By Charles Sercombe
In a year filled with one major news story after another, what was the one constant story of the year?
That’s easy: the city’s deteriorating financial picture, which culminated in recent weeks with the city’s effort to file for bankruptcy.
And so, without much to debate about, the city’s fiscal plunge off the cliff is the “News Story of the Year.”
Naming the top news event and/or newsmaker of the year goes back to a tradition that began with the former Citizen newspaper. We tip our hats to The Citizen with our own humble continuation of that tradition.
Yeah, we know. Just about everyone is weary of talking about how broke Hamtramck is. But it’s a story that the national press has picked up.
Well, as one person was quoted saying, Hamtramck is like the proverbial canary in the coalmine: what is happening to us is what is happening or will about to happen to hundreds – if not thousands – of other communities in the state and across the country.
Hamtramck’s financial meltdown is a result of a perfect storm of things coming together: the ongoing rise in cost of healthcare coverage for employees, decreasing state revenue sharing, falling house values, loss of tax collections, joblessness, escalating pension costs and the topper: Detroit withheld tax money owed to Hamtramck from the GM Poletown plant to the tune of $3 million.
That was $3 million the city expected to receive. Without it, Hamtramck will be without cash on hand to pay its bills. The city is disputing Detroit’s action and has filed a lawsuit.
That lawsuit could potentially drag on for years.
By the end of January, Hamtramck will be $3.3 million in the hole and won’t have so much as a nickel to pay employees and contractors. In 2009, city officials were boasting about how healthy the city was, financially speaking.
By the early weeks of 2010, however, that rosy picture suddenly turned ugly when Detroit withheld Poletown tax money.
There was talk of asking voters to raise property taxes to make up the city’s budget deficit but City Councilmembers refused to even allow voters to make that decision.
Instead, councilmembers insisted on budget cuts and even the layoffs of police officers and firefighters. However, because of contract requirements, the laying off of cops and firemen will only send the city deeper into debt because of mandatory minimum staffing levels.
City Manager Bill Cooper has been asking the unions to accept a less expensive health insurance plan but the unions have refused.
In the last month, Hamtramck’s financial woes went viral when Cooper asked Gov. Jennifer Granholm’s administration permission to file for bankruptcy. Cooper said that going bankrupt would allow him to tear up the city’s union contracts and switch to a cheaper health insurance plan.
That move, Cooper said, would save the city $1-$2 million a year.
While that request garnered national media attention, Granholm’s people were not amused.
They flat out said no to Hamtramck’s request, saying there is no legal basis to allow the city to go bankrupt. Instead, the state offered the city four – yes, four – loan options that would keep the city afloat for another 12 months or so.
Never had anyone seen the state so quickly offer a loan.
Cooper initially declined the offer, however, saying it would only delay the city’s financial problems for another year and worse, obligate the city with yet another debt.
So, he again asked the state’s OK to go bankrupt. And again the state said no. And then Cooper and the City Council agreed that, heck, they’ll take the loan. The thinking is, the loan of about $3 million will give the city another year to win over labor unions and get contract concessions, and also maybe force Detroit to make good on those Poletown tax payments.
At the time we went to print, the city was still looking into a state loan.
The story doesn’t end there. You see, Gov. Granholm has only two more weeks left in office. She was termed out of office, and state voters overwhelmingly elected a self-described “nerd” outsider Republican candidate to office: Rick Snyder, who has never held elective office nor mingled with the Lansing crowd.
During his campaign, Snyder refused to say what specifically he would do. And voters still elected him.
We have not been able to penetrate the Snyder circle to find out what he will do about Hamtramck’s financial crisis. Will Snyder agree to a loan? Will he allow the city to file for bankruptcy? Or, in a fit of fiscal streamlining, will he force Hamtramck to merge services with Detroit or Highland Park?
For now, Snyder ain’t saying.
But he was recently quoted saying don’t bother come knocking on his door asking for money.
To say the least, Hamtramck’s new year is going to be interesting reading.