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Posted on Tue, Oct 6, 2009 : 11:45 a.m.

Michigan's budget problems deal $1.16 million blow to Ann Arbor

By Ryan J. Stanton

State Rep. Rebekah Warren, D-Ann Arbor, told the City Council Monday night she's been fighting to prevent state revenue-sharing cuts in Lansing. But unfortunately, she says, her peers in the state capital see otherwise.


State Rep. Rebekah Warren, D-Ann Arbor, tells the City Council on Monday that the state's 2009-10 fiscal year budget includes a $1.16 million cut in revenue sharing to Ann Arbor.

Ryan J. Stanton |

Warren told city officials at the start of Monday's meeting that the state budget for the fiscal year that began Oct. 1 includes an 11.1 percent cut in state revenue sharing to Ann Arbor. That translates to about $1.16 million, which will deal a heavy blow to the city's budget.

"I wish I was here with a little bit better news for all of you," Warren told council members. "I thought that this was a pretty draconian cut and there are many other cuts that we're doing right now in Lansing as we try to balance our budget that impact arts and cultural programs, that impact environmental protection, that impact our early childhood education, and really education at every level."

Warren, now in her third budget cycle in Lansing, said she voted against the bulk of those cuts.

Mayor John Hieftje said he's watched the city's statutory revenue payments from the state drop from $6 million to $2 million in recent years.

"It has been kind of a long road of steady declines, and we appreciate your standing up for us," he told Warren.

Warren handed out an information sheet at Monday's meeting that showed a history of state revenue sharing payments to Ann Arbor. For the 2009-10 fiscal year budget, total revenue sharing - including statutory and constitutional payments - has dropped from $10.5 million to $9.3 million.

"I voted against that budget when it was in front of us on the House floor and I did so certainly with the citizens of Ann Arbor in mind," Warren said.

Warren said she believes the state has the tools and ability to raise revenues to stabilize the budget. But instead, she said, it has consistently passed on its problems to local governments, universities and public schools.

"I don't think that's the way that we lead Michigan into the future," she said. "I have advocated for an overhaul of our tax system in Michigan. We have a very outdated tax system, and we're actually struggling with a general fund budget in Michigan that is way under the amount that it should be to effectively run the programs in the state."

Warren said she and others in Lansing are working to figure out long-term solutions to the state's budget woes. She points out Michigan is one of the few states that has a flat income tax, and there are ongoing talks of raising revenues with a graduated income tax.

"There are several of us, myself included, who are talking about a real overhaul of the tax system in Michigan, that we really have some sort of outdated ways that we collect taxes where, in a lot of ways, I think we're still taxing some of the things that are not the indicators of wealth that we would want to be taxing," she said. "And as many of us know, the largest growing sector of our economy is services, and in Michigan, we don't tax services at all."

Warren said proposals to raise revenues through a graduated income tax or sales tax would have to go on a statewide ballot for the voters to decide.

Warren told council members she'll continue to fight to restore lost revenue sharing dollars, but at this point there are no answers. She said the House has sent the Senate a supplemental that would restore a portion of the dollars, but the Senate has not yet taken up that legislation.

Ryan J. Stanton covers government for Reach him at or 734-623-2529.



Fri, Oct 9, 2009 : 12:40 a.m.

We need tax reform in Michigan, not tax increases. We need a tax that helps stimulate the economy and doesn't penalize businesses (don't forget businesses just pass taxes along to the people in the form of higher costs for products or services.) We need to look into the MI Fair Tax, and be one of the first states to enact it. A couple highlights from their website ( : The MI FairTax: * Makes sure everyone pays their fair share * Allows you to keep your entire pay check free of state taxes * Un-taxes the poor with a rebate on the necessities of life * Stimulates investment, economic growth and job creation The MI FairTax is Simple: * NO Tax Filings * NO Loopholes * NO Hidden Taxes


Thu, Oct 8, 2009 : 10:50 a.m.

Mr. Stanton showed the reductions in state aid in his chart. Now I would like to see what has happened to total compensation to city employees during the same period. I know there are less workers, I am talking about INDIVIDUALS who are city emplyees. I would expect, based on the figures that total compensation should be at 2003 levels for employees and management. Unfortunately, in these times, we all have to tighten our belts. Instead of laying off so many people, let's lower compensation


Tue, Oct 6, 2009 : 8:20 p.m.

