Ypsilanti income tax, Water Street debt millage request likely going before voters
Ypsilanti voters will likely be asked to approve an income tax and Water Street debt retirement millage next year.
But Ypsilanti City Council is working to offer those proposals with significant spending cuts of $1.3 million over the next two budget cycles. In estimates calculated at Tuesday’s financial goal setting meeting, the budget was projected to be balanced by 2017 and the city will have $2 million in additional reserves if the new taxes are approved and the cuts are made.
The city is working to close a projected $10.69 million deficit in fiscal year 2017, and its $9 million in reserves are projected to be depleted by fiscal year 2015. Without any changes, the city faces insolvency and the likely prospect of takeover by a state emergency manager.
No votes were taken on Tuesday, but council directed staff to start working on preparations for the income tax and debt retirement millage votes as well as finding cuts. Requests for proposals have already been sent out on a study needed to determine what the income tax might generate.
Brian Robb
"At the end of the day, we're asking people to invest in Ypsilanti, and until we come up with the plan with reductions and increases, it's premature to think about putting anything in front of the voters," he said.
Robb developed a program that calculated how much in cuts the city would have to make in order to balance its budget in 2017. That number fluctuates depending on how much of its reserves council wants to spend and how much it expects to generate from an income tax.
He gave an hour-long impromptu presentation to council and explained the formula. Assuming that the Water Street debt retirement millage passes and the income tax were to generates $2.25 million in fiscal year 2014, the city would balance the budget in 2017 and have an additional surplus of just under $2 million if it found $1.3 million in reductions.
The city would make $650,000 in cuts to recurring costs at the beginning of the next two budget cycles in fiscal year 2013 and 2015. Including the revenue assumptions, it would have to spend $620,000 out of its reserves next year.
Council Member Pete Murdock underscored that the city needs to present a plan that solves its financial issues if it is going to ask voters to approve an income tax.
“When we get all the pieces together it’s important that ... it solves the problem,” he said. “If it doesn’t solve the problem, and we had that experience last time, then people are going to say ‘Why bother?’ We need to make it work and when I say make it work, I mean have a balanced budget … or at least as close as we can get it.”
But where will the cuts come from, especially in a city that has already made significant reductions over the last decade? City Manager Ed Koryzno will provide council with a variety of options, and many possibilities were discussed at the last two financial meetings.
Among them are:
- Reducing the annual rate at which health care costs are increasing by 10 percent.
- Further cuts to personnel.
- Consolidating city hall offices.
- Considering selling off city parks or buildings.
- Creating a special assessment district around city streetlights to help the city switch to LED street lights.
- Consolidating with Ypsilanti Township.
Council members are not eager to cut more personnel and capping health care cost increases at 5 percent annually would save $1 million over 5 years, according to Robb's calculations.
Paul Schreiber
Tom Perkins | For AnnArbor.com
Council must also figure out when to put the debt retirement millage and income tax proposal in front of voters and whether or not to package them together. Several council members said they thought a special election in August would be the best choice, though other possibilities are May or the November general election.
Mayor Paul Schreiber said he thought May was too early because the city needs to complete its income tax study and also communicate the issues to voters. He said he thought a lot of progress was made at Tuesday’s meeting in giving staff direction on goals, but he said isn’t pleased about having to find another $650,000 in cuts.
Still, the plan doesn’t deplete the city’s reserves or involve asking the state for a loan as other municipalities have done, Schreiber said.
“It is a plan and it’s a comprehensive plan that looks to future,” he said. “I think council is being responsible.”
Comments
Andrew Jason Clock
Fri, Dec 2, 2011 : 1:26 a.m.
jbhuron, it would seem at this point the only way to get Ypsilanti City council to take steps to attempt to grow the city tax base is to get a new Ypsilanti City Council. If anything, I would say our council has taken steps in the opposite direction. When they have had chances to to make decisions that could positively impact growth and development, they have failed. Its not to say I think council has mismanaged the city's finances, I don't believe that. But we need some inspired leadership. Can we at least go down fighting and bailing water, instead of just bailing water?
Steve McKeen
Fri, Dec 2, 2011 : 2:44 p.m.
Council needs to promote more festivals.
moveon2011
Fri, Dec 2, 2011 : 12:55 a.m.
Capping Health cost: Shop around for a better deal with your health insurance company or or selfinsure yourself .Da.. first cut /problem solved ...! any more ? !
Mark Hergott
Thu, Dec 1, 2011 : 9:11 p.m.
