A city income tax will hurt - not help - Ypsilanti finances by further eroding the tax base
Steve Pepple | AnnArbor.com
Proponents of higher taxes in Ypsilanti often point to cities like Grand Rapids or Ionia as successful communities with a city income tax, as if that tax were a part of their success. It is not, and here are the reasons.
First, consider the 22 Michigan cities that have an income tax. Those most commonly cited to bolster the higher-tax proposition (i.e. “successful cities”) are also among those with the lowest property taxes. Homestead property taxes in Grand Rapids are 33.462 mills (4th lowest), while Ionia levies 34.194 mills (5th lowest). Other favorites for comparison, such as Lapeer (27.348), Hudson (33.21), Big Rapids (38.108), or Grayling (39.118), all rank in the bottom half for property taxes.
Now that we have an apple-to-apple comparison, how are those five cities doing? Every one has had an emergency financial manager, or has been designated as a “fiscally distressed community” by the State of Michigan. Clearly, a city income tax is not correlated with municipal success. So what is?
Simply put, successful communities have low property taxes, stable or increasing population, and better performing schools.
Besides a city income tax, Detroit, Highland Park, Flint, Muskegon Heights, and Hamtramck also have in common very high property taxes, ever decreasing population, and poorly performing schools. The same is true of cities that do not have an income tax but were assigned an EFM, such as Benton Harbor and Ecorse.
Given these indicators, Ypsilanti has everything in common with these struggling communities, and nothing in common with Grand Rapids or Ionia. So how does Ypsilanti avoid their fate? Certainly not with their failed roadmap of shortsighted revenue fixes in lieu of reform.
High municipal taxes are doubly pernicious because they both erode the tax base (by depressing property values) and drive away population, leaving schools with high fixed overhead but without enough students to fill them. They can cause a death spiral like that seen in Detroit, where houses can sell for mere hundreds of dollars, and fiscal insolvency is close at hand.
The good news is that the City of Ypsilanti still enjoys a healthy balance sheet, with over $9 million in a rainy day fund. This means we have a choice.
When deciding how to vote on Tuesday, May 8, ask yourself two questions: Will higher property taxes and a city income tax turn the tide and encourage new people to move to Ypsilanti? Will they make our schools better? If you believe the answers are “NO,” then you should vote “NO” on the City Income Tax and Water Street Debt-Retirement Millage.
Success in our community does not depend on higher taxes. Success depends on reasonable tax rates, encouraging people to move to the community, and improving our schools. This is where we should focus our energy.
Vote “NO” on both measures to save Ypsilanti on Tuesday, May 8.
Karen Maurer is a business woman, Ypsilanti homeowner, and mom of 5, who along with her husband, Eric, co-founded Ypsilanti-based Maurer Management, a property management and development company in 1990. She can be reached at email@example.com.