Ypsilanti residents react to tax increase proposals
As the city of Ypsilanti tries to figure out how to close a projected $10.69 million shortfall in 2017, conversation among City Council members is largely focused on new revenue sources.
Last week, City Council took the first step toward putting an income tax in front of voters by directing staff to update a study on the issue that was completed before the failed 2007 income tax campaign.
Council members also discussed a Water Street debt retirement millage, though no action or specific directions were given regarding it. The city faces $30 million in Water Street debt and must make payments that will soon grow to $1.3 million annually.
Community members - including former local politicians, business owners and residents - varied in their reaction to the proposals. Many declined to comment until after a proposal is put forth, but several offered their thoughts.
Respondents largely expressed opposition to further cuts, but opinions on the revenue raising proposals were varied.
Rodney Nanney, a local business owner who ran on the Republican ticket for the Michigan House of Representatives in the 54th District in 2010, noted that the 2007 income tax proposal he campaigned against failed by a wide margin. He said he would campaign against a new measure because residents can’t afford to pay another tax in a bad economy.
“Residents of this city are facing disastrous consequences related to the economy, and the city income tax would be the nail that nails the coffin shut,” he said. “I understand this city government is in this city hot water related to Mayor Cheryl Farmer’s Water Street debacle, but the city income tax failed in 2007, and we don’t need it now in 2011.”
He said he also opposed a Water Street millage because he said it would “only delay the inevitable” and the $30 million debt “dwarfs the city budget.”
“I don’t see how the city can tax its way out of that,” he said.
Early discussions indicate council could offer a 5.1 to 5.9 mill tax through 2017. That would mean a property owner with a house with a taxable value of around $50,000 would pay about $250.
Resident Andy Gillman said he would conditionally support a Water Street tax. He said if Mayor Paul Schreiber and Council admitted Water Street was a mistake and put in the city charter that they wouldn't undertake such a project again, then he would be comfortable paying the tax.
But he said he continues to hear council members say Water Street was a good idea.
“If Paul (Schreiber) and the rest of them said ‘We were wrong. We were tricked into this bad idea’ and show some change in thinking, then I’d say ‘OK, now let’s put it to rest. I’m willing to pay for it,’” Gillman said. “But that’s not what they’re saying.”
Gillman said he opposed an income tax because, like Nanney, he said it was a permanent tax but only a temporary solution. He said his house is paid off and he would consider moving if the tax was implemented.
Beth Bashert, who has been active with a number of local campaigns and the Advance Ypsilanti group, supported both taxes and said it will help preserve the city through the economic downturn.
“We’re close to a crisis but not in a crisis yet,” she said. “But if we do not raise revenue, then we will be in big trouble soon. I love my city and I don’t want my city to lose as much as we could lose should we not find revenue to stay solvent.”
“Without these options, we will be in very big trouble, and with these options we will be able to ride through a very difficult period.”
She said further cuts to public safety would lead to higher fire insurance rates that could end up costing more than a tax increase, and the city’s service level has already significantly declined.
“A government needs to have enough staff to function to keep the city’s wheels turning,” she said. “We’ve cut a lot of staff - city hall is a ghost town.”
Bill Nickels, a former Ypsilanti City Council member, also said he supported both proposals.
He said there are ways to structure an income tax or make it more palatable, such as by lowering the property tax millage rate. The Water Street debt retirement millage would eventually expire, albeit it in 2031, but that is more desirable because there is an expiration, Nickels said.
Regardless, the city needs to generate revenue and has already made significant cuts, he added.
“We’re going to get to the point that without any revenue increase we are going to have extremely minimal police services and fire protection,” Nickels said. “Yeah, we can we cut our way out, but we wouldn’t have a functioning city anymore.”
Mark Teachout opened Cafe Ollie in Depot Town earlier this year and is ready to open a new, all-Michigan products store as well. Like several other residents, he said he didn’t have enough information on the situation, but on face value he opposed an income tax because of the impact it would have on his new businesses' bottom lines.
But he said a tax would beat the alternative.
“I would probably pay whatever is asked so we didn’t have to get involved with Snyder’s emergency financial managers, because that is completely out of control,” he said. “I would rather support something local I’m unhappy with to block a statewide measure I hate.”
