The Ypsilanti Courier
A Heritage Newspaper
Weekly Publication
Talks continue on income tax
By Dan DuChene, Staff Writer
PUBLISHED: May 31, 2007
Ypsilanti City Council members last week hashed out points of a proposed income tax plan.
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Decisions were made at a special meeting to discuss the tax plan, held last Thursday. Lois Richardson, D-1st Ward, was not at the meeting because of medical reasons.
Requiring a later meeting to discuss deductions and exemptions, City Council did finalize a 1 percent rate, with a .5 percent rate for non-residents, a starting date of July 1, 2008 and a sunset in six years for the proposed ordinance.
During discussion, John Barr, Ypsilanti's city attorney, said a millage rollback, which had been discussed by Council to coincide with an income tax on the ballot, would have to be a separate decision, made by council and not voters.
"A petition that goes to voters can only have one option," Barr said. "If you're going to rollback the millage, you're going to have to do it in a separate ordinance."
Council members were given a proposed ordinance to lower the property tax collected by the city by four mills. The ordinance stipulates an income tax being passed by voters would be necessary for the rollback to take effect.
Brian Robb, D-3rd Ward, proposed the maximum tax rate to generate the most revenue. Additionally, he proposed the tax include no millage rollback with the minimum $600 deduction. He said the city would need to maximize the revenue generated by an income tax to allow payments for the looming Water Street Project's debt in two years.
"Water Street is a debt we have to pay," Robb said. "I have it in my numbers because we don't want to ignore Water Street."
Calling it a "worst case scenario," Ypsilanti Mayor Paul Schreiber asked if City Council could raise the millage back to the 19.2-mill limit if Water Street debt needed to be paid.
"The solvency plan did not include Water Street payments," Schreiber said. "It's unclear now what's going to happen."
Barr said City Council could restore a rollback without the question going to voters, as long as the millage rates did not exceed the limit.
Without making Ypsilanti a "candidate for receivership," Bill Nickels, D-2nd Ward, said, "I'm assuming one way or another we're going to honor our Water Street debt."
The issue of deductions and exemptions was not decided by City Council. Barr said city's could use the federal system, currently at $3,400, or elect to form a unique system. The minimum deduction, set by state law, is $600 per dependant.
Council determined establishing a 4-mill rollback coupled with the federal deduction system would mean a $1 million loss of revenue generated from an income tax.
"I don't think we can afford both," Nickels said.
Brian Filipiak, D-3rd Ward, said of the 22 cities with an income tax, several use the same system with a $600 deduction. He said many cities use the same form, generated by Grand Rapids.
Several residents attending the meeting spoke up against the proposed income tax.
"You're just grasping for straws," Michael Sneed said. "If you pass this, it's just political suicide."
City staff presented the three-year solvency plan at the meeting. If the city income tax is not passed, officials have said the cuts proposed in the plan would be implemented instead.
The plan includes cutting the remaining funding for bus service and recreation, eliminating code enforcement and city prosecution and a reduction in police and fire during the next three years.
"What is clear is we're going to have to keep cutting if we want to balance the budget," Schreiber said.
Nickels said his most common phone call as a City Council member concerns code enforcement. He said it is important to the city.
"It's really important to me, as a City Council person," Nickels said, "to put the income tax to a vote so we can choose to keep that enforcement or dump it."
Local resident Steve Pierce said he is opposed to the tax at the meeting. He said if newly hired city staff was not overpaid than the issue of increasing revenue wouldn't be such a problem.
"The people will revolt and burn the building down if you stop ordinance enforcement," he said.
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