Putting the income tax issue alongside the debt millage will kill both. In any event, the income tax will never fly. What can fly is a debt millage and a commitment to consolidate police and fire services with Superior and Ypsilanti Townships. I am quite sure a few people in Ypsi township would like to get those Deputies out of their community. We already have mutual aid for fire... why not widen the tax base and increase the community's leverage with the fire union?
acme
Sat, Dec 3, 2011 : 8:05 p.m.
The Township would be crazy to consolidate any service with the City. Your appetite for services exceeds your ability to pay for them. We read the papers and are well aware of your fiscal mismanagement. We will never vote to join your sinking ship.
jbhuron
Thu, Dec 1, 2011 : 6:24 p.m.
Two ideas for thought: Revenue idea #1 that doesn't raise taxes on individuals - Start writing tickets for texting and driving! Everyday, at every light I come to, someone is on their phone texting. I spoke with a officer this summer and he said that he was the first one to write a ticket for this in Ypsilanti, and that no one else is really doing it. 50 tickets a day @ $100 each, rasies $1.8 million a year. Cops don't want to do it, then make the cuts to the police force. Revenue idea#2 that doesn't raise taxes on idividuals- Start assesing a fee on churches, temples, and other non-propoerty tax paying religious organizations. These facilities benefit from out tax payer funded roads, water and sewer infrastructure, street lights and side walks. This doesn't have to be large but any bit would help.
jbhuron
Thu, Dec 1, 2011 : 6:11 p.m.
Growth? Nah, our council must think it's impossible. Months and months go by and still not even a mention of any type of plan to grow the city. The council continues to project future years revenue problems blamming declining tax bases and increased structural expense. Yet, no where in their 90 pages of proposals or meetings mentions any type of plan to actually grow the city. You need accountants to balance budgets, you need leaders to put forth bold plans to restore growth to our city. Please join me in demanding ideas from these leaders that turn around the city, not continuing to play budget roulette staving of the inevitable.
Glen S.
Thu, Dec 1, 2011 : 6:25 p.m.
@ jbhuron I agree with you that City Council needs to put plans for new (tax-paying) economic development at the forefront of any fiscal rescue plan. On the other hand -- because of Michigan's completely broken system of funding local government -- even if we were somehow able to attract significant new investment (or even if the housing market recovered), it would still take many years for this to begin to help mend our budget. As it stands now, Lansing has put cities like Ypsilanti in a straight-jacket with regard to being able to pay for local services that citizens need and depend upon. Unless/until that changes, cities like Ypsilanti are going to have to whatever we have to do to survive.
Martin Church
Thu, Dec 1, 2011 : 6:05 p.m.
The failure of this council and the past council to balance the spending with the income has lead us to this problem. Now you are asking the hard working citizens of this community to give more of the hard earned income to continue the spending. I am alreadyspending 60% of my income on federal, state and local taxes. I don't have any more to give. So I vote NO. And if this is to pass it better have a sunset clause that ends it in 5 years. NO MORE.
dading dont delete me bro
Thu, Dec 1, 2011 : 10:51 a.m.
consolidate with ypsi township? we don't want your budget and real estate problems. we have our own problems.
tdw
Thu, Dec 1, 2011 : 2:21 p.m.
agreed
ypsilanti
Thu, Dec 1, 2011 : 2:30 a.m.
Property tax cut? Puh-leez. You want to maximize what the waitresses at Aubrey's will pay while giving a break to homeowners whose taxes have gone down in each of the past two years? I sure hope council doesn't squander the money it will cost learn what voters think of this. You guys will never learn, will you?
pseudo
Thu, Dec 1, 2011 : 11:15 a.m.
Yes, the waitresses at Aubrey's should pay. Of course. However, you can be fussing about the waitresses at Aubrey's and think of only that example and complete miss the larger picture: There are thousands of employees at EMU thata don't pay their fair share and they should be paying as well. I appreciate the sentiment about taxes but Ypsilanti taxess have been collected from a small number of its residents for too long. Everyone who consumes city services should pay for them. That isn't limited to property owners.
Glen S.
Thu, Dec 1, 2011 : 2:03 a.m.