Council Member Brian Robb and Pete Murdock have pushed hardest for discussions on controlling fixed costs such as health care, which is projected to increase by 15 percent annually.
Ken Hobbs, Ypsilanti Fire Department’s union chief, said he supports the taxes because they save jobs, but said he understands why people might be upset for having to pay for Water Street, which they had no voice in and was out of their control.
He said the union has made health care concessions in every recent contract negotiation, and he offered a new suggestion for saving money. He said all the fire departments across the county use the same insurer and many have already begun consolidating their services. It would make sense for everyone to negotiate for a plan as one, Hobbs said, because it would save each municipality money. But he added he didn’t know if it was possible legally or politically.
Gillman acknowledged the city has made significant cuts and commended City Manager Ed Koryzno for how he has managed the city’s finances in recent years. But he said the hasn’t heard the kind of conversations he believes would solve the city's structural issues, such as those about health care and pension costs.
He also suggested a part time fire department or reducing the police force and having officers focus on more serious crimes.
“Those are the big-ticket items, but you can't walk in there and talk about them without the firemen and police officers sitting in the background saying ‘You’re dead politically if you bring (the cuts) up,” he said.
Nanney also said he thought the city had done a good job making cuts in recent years and didn’t have much more to cut. But he said he favored an emergency financial manager addressing the situation.
“I respect the efforts of the council members to have a local solution, and they have made every possible effort," he said. "The fact that we have a $9 million fund balance is remarkable, but there is no local solution. There is no way out at the local level. The solution has to come form Lansing.”
Comments
ice1950
Tue, Oct 18, 2011 : 5:03 p.m.
eatPie: the reason is simple: Ypsilanti is still a bargain! You can get a house for $150k that would go for $450k in AA or close in Livonia. You're blinded by the rate an not looking at the $ or the value. Add up all the taxes and Ypsi still is better and has no more crime and many of the same services. As for council admitting mistakes, that would have to be the previous council and mayor, they were voted out. This one's doing their best to trim back and keep quality of life. Falling property values in MI are not the fault of council. None of the offers on Water St combined would have stopped the train wreck coming. Unless the Governerd gives the city power to print money his hands will be tied too. The message from the mayor has not noted the biggest elephant in the living room: a huge shortfall in pension debt that will make Water Street look smaller in comparison...
eastsidemom
Tue, Oct 18, 2011 : 10:35 p.m.
lynel: a child could attend school in any number of good choices...I resent your comment, an elitist, classist insult...where do you live that is so superior?
lynel
Tue, Oct 18, 2011 : 8:31 p.m.
Yes, you can get a nice house in Ypsilanti for $150,000, but where will you send your kids to school?
Designated Conservative
Tue, Oct 18, 2011 : 7:53 p.m.
The current Mayor has opposed and has been outvoted on most of the spending cuts. If his views had prevailed over the last few years (since the 2008 election), the city would have far less set aside for these future debt payments, and would be far closer to fiscal insolvency.
Woman in Ypsilanti
Tue, Oct 18, 2011 : 4:13 p.m.
It is a known fact that if you have an affluent community, you can have a lower tax rate and still get sufficient income to provide decent public services. Thank about it. A 1% tax on a million dollar house brings in the same as a 10% on a $100,000 house. It isn't some kind of accident that the communities that are hurting the most are those with more poor people and lower property values. That some people like to pretend that those places have lower property values because of higher taxes rather than the other way around would be amusing if it weren't so sad. I strongly support the water street millage. Yes it was a mistake but people with good intentions often make mistakes and considering the real estate market at the time the decision was made, it wasn' t some way-out-there pie-in-the-sky idea. No one could have see the subsequent collapse. There really was every reason to think that developers would be lined up for such a project. I don't like the idea of an income tax because it unfairly taxes the poorer people in our community. Also for personal reasons because paying an income tax would mean filling out yet another stupid tax form which I consider to be a waste of my time. I much prefer an increase in property taxes. And while I agree that we can't simply tax our way out of this problem, we can't cut spending alone either. We have to do both.
eastsidemom
Wed, Oct 19, 2011 : 10:03 a.m.
Thomas...poor people are not all on welfare...you are not carrying Ypsi on your back., get over yourself. And income tax does not depend on owning a home...that is property tax, which is included in most people's high rent. Keep in mind those highly paid CEO's who pay little or no tax (oh yeah cuz they give poor people jobs!) while we pay up in full.
