Dissecting the city’s finances is a yearly exercise

Each year city officials offer a glimpse into how much money the city takes in through taxes and where that money is spent. The biggest revenue source is from property taxes, and the biggest expense is providing police and fire services.

By Charles Sercombe
Ever wonder where Hamtramck’s government gets its money — and where it’s spent?
According to a recent audit of the city’s 2019 finances, on the revenue side of the ledger, the city’s prime revenue stream is from property taxes – which should come as no surprise, at least to property owners who are painfully aware of how much they pay each year.
Last year, the city collected over $6.5 million in property taxes – down by almost $50,000 from 2018.
The next highest revenue stream is from state revenue sharing, which netted the city over $3.4 million last year, which is about $83,000 more than 2018.
That’s largely due to Gov. Gretchen Whitmer increasing how much money is paid out to communities.
Under former Gov. Rick Snyder, state revenue sharing was slashed in an effort to deal with the economic downturn when he first took office in 2011.
Next up is revenue from the city income tax, which brought in a little over $3 million last year — up by over $300,000 from 2018.
On the downside, for revenue from a category called “other revenue,” the city saw a loss over $1 million. That was largely due to the expiration of a federal grant that compensated the city for the salaries of firefighters.
On the expenses side, 60 percent of the city’s budget, some $10.7 million, goes toward police and fire services. That was an increase of almost $1 million from 2018, which mirrors the loss of revenue from the federal grant that paid for firefighters’ salaries.
The next highest expense is general government services at $3.4 million and then public works at $2.6 million – a slight increase from the year before, but still taking up 19 percent of the budget on the expense side of things.
The city has a budget surplus, called a “fund balance,” of $6.8 million, down from 2018 when it was $8.2 million – the highest it had been in many years.
Water and sewerage services have always been points of interest for property owners. In 2019, the city earned $5.2 million in sewage disposal service, and $3 million in providing water.
The water revenue increased by over $500,000 from 2018, but sewerage charges fell slightly in 2019.
On the expense side, the city spent $4 million on sewage disposal, over $700,000 in providing water, and $1.2 million in general operation costs – among several other expense areas.
There is an $11.4 million budget surplus (fund balance) in the Water Department.
Why does the city have such a high surplus in the Water Department?
When asked about the surplus, and the city’s plan on what it will do with it, City Manager Kathy Angerer referred us to a 2018 “Water and Sewer Rate Assessment Report.”
The report’s summary basically said that the rates for water and sewerage are set to ensure the department can continue to operate in the future, and cover repairs needed to the system.
The report also said that each year rates will increase 2.9 percent. In other words, your water bills will continue to go up.
March 6, 2020