CHICAGO -- The emergency manager of Hamtramck, a small town surrounded entirely by Detroit, began implementing her financial plan to revive the city by firing a trio of top city employees and cutting the City Council’s pay.

Emergency manager Cathy Square, who worked with Pontiac EM Louis Schimmel before being appointed earlier this year to take over Hamtramck, laid off the acting city manager, the community and economic development director, and the director of the Downtown Development Authority.

“Hamtramck is a small community and I’m trying to right-size it, so we’re not so top heavy,” Square told the Detroit News. The city’s population is 22,000.

Square’s deficit elimination plan, released in mid-August, foreshadowed the top executive layoffs. The plan also proposes cutting 10 police and fire positions, 10% cuts in salaries and reductions in health care benefits, and the sale of at least some of the 400 city-owned lots. Square also proposed merging some departments with their counterparts in other towns and privatizing other city services, as Schimmel did in Pontiac.

Gov. Rick Snyder appointed Square to take over Hamtramck in June, a few weeks after the state declared the city to be in a state of financial emergency. It’s the second time in 10 years the state has taken over the city.

The city has delayed making required monthly pension contributions in order to manage cash flow and has had a general fund deficit for the last three years. The current projected general fund deficit totals $3.3 million in a $16 million 2013 budget. The city also had an emergency manager from 2000 to 2007.

Three years ago, local officials pressed the state to allow it to become the first Michigan government to file for bankruptcy, a request the state denied. In her deficit elimination plan, Square said bankruptcy was not a viable option for the city now, but may be reconsidered if alternatives fail.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.