Thomas
Tue, Oct 18, 2011 : 5:37 p.m.
How does an income tax tax the poor people more? "poor" people don't own homes, they rent. And "poor" people don't pay their rent, they're welfare, so WE pay it.
treetowncartel
Tue, Oct 18, 2011 : 3:17 p.m.
Oh the irony, the Waterstreet project is underwater.
Ron Granger
Tue, Oct 18, 2011 : 2:54 p.m.
The water street debacle should have been a private development. This is what happens when elected officials pretend to be business people and try and wheel and deal. A lot of people predicted the water street fiasco - you can read their writing on the web. There is a similar trend in Ann Arbor and it is very disturbing. It will not end well.
David Cahill
Tue, Oct 18, 2011 : 2:53 p.m.
AnnArbor.com, could you explain simply to whom the $30 million Water Street debt is owed, and why?
treetowncartel
Tue, Oct 18, 2011 : 3:15 p.m.
Yeah, I am a little perplexed. if they owe it to a bank why not just default on the property. alternatively, Bankruptcy seems.
eastsidemom
Tue, Oct 18, 2011 : 2:40 p.m.
It is my understanding that even with the 2 taxes...a millage and an income tax...the debt will still be there swallowing us up in 2017..5 years out. I cannot support more tax after bad decisions. It is not really a solution, just a finger in the damn. I feel like my fingers have to be in my own family 's damn right now.
Designated Conservative
Tue, Oct 18, 2011 : 2:40 p.m.
Perhaps a debt relief millage might be approved in Ypsilanti IF it was accompanied by both full page mea culpas from Mr. Koryzno, the former and current mayors, and those ousted city councilmembers begging forgiveness for their misfeasance related to Water Street - AND by the sort of iron clad guarantee of future fiscal prudence that could only come through a City Charter amendment prohibiting any city or DDA land speculation or redevelopment effort or "investment of any kind as Mr. Gillman suggests in the article. I know that I would be a bit more positively disposed towards such a vote if I could mount and frame Mayor Farmer's written and published apology for putting our city into this fiscal pit - even more so if she, John Gawlas, and Ed Koryzno all autographed it!
Designated Conservative
Tue, Oct 18, 2011 : 2:32 p.m.
Without the monstrous Water Street debt, the city of Ypsilanti would be like many other Michigan municipalities, coping with lower revenues while making every effort to maintain core services. Without the $30 Million+ legacy of the Mayor Cheryl Farmer's years in office, Ypsilanti would be able to weather this Great Recession reasonably well. In fact, with the post 2008 cost-cutting efforts of Councilmembers Brian Robb, Lois Richardson, Michael Bodary, and Pete Murdock, the city budget (minus Water Street) would look fairly healthy in comparison to other communities. Unfortunately, we cannot simply wish Water Street away. We can easily assign blame for this poorly managed land development gamble to the former Mayor and ousted Councilmembers like John Gawlas, but that won't make the debt vanish. We can hold our remarkably long-serving City Manager Ed Koryzno responsible for utterly failing in his fiduciary duties to stand up and protect the city by actively and publicly speaking and recommending against policies like Water Street that would leave the city vulnerable to excessive financial risk. None of that will reduce the debt. The city's own projections related to proposed millages or the return of a proposed city income tax suggest that these measures will not resolve the problem either. It appears that the city simply cannot tax its way back to prosperity, no matter how high the rate may go. I know it is asking a tremendous amount from my Democrat friends and neighbors, but if this city is going to have a prosperous future you are going to have to think very differently than you have up to now. There is simply no way a local income tax will pass in this town - and if it did you would see an exodus of residents that would blunt any short-term positive financial benefit that it might have for the city budget.
Thomas
Tue, Oct 18, 2011 : 5:34 p.m.
You won't see an exodus of anybody because no one can sell their homes.
oldblueypsi
Tue, Oct 18, 2011 : 2:27 p.m.