Rep Warren favors raises taxes rather than reforms. She really doesn't get it. No tax increases without serious reform!


Tue, Oct 6, 2009 : 8 p.m.

Do not raise taxes!!! It will drive people out of the state.


Tue, Oct 6, 2009 : 4:58 p.m.

Pyro, The University of Michigan is an extension of the state. No city has the authority to impose taxes on the state or its properties.


Tue, Oct 6, 2009 : 4:20 p.m.

It is amazing to me all the comments about taxing the non-residents, transient workers who come to AA. while this may be good and true in some eyes, how about demanding (1)The U-M pay property tax on property they own within the city limits (roughly 40% last estimate) (2) The city council not fork over $800K for an Art Design for their over priced new City Hall (3) Stop the $50 million underground parking structure??? What does everyone here do when they do not have the funds available to get the extras?? keep spending or wait till later, I know I wait, but that is just my 2 cents worth.


Tue, Oct 6, 2009 : 3:51 p.m.

The reason Michigan has some of the worst roads and highways is less related to an outdated tax structure and more related to the constant shifting of highway funds to the general budget.This happens every year with these legislators...and then they try to tax someone more for more highway funds.If they ever learned that a budget item was supposed to go to the line-item it was earmarked for, citizens would quickly see where money is being wasted. And a pothole or two would be fixed.


Tue, Oct 6, 2009 : 1:44 p.m.

Well, on the bright side, at least we're still getting $9.3 million. I can well imagine that the tax system is outdated in this date. It's one reason why Michigan has the worst roads and highways in the country. But, let's put the blame where it's due - on the State legislature and recent governors who can't ever seem to work together to solve key issues. I certainly hope one of the revenue-increasing taxes she's NOT referring to or supporting is the proposed tax on entertainment tickets (movies, concerts, athletic events). In addtion to the unfair burden it would place on most people in the state, it also is counter to Michigan's desire to increase the number of tourists and visitors. Also, does it make sense to grant big tax-breaks to movie makers to make films in Michigan, then shift the cost of doing this to average taxpayers by charging them more at the box office to watch those same movies? The State needs more money, that's for sure. But, I'd like to see them do what they should have been doing for the last 15-20 years: encourage new businesses to start or move into Michigan.


Tue, Oct 6, 2009 : 1:05 p.m.

Correct me if I'm wrong on this: for retired city residents, if they are not working (i.e., no wages to tax), then they will stand to gain nicely since their property taxes will go down if a city income tax is enacted. Same scenario for laid-off residents, lower income residents? True? I'm not complaining (since I'm retired), but just wanted to know.


Tue, Oct 6, 2009 : 1:01 p.m.

Hey BornNRaised, how about a 1% city income tax only for non-residents. Leave me alone. The resident adjustment for property tax doesn't even need to happen. It only is suggested because the adjustment will either; not cover all the tax, thus making you pay more; the property tax can always be increased by the city later wiping out the adjustment; it can be dependent based, penalizing childless couples. The city is a fatted cow that needs to go on a diet. No more secret stashes for new city halls, etc.


Tue, Oct 6, 2009 : 11:38 a.m.

"he points out Michigan is one of the few states that has a flat income tax, and there are ongoing talks of raising revenues with a graduated income tax."..why is it that the people who we send to Lansing only focus on more tax money? more..enough..I'm not voting for any tax increase of any kind..or anyone that suggests of tax increase...until those in Lansing get control of how our tax dollars are spent and start cutting back like the rest of us. Lansing lead us to this problem and Lansing seems only willing to take more from the people.

Ryan J. Stanton

Tue, Oct 6, 2009 : 11:35 a.m.

Here's a history of revenue sharing payments to the City of Ann Arbor. 2003-04 $11.52 million (10.1% cut) 2004-05 $11.39 million (1.1% cut) 2005-06 $11.27 million (1.1% cut) 2006-07 $10.9 million (3% cut) 2007-08 $10.9 million 2008-09 $10.5 million (4% cut) 2009-10 $9.34 million (11.1% cut) The fiscal year 2009-10 payment estimate is based on SB245 (S-2) CR-1 as passed by the Senate and the House.