For now, city’s tax takes a hike

By Charles Sercombe

Hamtramck is following in the footsteps of a number of suburban communities by passing a small property tax increase.

At Tuesday’s City Council meeting, councilmembers engaged in a lengthy debate over a 2.2 mill tax increase despite numerous budget work sessions in recent weeks in which the topic was covered.

At this point, the tax proposal is not a done deal. The tax was wrapped within the city’s budget for 2012 and the new water and sewer rates. Tuesday’s vote approved the total package, but a second vote is required at the next council meeting, scheduled for May 24.

That will be the final vote. Although the vote was a solid 4-2, in Hamtramck anything can happen until it’s over.

Councilmembers Mohammed Hassan and Kazi Miah voted against the tax. Hassan insisted the city should first seek contract concessions from the police and fire unions before resorting to a tax increase.

Miah said if the city raises taxes residents will move out.

The tax will generate $425,000 a year. For the average homeowner, the increase will translate into an extra $50 to $55 a year, said Finance Director Nevrus Nazarko.

During the debate, Nazarko stressed that the city has cut as much as it can. He said at some point the city has to raise additional revenue.

Property owners may not like a tax hike, but they have little to complain about because they have enjoyed a tax break in recent years. Three years ago 11 mills fell off the city’s tax rolls after a lawsuit award was paid in full.

Nazarko also pointed out that because property values have sharply fallen, homeowners have been experiencing a further break in taxes.

The city’s total taxable value dropped by $50 million because of the housing crash. While that has meant fewer taxes owed by property owners, the flip side has meant a loss of $800,000 to the city’s coffers.

Hamtramck’s tax rate is about 45 mills, Nazarko added, which is comparable to suburban communities.

As for the city’s upcoming budget year, it looks like Hamtramck can survive financially until the 2013 budget year arrives, at which point the city is looking at about a $2 million deficit with just about nowhere to cut.

Tax or no tax, Hamtramck could be in a financial hole sooner than that. The upcoming budget year has some mighty big “ifs.”

City Manager Bill Cooper will be asking the police and fire unions to make significant contract concessions. Without them, the city will go broke, he says, and that could lead to the state appointing an emergency financial manager to take over.

If an EFM does indeed come to town, that person will have the wide-ranging authority to break union contracts. Barring any successful legal challenges to the recent expanded powers for EFM’s that were enacted by the state legislature and the governor, the police and fire unions will have to accept contract concessions whether they like it or not.

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