The Real Story Behind Lincoln Park’s Fiscal Crisis

It should come as no surprise that Gov. Snyder has confirmed that the City of Lincoln Park is officially in a financial emergency, having a current structural deficit of $89,903, which officials have projected will grow to approximately $1 million by next year. Factors leading to the crisis are not unique to the city — declining tax revenues and burgeoning legacy costs simply overwhelmed the municipality. They will be joining the neighboring communities of Allen Park, Ecorse, and River Rouge — all determined by the state to be in fiscal crisis, along with Detroit. It total, 17 public bodies are functioning under provisions of the emergency manager law, with 15 of them in Southeast Michigan.

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But Lincoln Park’s story differs in one important aspect.

Previous payroll budget cuts adversely impacted the city’s institutional memory and its retirement fund revenues, which ultimately nudged the city to the edge of the financial precipice. Ten years ago, city officials tried to do the right thing, but instead, they inadvertently accelerated the crisis.

In a fiscal belt-tightening move back in 2004, Lincoln Park offered early retirement to its employees, but they didn’t anticipate the resulting human resource exodus. Mid-level management bailed. From the financial Review Team report:

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The spiraling deficit was further exacerbated by sharp declines in property tax revenues over that period. Property taxes accounted for 60 percent of the city’s General Fund, but over the past five years that revenue stream decreased by 31.6 percent, going from $793 million to $543 million. In 2013, Lincoln Park was forced to borrow $2.5 million from its Water and Sewer Fund just to keep up with annual Pension Fund payments.

The city had additionally stopped making required debt service payments to SunTrust Bank, who responded with litigation. In December, an agreement was reached to settle that debt — to be paid for by a two-year special assessment of $58 per parcel. That came one month after another property tax increase of $37.21.

Lincoln Park has seven days in which to decide among the four options offered under Public Act 436, the emergency manager law. They may request a consent agreement, an emergency manager, Chapter 9 bankruptcy, or a neutral evaluation. The likely outcome will be a consent agreement. A municipality with their projected deficit does not necessarily warrant emergency management or bankruptcy.

The Lincoln Park situation is comparable to the cities of Inkster and River Rouge — both having “opted” for a consent agreement. They were joined yesterday by tiny Royal Oak Township. Inkster entered into their agreement with a deficit of nearly $3 million, River Rouge at a fraction under $1.7 million and Royal Oak Township with just over $300,000 in red ink. Typically, only the big boys get emergency managers, although Hamtramck and Allen Park have bucked that trend and taken on a dictator. If Lincoln Park officials find they cannot produce a workable consent agreement, they too may sacrifice democratic home rule for financial expediency. Ultimately, the decision lies with Lansing.

DSCN0444Amy Kerr Hardin

 

 

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4 Responses to The Real Story Behind Lincoln Park’s Fiscal Crisis

  1. Helen Switzer says:

    I am the spouse of a past employee of the City of Lincoln Park. His retirement was in 1993, after 25 years of service in the DPW. This was the first wave of “early retirement” and most of those he retired with have since passed on. In the early to mid 2000’s, the city “took” approximately 4million out of the pension fund, that was solvent and contributed by the retired and municipality. On my behalf, my husband delayed half of his retirement so that I could have a small pension to live on when he passed away. Not many opted for this choice. It was a very nice gesture for my husband to make. Now, there are hundreds of retirees in the metro Detroit area that have their pensions on the line. That is all they have to live on. If the city center of Detroit fails, so does it’s bedroom communities. It’s not rocket science. If the powers that be want to “fix” this problem, they have to promote the whole area to create more revenue. Can you find a full service grocery store in the City of Detroit? No. They come to the suburbs to shop. If there are no Queen Bee’s, the hive will die. The workers leave and it is barren. I grew up in Lincoln Park, my family is and was blue collar. When NAFTA and the Free Trade agreement happened, the big boys took their business’ elsewhere, to cheap labor and off shore accounts. People outside of Detroit were jealous of the prosperity, and soon, it was gone. Sadly, the same companies that built the Detroit Metro area, destroyed it when they left for cheaper labor and imported parts. This was our “Trickle Down Economy”. I only hope that they can find a way to help these communities without hurting their work forces, both current and past. The small business has left the “Outer Ring” of Detroit, i.e. River Rouge, Ecorse, Lincoln Park, Allen Park..these were once “job shop communities”. Everyone keeps moving further and further out to the once farmland and wild woods. This receivership will not help anyone. If we can “donate” billions to other down and impoverished countries, why can’t we help our own? The bottom line is this. Michigan has been failing for decades. Too many hands in the pot, so to speak. Mostly due to the loss of industrial and mechanical jobs. There are no incentives to bring other business’ to the state. Therefore, the entire state suffers. No trips “up north” for those who are working, brings us to no jobs for those who live outside the ring of fire…..It’s not just the City of Lincoln Park that is suffering, it’s the whole state. I feel that if something fails during a “term” of a politician, they should be held accountable. Allen Park invested everything they had into the film industry. Then, the rug was pulled out from under them. Lincoln Park has too many empty taxable business’ and derelict homes. It’s domino’s from there…..

  2. See McSee says:

    I moved away from Lincoln Park after marriage, decades ago, but my mother and sister remained. It has been distressing to see the turn that the city has taken. I agree that while well-meaning the city officers have appeared to have succumbed to short-term thinking during an admittedly difficult time, in a horrid economic environment. I think the corner will be turned, eventually, but I encourage the people of my hometown to decide on the character they wish to demonstrate, the kind of community they wish to be.

    I currently live in a village in New York State, and right now we are debating allowing a fast-food outlet — Dunkin’ — into the community. This would be our first. I don’t think it necessary, and I would like to think that we are better than this and have the internal resources to think more creatively, or to seek ideas from outside the box. I hope Lincoln Park takes a step back and draws on its history, its unique location, and the lessons learned by other communities elsewhere to make some much-needed progress.

  3. See McSee says:

    I moved away from Lincoln Park after marriage, decades ago, but my mother and sister remained. It has been distressing to see the turn that the city has taken. I agree that while well-meaning the city officers have appeared to have succumbed to short-term thinking during an admittedly difficult time, in a horrid economic environment. I think the corner will be turned, eventually, but I encourage the people of my hometown to decide on the character they wish to demonstrate, the kind of community they wish to be.

    I currently live in a village in New York State, and right now we are debating allowing a fast-food outlet — Dunkin’ — into the community. This would be our first. I don’t think it necessary, and I would like to think that we are better than this and have the internal resources to think more creatively, or to seek ideas from outside the box.

    I hope Lincoln Park takes a step back and draws on its history, its unique location, and the lessons learned by other communities elsewhere to make some much-needed progress.

  4. Life in Lincoln Park says:

    I live in this sad city, Lincoln Park was once a bright and thriving city. Now you look around this city and we have lots of empty building and houses. We had a Mayor years back ( Sall) who warned the council at that time this would come but was ignored. I have lived in this City for 25 yrs, Crime has gone up weather our police chief wants to admit it or not. This council and the past council has blamed our budget problems on our Fire and Police contracts and Headly roll back. And not once blame themselves for any part of it. They had allowed our first city manager do what he dang well please in this city took his word for gold and he is the one who sold them the idea of the early retirement offer. Many residents went to the council meeting and said this was a bad idea. It’s sad the us residents knew it was a very bad idea and yet our council didn’t. And now that very same city manager left this city just when things where going to hit the fan. He knew what he did. This was the same man who came from another city that was go for lie’s on his resume. No wonder this city is in a mess.

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