here’s what I think I know about the situation in ypsi

The discussion about the proposed Ypsilanti income tax taking place in the comments section is really great. (If you live in Ypsi, or are thinking about living in Ypsi, you really should check it out.) Unfortunately, for me, it raised more questions than it answered. I suppose I might be a bit slow, but I’m wondering if folks could help me out by answering the following questions.

OK, first, let’s start with a few things that I think most of us agree on tonight, as our city teeters on the edge of bankruptcy.

1. Receivership is to be avoided if at all possible. (We want for our city’s destiny to be in our own hands, and not those of someone appointed by the state.)

2. Our city’s foray into real estate speculation was, in retrospect, misguided. While the intention may have been good, we didn’t do enough to protect ourselves from outcomes such as those we’ve encountered. If it had worked, those who championed the idea would be seen as Ypsi’s saviors. Instead, we’re left questioning their intelligence. Most, I think, now share the opinion that we should not have seized properties under eminent domain, displacing tax-paying businesses, for the promise of lovely, river-facing townhouses teaming with young, upwardly-mobile professionals and their freckle-faced, Oilily-sporting offspring. (What’s done is done, however.)

3. We need to have an impartial third-party audit of the city’s books, telling us exactly what we’re obligated to pay on our debt and when. (I’ve never heard the same answer twice from anyone, and I suspect that none of you have either.)

4. We realize that Water Street is the key. Water Street is to a great extent what got us into this mess, and it’s likely the only thing that will get us out.

So, can we agree on that much?

OK, now come my questions.

A lot of you have left comments to the effect of, “I don’t support the income tax because it doesn’t offer a long-term solution.” You point out, I think accurately, that even if an income tax is passed, within a few years, we’ll be back in the red again. I haven’t done the math, but, given the size of the numbers we’re talking about, that seems reasonable.

Here’s my question though.

If an income tax would keep us from receivership, even for two or three years, wouldn’t it be worth pursuing? Wouldn’t it, perhaps, give us time to figure out the Water Street puzzle?

So, how long will the income tax buy us? And will it be enough time to figure Water Street out? That, to me, seems like the most critical thing we need to know.

Am I wrong when I say that if we do not pass the income tax, we will almost absolutely go into receivership? I can’t imagine that there’s enough fat our city budget, even if we cut it all away, to get us close to what we need to cover what’s due on the loans we took out to finance the Water Street boondoggle. Maybe, if, in addition to cutting our budget to the bone, we also sell the Water Street parcels within a few months, we could skirt it, but that would be unlikely, right? If someone could lay out a scenario in which we don’t pass the income tax and yet avoid receivership, I’d love to hear it.

Given what I’ve heard so far, it sounds to me as though our best bet would be to pass the income tax and buy some time. But only if 1) the income tax is temporary, and 2) we’re confident that both costs are being cut (e.g. through the continued regionalization of services), and a solid plan is in place to move the Water Street project forward.

Here, I think, is the bottom line. We need to know exactly how much we owe and when. And, we need a plan to move Water Street into private hands. If we have an aggressive plan, and if it can be proven that every measure is being taken to cut costs, I’d support a temporary income tax. Given what I see right now, however, I wouldn’t.

(And, in the long-term, assuming we make it through this, we’ll go after the Headley Amendment, but I’ll leave that discussion for another day.)

This entry was posted in Ypsilanti. Bookmark the permalink. Trackbacks are closed, but you can post a comment.

24 Comments

  1. Posted May 20, 2007 at 9:26 pm | Permalink

    My “first blush” reaction is that it is wrong to assume the “Water Street puzzle” is solvable. The primary argument in favor of adopting an income tax to fend off receivership is based on the presumption that it will make a difference. Currently, only naked, baseless optimism nudges us in that direction. I would posit that there’s just as likely a chance that the structural deficit will be fixed, that the economy will turn around, or some other unforeseen occurrence (like a lottery ticket) will alleviate the problem. Not that I think any of them are likely, but I don’t have a problem saying they are all equally likely. If this is true or very likely true (that Water Street isn’t solvable), then one cannot persuasively argue that an income tax is “the” solution, eh?

    It seems this is a key weakness in piecing together the enigma of an income tax under these circumstances (i.e. presuming that buying time will work) because there’s no way to quantify what it is the voter is getting for what it is the voter is giving up. It creates a subjectivity that is inherently difficult to appeal to or argue against.