The "Water Street" project is no longer a project. It is a money pit sinkhole, and should be renamed as such. It was created based upon the misguided theory that if you build it, they will come. The only one to come was a money grubbing firm, which, after being paid handsomely, decided that condominiums built in the Huron River floodplain might not be feasible. They took the money and ran, leaving the City with a long term debt. Unwilling to accept the fact that it had made a massive error, the City went into denial. When approached with a proposal (private enterprise - read as "tax generating") to develop a portion of the northeast corner of the property, the City, with visions of grandeur dancing in its head, rejected the proposal. The time to pay the piper arrived and the City was as unprepared as it was in the pre-Money Pit Sinkhole days. A new proposal to perpetuate a portion of the land as tax exempt is being put forward. Those advocating this move argue, based upon some demented trickle down theory of economics, that money will flow into the City tax coffers from this idea. Where are the millions from the IC (Inundated Condos) project? Those who fail to learn from history are doomed to repeat it. It is time for the City to work with the State, under the Financial Manager Act, to achieve a viable unification of the City and Township. A merger vote stands less chance of succeeding than a city income tax. Given the tax base in the Township, Township corporate taxpayers (themselves and through their networking resources) could stimulate real development of the Money Pit Sinkhole and restore the land to a tax generating status.
oldblueypsi
Tue, Oct 18, 2011 : 2:27 p.m.
The alternative is to watch the State appoint a Financial Manager and proceed to decimate what few City services remain. Either way, the local warlords will lose their political fiefdoms they have fought to preserve. No need for the last person leaving to shut off the lights - DTE will do that on its own (see Highland Park).
Andrew Jason Clock
Tue, Oct 18, 2011 : 1:04 p.m.
As Stephen says above, if all we do is raise and create taxes, we already know the result. See Detroit, Flint, so many other cities that have driven away their tax base with insane taxes for little service. If city council wants us to pay for Water Street anyway, they need to get the deal done with Washtenaw County to build the Eastern Recreation Center there. No one else is going to buy that land as it is now and put it back on the tax rolls. We may as well get something out if the deal if we are going to have to pass a millage to pay for it anyway! Washtenaw County is trying to help dig Ypsilanti out of its hole by offering to put a new face on downtown, and we would be stupid not to take it. We need to roll the dice that turning this land over to Parks and Recreation for development will spur other development. Its not a land giveaway if we get roads and utility infrastructure in return, and it gives us a chance to draw people and development to downtown, which can help reverse tax revenue trends faster than hiking our taxes. We will not pass a city income tax. Hasn't council learned its lesson? For once, I agree with Pete and Brian. Start with working to reduce fixed cost, but that's just a start. Oh, friends, on another note, you might want to put less effort into trying to run out interested groups like the DTCDC/DTA. They were trying to work to the same goal, improving Ypsilanti. If you keep running out people who are trying to help out just because you don't like them or like exactly what they do, you are going to find yourself with an empty city. We need to reverse the revenue trend, the right way, by bringing in people and business. Create a small tax credit for new home buyers as well as businesses. Get the DDA to work promoting Ypsilanti as a place to live, work, and play. Make city government easier to work with for people trying to locate here. We are known for being hard to work with. Fix it! If we're talking reversing trends, lets do it right
Thomas
Tue, Oct 18, 2011 : 12:43 p.m.
I don't know what current taxes people are complaining about. I was recently house hunting and checked Ann Arbor and Ypsilanti as well as other surrounding areas. Houses for sale in AA had taxes in the $5000 area. I almost spit my pop out! Ypsilanti isn't anywhere near that! Most are in the $2500-$2800 range. So those of you who are saying Ypsi taxes are higher than anywhere else need to check their facts again. Ann Arbor is WAY higher! And combined with median house prices, now is the time to get an excellent deal in Ypsi! Remember, bank owned homes pay more in taxes than owner occupied. So if you find a bank owned house for sale with taxes that are $2800 in Ypsi, you're bound to pay even less than that. Unless you plan on being a landlord.
Plubius
Tue, Oct 18, 2011 : 3:28 p.m.
The tax bill is immaterial - what counts is the tax rate. Houses in Ypsi are valued far less than houses in A2, that is why the amount of tax seems lower.
Thomas
Tue, Oct 18, 2011 : 1:20 p.m.
Both city and township. And while township was lower than city, city was lower than Ann Arbor.
oldblueypsi
Tue, Oct 18, 2011 : 1:04 p.m.
