Michigan poised to take over another cash-strapped city

Reuters News
Posted: Jun 03, 2013 5:33 PM
Michigan poised to take over another cash-strapped city

(Reuters) - Michigan Governor Rick Snyder on Monday declared a financial emergency for the city of Hamtramck, an action that could make it the ninth city to be put under some form of oversight by Michigan.

Snyder accepted a May 23 report from a five-member review team that concluded that a local government financial emergency exists in Hamtramck because of debt problems.

Those include delayed monthly public pension payments to manage cash flow, a $3.3 million deficit that is equal to more than 5 percent of fiscal 2013 general fund revenue, and a growing structural operating deficit over the last three fiscal years, according to a statement from the Michigan Treasury Department.

Hamtramck is an enclave within Detroit but operates as a separate city.

Michigan took over its largest city, Detroit, on March 14 with Snyder naming bankruptcy attorney Kevyn Orr as the cash-strapped municipality's emergency manager.

Under a new law that took effect later in March, Hamtramck officials will have a choice between an emergency manager, a consent agreement, a neutral evaluation process, or Chapter 9 municipal bankruptcy.

Hamtramck Mayor Karen Majewski said the city council had already voted for the emergency manager option and she did not expect members to change their minds.

She added that the city of about 25,000 requested the state financial review earlier this year. Still, city officials have until June 10 to request a hearing on the Republican governor's determination of a financial emergency.

Majewski said it was still possible that the council could want a hearing to go over various findings.

Besides Detroit, four other cities have emergency managers, while the rest are operating under consent agreements or with a transition advisory board.

(Reporting by Karen Pierog in Chicago; editing by Matthew Lewis)