Ypsilanti voters to decide on Water Street millage, income tax
Ypsilanti voters go to the polls today to decide whether to approve a proposed citywide income tax and Water Street debt retirement millage.
The proposals are integral parts of a five-year financial plan developed by city staff and city council that officials say will avert a $6.1 million deficit projected for 2017.
The income tax would be set at 1-percent for residents and 0.5-percent for those employed in the city, including 6,000 Eastern Michigan University employees. It’s projected to generate $1 million in fiscal year 2013 and approximately $10 million through 2017, according to an income tax analysis commissioned by the city.
The income tax would be effective on January 1, 2013.
The city is paying $30 million on its Water Street bond debt. It must continue to make payments through 2031, and the amounts will grow to $1.7 million annually by 2015.
The Water Street debt retirement millage residents will see on the ballot is for 4.94 mills in fiscal year 2013. That rate would grow to 7.12 mills by 2017. But as part of the five-year plan, city council voted to use savings to pay half the Water Street debt. That would allow the city to cut the millage rate in half.
In that scenario, homeowners would pay a new millage rate of 2.35 mills in fiscal year 2013, which would grow to 3.55 mills by 2017.
The full millage would is projected to generate $7.7 million.
Aside from the Water Street debt payments, property tax revenues are projected to fall 30 percent, from $7.2 million in 2010 to $5 million in 2017, which is among one of the largest financial challenges facing the city.
In his recent State of the City address, Mayor Paul Schreiber said failure of either measure will force the city to make significant cuts in police, fire and other city services. He highlighted that Ypsilanti has cut staff by one third over the last 10 years from 139 employees in 2002 to 93 today.
A proposed budget for fiscal years 2013 and 2014 that assumes no new revenue from an income tax or Water Street debt includes cuts to 10 more full-time position, including seven from the fire department.
An opposition group called Stop City Income Tax has contended that taxes in Ypsilanti are already high, and even higher taxes would drive away businesses and residents.
A group campaigning for the proposals, Save Ypsi Yes, has argued that without the new revenues businesses would choose to move elsewhere because of a lack of safety and city services. Group members have also raised fears of sharply increasing insurance rates.