The City of Ypsilanti has been cutting for well over a decade. Many positions have been cut, whole departments have been shut down, and many services have been trimmed or eliminated. Still, the truth is that no matter how much we "cut," Ypsilanti still faces a long-term structural deficit that isn't going away ... and the Water Street debt (while significant) is just one of the causes. And -- for what it is worth -- the "$9 million surplus" that some have commented about here is, in fact, a "fund-balance" the City has very carefully (and wisely) put aside to provide a financial cushion for the time when we (inevitably) reach the tipping-point when expenses began to exceed revenues. So, rather than waiting until the day that we actually run out of money (like Pontiac, Highland Park, etc.) ... our City Council is taking steps NOW, while we still have some time (and while we still have some cash reserves) to put before the voters a proposal that will keep the City financially solvent, and out of receivership. For that, I applaud the Ypsilanti City Council for having the courage to put all of the options on the table, and to level with the voters about not only the magnitude of the crisis, but also the potential consequences of maintaining the "status quo." One final thought: Because of falling home values, my own property taxes have fallen substantially over the past few years. If passing a Water Street millage and/or City Income Tax ends up making up some of that decrease -- AND allows the City to continue providing an acceptable level of quality public services -- I, for one, am more than willing to vote "Yes."
Forest City
Thu, Dec 1, 2011 : 1:51 a.m.
What we have here is a failture of leadership. I have two words for the proposal. NO and NO.
EyeHeartA2
Thu, Dec 1, 2011 : 12:18 a.m.
Ypsi following in the footsteps of: Detroit Flint Pontiac Highland Park Pass that, watch the exodus. It will never fly anyway.
PattyinYpsi
Thu, Dec 1, 2011 : 2:30 p.m.
This is just what Ypsilanti needs--a negative comment with no thought behind it whatsoever and posted by someone who doesn't even live in Ypsi. For those of us who DO live here, let's try to avoid this kind of attitude, pay attention to what's going on in our city, ask questions and demand answers from the City Council and officers, and stay positive about getting Ypsi back on its feet. No matter how long it takes.
pseudo
Wed, Nov 30, 2011 : 11:16 p.m.
I think an income tax is a good idea because its generally more fair it taxes just about everyone who depend on and consume city services not just property owners in the the city. That being said, I think that should be balanced with a property tax cut for property owners similar to the one proposed the first time.
acme
Sat, Dec 3, 2011 : 8:11 p.m.
A City Income Tax means a copy of your Federal Schedule A is kept at City Hall for the perusal of council members.
moveon2011
Fri, Dec 2, 2011 : 12:48 a.m.
Maybe the BIG PROPERTY OWNERS in the city should pay there fair share of taxes and no longer be .Servicefree ....... We voted on the city income taxes 2-3 years ago that DIDnot pass, quiet beating a dead horse..SOLARPANEL are the answer for waterstreet=funny... take water add solar panel+BIG MONEY for the city NOW Water into Replace Leed lights and still have a profit...for fixing street .sidewalks . plant trees etc etc Get a new name for ypsi...dont muddy the "water' clean up with solar.swim in the money!
Turd Ferguson
Wed, Nov 30, 2011 : 11:48 p.m.
Fail
dading dont delete me bro
Wed, Nov 30, 2011 : 11:12 p.m.
what's the over/under on this? you have to be kidding me.
YpsiVeteran
Wed, Nov 30, 2011 : 11:07 p.m.
In essence. a city with a current $9 million surplus is asking its residents to accept cuts in services and pay more taxes solely because of the Water Street debt that resulted from bad council decisions and council's repeated refusal to allow any development there that might bring in money to pay the debt. The city has a $9 million surplus, no thanks to past and some current council members, yet they want to decimate the police and fire departments and institute an income tax, rather than sell property and actively pursue development that will bring in revenue.
Duc d'Escargot
Thu, Dec 1, 2011 : 6:26 p.m.
(excuse me, in my comment I meant "those ideas have not gone past general discussions")
Duc d'Escargot
Thu, Dec 1, 2011 : 6:23 p.m.
I'm not sure about the "repeated refusal to allow any development" at the Water St. site. As I recall the only concrete proposal in recent years was for the Burger King that would have been located at the northeast corner of the property. That would not have provided much of a return on its investment from the city's point of view, given the costs of setting up the utilities, etc. for which the city would have been responsible. As far as other recent proposals are concerned, such as the construction of apartments or a County Rec Center, those ideas have not past general discussions, so there hasn't been anything definite for the council to vote on.
The Picker
Wed, Nov 30, 2011 : 10:47 p.m.
Don't even think about raising my taxes. The taxes are already too high. Start selling property and put yourselves on a crash diet !
EyeHeartA2
Thu, Dec 1, 2011 : 12:12 a.m.
to who?