Hamtramck emerges from emergency management
The state announced Thursday the financial emergency in Hamtramck has been resolved, bringing the city out of emergency management and putting it under the guidance of a transition board.
It’s the second time in 14 years the city has come out of financial crisis through the guidance of an emergency manager.
Cathy Square was appointed as Hamtramck emergency manager in June 2013 to address a $2 million shortfall in the city’s $5.6 million budget; $1.4 million of the deficit was money the city owed to its pension system.
Square said that after a year and a half, the city has an unaudited fund balance of $3 million.
“The council had requested an emergency manager from the governor, and they were receptive the whole time. The unions were receptive,” she said Thursday. “That level of cooperation led to a long list of accomplishments here. It’s really been a culture change in Hamtramck.”
Square informed Gov. Rick Snyder on Wednesday the city’s problems had been addressed. By accepting Square’s recommendation, Snyder agrees the city is no longer in financial peril. He appointed a Receivership Transition Advisory Board to help the city shift back to managing its own finances.
The decision comes a week after Detroit’s emergency manager, Kevyn Orr, announced that city’s financial crisis was over and it should emerge from receivership.
With Snyder also approving Square’s departure from Hamtramck, that leaves only the cities of Flint and Lincoln Park and school districts in Detroit, Highland Park and Muskegon Heights with emergency managers.
During her time managing the city, Square secured a low-interest $2.3 million loan with a 10-year repayment schedule to fund payments the city had missed toward employee pensions. She negotiated salary reductions for union and nonunion employees, eliminated minimum staffing requirements and made changes to employee and retiree health care that contributed to $1 million in savings.
She also stopped the outsourcing of city controller and assessor positions and sold surplus vacant land and tax reverted properties, bringing in more than $350,000.
Square will play a role in the city’s transition as a member of the advisory board. Other members include Debra Roberts, executive director of the state building authority; Karen Young, from Support Management Services; and Mark Stema, a consultant with Henry Ford Health System. Young and Stema are Hamtramck residents.
Pensions will continue to be something Hamtramck will have to deal with, Square said. There are 300 pensioners and the number is expected to grow. To address that, the city will turn to a consultant who will recommend ways to be more efficient and better manage the police department, Square said.
Hamtramck was under emergency management before, under a different law. Louis Schimmel, who would later serve as Pontiac’s emergency manager, handled Hamtramck’s financial crisis between 2000 and 2007. But shortly after he left, the city reverted back to its old problems.
Square says Public Act 436, the updated emergency manager act with stronger powers, will help keep the city on track.
“The other key is I’ve been able to find some really good people,” she said. “I’ve gone through a lot of personnel changes here, a lot of qualified people who have strong credentials.”
While the unions negotiated with Square, she would have had the powers to break union contracts, if necessary, something that has been seen as controversial. In spite of the criticism over the new emergency manager law, Square says it provided the tools she needed to work quickly and efficiently.
“The fact that the emergency manager has 18 months to do it, it means you really have to bring a skill set and work really hard every day and move fast,” she said.