"Recent future" should read "recent past". Sorry, my proofreading is dipping to aa.com levels.
oldblueypsi
Tue, Oct 18, 2011 : 1:03 p.m.
Are you referring to the City of Ypsilanti or the generic Ypsilanti (township and city). When looking at property in "Ypsilanti", first become familiar with the boundaries of each. Ypsilanti Township property is not subject to City taxes. At one time in the recent future, City taxes were the second highest in the state (Bloomfield Hills = 1, City of Ypsilanti = 2, City of Ann Abor = 4). The "City leadership" (an oxymoron?) appears to be trying for the #1 ranking.
Carole Clare
Tue, Oct 18, 2011 : 11:38 a.m.
I agree with Stephen Lange Ranzini
EatKeyLimePie
Tue, Oct 18, 2011 : 11:32 a.m.
Explain to me why ANYONE would choose Ypsilanti as a place to establish their family and buy a house when property taxes in the city (and most parts of the township) already EXCEED the property taxes in communities like Livonia. On top of current property taxes the city wishes to levy new taxes to fill the hole in their budget know as Water Street. I realize in poor economic conditions that shared sacrifice need to occur but listen Ypsilanti Council: You are chasing away future residents, home owners and family's from establishing roots in Ypsilanti. Is that really your intension? I am going to tell all my renter friends that are registered voters in the city of Ypsi to make sure they go out and vote NO on increased taxes. The people in power at the time made a HUGE mistake investing in Water Street, also the current leadership has had the opportunity to sell parcels of that land, however choose not to because it did not fit their original plan for the land, beggars can't be choosers! Why should the burden of these individuals mistakes be placed upon an entire community. Ypsilanti City Council: Get over yourself, you are NOT Ann Arbor, you need revenue, you messed up and the voters will NOT let this pass (look at the poll results up above). Further I would rather see an Emergency Financial Manager running this cities finances as the elected ones have proved that they are not up for the task.
eastsidemom
Tue, Oct 18, 2011 : 2:43 p.m.
Because we love Ypsilanti...you don't get it...you never will so don't even try. Current council is certainly not a keeper of a magic wand that could undo history.
RUKiddingMe
Tue, Oct 18, 2011 : 11:24 a.m.
Ann Arbor's council is on the cusp of completely NOT learning from Ypsi's mistakes. We've been building and building and adding enormous unjustifiable projects in the face of a bad/worsening economy and ongoing city budget crisis; new city hall, renovating old city hall (how much office real estate does a town the size of Ann Arbor need, exactly?), new underground garage, art programs, and a train station next to an existing train station, a project that has already absorbed MILLIONS of your dollars with no justification, no plan for paying for itself with revenue, no idea who will staff it, nothing. The city is NOT serving your best interests, Ann Arbor citizens. Ann Arbor mayor and city council need to rein in the spending; they're not just wasting money they've always been getting from us, they are looking for new and different ways to waste MORE money, and they are RAISING your property taxes to get it. We need a freeze on all spending that is not critical to the continued operation of the city.
Ron Granger
Tue, Oct 18, 2011 : 2:48 p.m.
No doubt, Ann Arbor City Council is giddy about spending. Worse, they're now trying to do more complex "business deals".. Wheelin' and dealin'. Something they have no experience in and were not elected to do. A monorail? Really?
Tom Todd
Tue, Oct 18, 2011 : 11:08 a.m.
80/20 does not help here it's called a EFM, since bad decisions were made.
Stephen Lange Ranzini
Tue, Oct 18, 2011 : 10:42 a.m.
In Detroit the median priced home costs about $9,000 and you can buy as many as you want, but the taxes are about $9,000 a year and the city has an income tax. Home prices collapsed and why would anyone buy a home there? Is that the future Ypsilanti's residents desire? If so, increase your already too high property taxes and put an income tax in place.
Woman in Ypsilanti
Tue, Oct 18, 2011 : 4:04 p.m.
I have a hard time believing that property taxes in Detroit are 100% of the value of the house.
EatKeyLimePie
Tue, Oct 18, 2011 : 11:42 a.m.
Here's the thing, the houses don't cost 9K in Ypsi, they are priced around the median of our surrounding communities, and those communities do not have as high property taxes or an income tax. The 9K property in Detroit is a great deal, thats the trade off.