The city of Hamtramck, desperate for cash, has asked the state for permission to take an unprecedented step: filing for bankruptcy. City Manager Bill Cooper said the city of roughly 20,000 people is staring at a $3 million deficit, fueled by a dispute with Detroit. Unless Hamtramck files for bankruptcy, it won't be able to pay its nearly 100 employees or 153 retirees, he said.

The city sent a letter to the state Department of Treasury last week asking for approval to seek bankruptcy protection. It has not received a reply, Cooper said.



"I'm going to run out of money Jan. 31," Cooper said. Bankruptcy would allow the city wants to stave off creditors and force its unions to consider concessions.



Many Michigan municipalities are under severe financial pressure following a crippling recession that has seen tax revenues plummet. The Detroit Public Schools considered bankruptcy last year but opted against it.



"I'd much rather find another way," Cooper said. "It's not Option 1."



A spokesman for the Department of Treasury said, under state law, a municipality can't file for bankruptcy without first having an emergency financial manager appointed.



Caleb Buhs, a Department of Treasury spokesman, said the department received the letter Monday and officials are studying it. Under a 1990 law, only an emergency financial manager appointed by the state can take a city into bankruptcy, he said. No Michigan municipality has declared bankruptcy before or since the law was passed, he said.



The city of Hamtramck has an annual budget of just under $18 million. A substantial portion of its revenues come from a tax-sharing agreement with Detroit that centers on General Motors' Poletown plant. Detroit has withheld payment for a number of months, arguing that it had overpaid previously. Hamtramck has sued its bigger neighbor, but a court resolution could take months or even longer — not soon enough, Cooper said.