Hamtramck City Council Moves Forward on Budget-Saving Plan, Proposes 10-Mil Tax Increase
By Simon Albaugh – Yemeni American News
HAMTRAMCK, Mich. – In a narrow vote, Hamtramck City Council has decided to put a millage increase on the August, 2021 ballot. The ballot language is expected to be similar to the previous millage increase that asked for voters to consider funding the police and firefighters’ retirement system back in November. Even though the proposal failed almost 3 to 1, the budget challenge has now become vastly more pressing.
Last week, Plante Moran delivered a presentation for City Councilmembers about the finances of the city. In their forecast, the city was expected to completely run out of money at some point in 2024 – if nothing was done about it. Brian Camiller, a CPA with Plante Moran, suggested that one of the biggest challenges for the city was its debt obligation to the Municipal Employee’s Retirement System of Michigan (MERS).
In order to save the cash needed to avoid financial disaster, Camiller suggested that the $15 million could come from two options: either passing a millage that would pay for MERS, or laying off around 27-40 full-time staff members. City council, it seems, is opting for the former.
“I know you voted before and [the bond proposal] failed,” said Mayor Pro-Tem Fadel Al-Marsoumi. “But after being presented with the facts and with information, you see that this is vital and this is crucial. This isn’t a ploy or a strategy to increase your taxes because of bad spending. Instead, this is a protective action because if we do go to a judgement levy, ladies and gentlemen, it’s inevitable that our taxes will increase, more than what we’re proposing.”
It’s unclear if a judgement levy, or court-ordered tax increase for a municipality, will be more than what City Council is proposing, however it does not change that City Council is following the direct advice of financial experts at Plante Moran in the dollar figure they’re asking voters to consider.
Plante Moran’s Camiller proposed that the biggest challenge to Hamtramck’s finances isn’t mismanagement or bad financial policy. Instead, the biggest challenge is a bill for emergency responder’s healthcare that didn’t account for the increasing length of life over the past half-century.
“The benefits that were promised 50, 60 years ago, these plans were started back when, at the time, they were affordable,” Camiller said. “But as people lived longer, the draw of those benefits once people retired became longer and longer. It became a system that wasn’t sustainable.”
In Al-Marsoumi’s closing report in yesterday’s city council meeting, he echoed this for the public.
“We all heard about why we’re facing these financial issues,” Al-Marsoumi said. “It’s because of contracts that were established a few decades ago that didn’t account for age expectancy. So we, as officials, can’t stand idly by and do nothing, because that’s going to result in something that may not be reversible or fixed. So I just wanted to clarify that. I know it passed, and I know it’s going to be on the ballot.”
