services to almost nothing.

The police and fire departments have the least room to cut. Laying off police officers or firefighters would likely require the remaining public safety officers to put in overtime.

City Manager Bill Cooper said that unless Detroit hands over the $3 million it is withholding from Hamtramck in a dispute over how much in tax revenues is owed from GM’s Poletown plant, the city will be broke by the end of this January.

And even if that payment comes forward, which at this point looks doubtful, the city could operate only until next June or so.

Cooper has been trying to convince the city’s unions to agree to a less expensive health insurance program. City employees now enjoy a top-notch Blue Cross plan. Cooper said switching to a less expensive plan could save the city anywhere from $1 million to $2 million a year.

So far, the unions have refused to budge on that concession.

At the same time that the City Council is forcing the issue of concessions, a majority of the council refuses to increase the city’s property tax rate to its legal limit, another 2.3 mills. If that increase were made, the city would generate an additional $500,000 a year, Cooper said.

Still, that’s not enough to ward off insolvency. Cooper said he needs to find an additional $3 million a year – either in savings or new income streams – to keep the city afloat.

Unless something comes along, the city is heading toward another state takeover. Cooper received the go-ahead Tuesday night to send a letter to the state Treasury Department outlining the city’s financial woes.

It may be the first time a Michigan city has forewarned state officials that it is heading toward financial disaster, Cooper said.

In his letter to the state, Cooper is asking for the state’s assistance to move the city into bankruptcy. He said this is the only legal way for the city to “set aside” union contracts and begin layoffs in the police and fire departments without being restrained by minimum staffing agreements.

“While this step may seem radical in its approach,” Cooper said, “it is the only approach that will quickly and effectively allow us to address our shortfall.”

In the meantime, the council ordered that anyone using a city vehicle to stop using it for personal use – which apparently also includes driving them to and from work.

The council also put a stop to all non-emergency overtime and all non-essential services.

Councilmember Catrina Stackpoole ratcheted things up another notch by asking Cooper to put together a cost-saving analysis of merging the police and fire departments into one department, a move a number of other communities have undertaken. That would mean police officers would also act as firefighters when needed, thus allowing the city to lay off firefighters.

Stackpoole also asked Cooper to look into the cost savings of contracting out public safety services.

Cooper said he will start talking with Detroit, Highland Park and Wayne County about providing public safety.

Councilmember Cathie Gordon said in an interview on Wednesday that the tough talk from council is an attempt to “get the message out. This is reality.”

(You can contact Charles Sercombe at cs@thethehamtramckreview.com, or by calling 313-874-2100.)