Budget Woes May Force Cities Like Detroit, Hamtramck To Combine
Combinations might also be in the works in Michigan, where local officials are mulling over the possibility of a merger of cities. A cluster of municipalities in the Detroit area faces severe strains, and a combination could potentially bring much-needed relief, some politicians say.
Last year, Detroit and Hamtramck, an independent city located entirely within Detroit's borders, were locked in a dispute over tax revenue. A General Motors plant -- the one that produces the Chevrolet Volt -- straddles the cities' border, and the two governments agreed decades ago to share that property tax revenue. But then Detroit started withholding payments, critically weakening Hamtramck's budget, the tiny city claimed. Desperate, the city of 20,000 people attempted to enter bankruptcy.
As part of a deal struck last month, Detroit agreed to pay Hamtramck $3.2 million for the lost tax revenue, and Hamtramck agreed to pay Detroit for water and sewer charges it owed. But both cities still face myriad woes. Hamtramck, for its part, will remain solvent only for the next 10 months, estimates Bill Cooper, the city manager.
Detroit, too, faces trouble. The decline of automobile manufacturers has put thousands out of work, and an exodus of residents has left the government scrambling to fill its coffers. Whole neighborhoods of buildings are decaying. The most recent Census numbers showed Detroit's population had dropped by a fourth over the last decade.
Making matters worse, Detroit's population has officially dipped below a legal threshold, now preventing the city from collecting a tax on electricity, heat and phone lines, and forcing the government to reduce its income tax rate. Mayor Dave Bing has taken the matter up with the state, and significant portions of the city's tax collection now hinge on whether the state legislature passes certain bills. In the meantime, the city stands to lose more than $100 million this year.
Residents of Detroit and Hamtramck have talked about a possible merger for years. Last month, Michigan passed a law empowering state-appointed managers to take over the finances of troubled local governments, a scenario that local officials are striving to avoid. With budget strains mounting, local politicians now see a municipal merger as a potential way to resolve fiscal difficulties without state intervention.
Outside city hall, Detroit politicians have quietly considered the idea of combining their city with Hamtramck and Highland Park, another municipality surrounded by Detroit. Councilman Kenneth Cockrel informally proposed taking a potential combination even further, merging Detroit with the suburbs of Ecorse and River Rouge. "
It would automatically solve the population issue," Cockrel said. "But it's not like you can just go out and do an annexation next week. There's a process you've got to undertake, and, I'll admit, I'm not totally familiar with that process."
Even if a merger could solve some of Detroit's problems, Hamtramck might resist. Hamtramck residents see their city as a relatively safe haven within Detroit, which, according to an analysis of FBI data, is the nation's third most dangerous city. The police in Hamtramck pride themselves on fast, thorough service, and some officers and residents doubt that Detroit police would be able to provide the same level of protection. What's more, a merger would likely require a reworking of payrolls, potentially resulting in layoffs. Dan McNamara, president of the local Detroit firefighters' union, wouldn't speculate about what might happen in a merger, but expressed support for the Hamtramck firefighters. The president of the Hamtramck firefighters' local didn't respond to requests for comment. But almost certainly, some jobs would be eliminated. At the very least, Cooper, the city manager, would be out of work, he said. "If a community can't afford to provide the services that it should provide to its citizens, then you've got to look for alternatives," Cooper said. "If that means combining communities, then that may be what has to happen." http://www.huffingtonpost.com/2011/0..._n_852312.html
