For now, the city has reversed its dip into the budget surplus

City officials recently received good news about the health of Hamtramck’s finances. At this point, the financial forecast says the city won’t have to go into deficit spending for another few years.

By Charles Sercombe
Hamtramck’s budget projection continues to look rosy.
But, just for the next few years.
At a recent city council meeting, Brian Camiller from the city’s financial auditing firm, Plante Moran, said the forecast for the next five years predicts that city will collect more money than it spends, through 2025.
After that, the costs go up, and the city will have to go back to dipping into its budget surplus.
For the immediate future, Camille said, “Better is not great. Better is better.”
The biggest boost in the revenue came from an unexpected source: city income tax collection.
Plant Moran credited both the city’s “increased collection effort,” as well as the return of GM workers to its Hamtramck-Detroit plant, where EV vehicles are now being manufactured.
Income tax collection, Camiller said, “is the exciting one.”
Specifically, income tax collection rose by $1.4 million in 2022, and another $1 million extra is expected to be collected this tax season.
In total, the city will realize $5 million this year from taxes, which will continue to increase to over $6 million a year by 2028. To those new to the city, yes, Hamtramck obviously has an income tax, one of 20 communities in the state that collect incomes taxes.
For those who live here, the city imposes a 1 percent income tax on your earnings, no matter where you work, and a ½ percent for those who work here but don’t live in Hamtramck.
And just in case you think you can simply not tell the city about your taxes, the state has an agreement where it shares tax returns with Hamtramck from those who report to the state that they live and/or work here.
In other words, Hamtramck cross-references those who report state income taxes but don’t report to Hamtramck.
Another increase came from district court collections in fines and fees, which Camiller said was a “matter of catching up” for the court in this post-pandemic period.
Court revenue peeked in 2022 to over $2 million, according to Plante Moran, but revenue collection will be under that amount for the next several years.
Another major revenue source has been from the Wayne County jail, located on Conant and Hamtramck Dr.
Hamtramck is expecting to collect almost $1.4 million from the county this year, but there is no forecast for the years ahead because it is believed the county will transfer prisoners to its new jail in Detroit this coming year – meaning no more revenue.
While revenue has been increasing in recent years, so have expenditures, such as the city’s yearly pension payments and other fixed costs.
“There’s really not anything there to cut,” said Camiller.
While the city is enjoying a revenue boost, Camiller stressed: “You still have a revenue problem.”
Why?
“You don’t have control,” Camiller said.
As for piloting through the next few years, Camiller was upbeat, albeit cautiously.
“I’m very confident you can manage that,” he said. “Things are much better than they were. You’re in a stable-ish place.”
There is one immediate way the city can smooth out the ups and downs of the budget year, and that is through passing a special tax millage to help with the yearly pension obligations.
The city would require a 12-mill property tax increase to make a difference.
But there’s a major obstacle to that: voters have twice rejected that proposal. Would the third try be the charm?
That’s doubtful, considering the anti-tax mood of many in the city. In fact, no one in the city has even proposed a third attempt at convincing voters to help cover the pension costs.
All totaled, the city’s annual budget is over $20 million. July 1 is the start of the city’s new budget year.
Posted May 5, 2023