  2. Posted May 20, 2007 at 10:39 pm | Permalink

    First we should not say a receiver is simply bad and must be avoided at all cost. That is what got us in trouble of Water Street. Instead of stopping 3 years ago when we knew things were bad, elected officials said time and time again, we can’t stop, we have too much invested. That thinking is what got us in trouble.

    Everything must be on the table including receivership.

    That said, the problems are fixable without an income tax or receivership.

    We have a two year window before Water Street comes crashing down and buries the city with debt. The City should be doing everything they can right now to save cash. The City has had budget surpluses the last three years. Even with revenue cuts from Lansing, the City is still expecting a budget surplus next year. That is 4 years of budget surpluses.

    What the city is doing is spending money at a furious rate and spending it on pet projects and special interest groups with the hopes of convincing folks that to keep things going, they need to vote for the City Income Tax. That combined with the unbelievable pay increases for people with far less experience than the ones they are replacing is a recipe for disaster. The newly hired Assistant to the City Manager in six months will be making $15,000 more than the previous assistant to the city manager. (The Ann Arbor News story had the wrong facts.) The current leaders are spending the city into oblivion with the sole purpose to convince you there is no other choice but a City Income Tax. They have also convinced themselves that if they spend more money, we will have better solutions.

    Instead, if the city launched on a savings program right NOW!, they could squirrel away about $2 million over the next two years. We still keep all our police and fire, the pool stays open and we keep ordinance enforcement going. It won’t be easy, but we can do it.

    That savings combined with spending about half of the rainy day fund, if there is ever a rainy day this is it, it would give us a 4-year window to get Water Street going. No Tax increase, no Income tax, no receiver.

    However, the City currently wants an City Income Tax and the spending is out of control. Little thought has been given to the fact that a City Income Tax will make it even more difficult to redevelop Water Street. Not like the City hasn’t already put up more than enough barriers to stall Water Street.

    After watching the City Council meeting last Tuesday, it was obvious that the fiscal recovery plan being launched by the City Council, even with a City Income Tax, only provides TWO years of solvency and we are right back in the mess we are in today. Folks, the budget they are considering right now does not include any of the Water Street debt. They are ignoring Water Street hoping it will go away.

    There really is a second option. It doesn’t mean receivership, it doesn’t mean a City Income Tax. But we only have one last chance to get it right. There have been far too many promises, excuses, mistakes, and misadventures.

    But they have boxed themselves in a corner. To admit there is a second option would mean the present course was wrong. So they are pressing on with a doomsday course and going to take us all right over the edge of the cliff.

    We can’t maintain the status quo, we must change. Question is do we change now, or do we wait two years when we have a City Income tax in place and 4 more mills added to the already 30 mills we spend for City services before we start to look at other alternatives.

    Did you know that there have only been two people that have attended all of the City budget meetings and one of them doesn’t even live in the City.

    The next budget meeting is this Tuesday. Brian Robb invited anyone that comes to meet up at Sidetrack afterwards.

    We can fix this problem, but not if we continue down the current path.

    Cheers!

    – Steve

  3. egpenet
    Posted May 20, 2007 at 10:40 pm | Permalink

    As briefly as possible …

    The “situation” in Ypsilanti is an entire collection of serious issues … all of which are solvable … the latest being Water Street.

    Some of the issues, if resolved within the next several months, could go along way toward staving off the worse case scenario.

    A serious error was placing the salvation of the city on Water Street. Water Street is one small chunk of a city that is badly in need of a host of renewed effort by local citizens, key city commissions (HDC, ZBA, and Planning), local business, EMU, the County, the township, and a few savy investors.

    Contrary to the snarky little signs around town … now IS the time to invest in Ypsilanti.

    BTW … the article in today’s (Sunday) A2 News about Ypsi going green WILL PLAY out ibn many respects toward the solution.

    In the meantime, don’t let one little low-lying chunck of the city distract us from ALL of the OTHER work that must be done … and the CONTINUING efforts many are already making to build/rebuild Ypsilanti .. and with success, I might add.

    What’s more, I am seeing a revival in entrepreneurial spirit in town that is just plain exciting. New business, new incomes, new jobs, new offices, new revenue … it’s coming. We must nurture, cultivate, and feed this new crop.

    The farm geese in Riverside Park have been nesting for a few weeks now, and today I noticed one new little goose swimming in the river with the flock. Who ate the other eggs?

    The Water Street issue is minor in comparison to the present needs of our local businesses, local property owners and our own children who want to stay, work, raise families and build businesses here. Let’s put our efforts into the vastly larger square miles of the city and let some subcommittee somewhere keeping hunting up a new Water Street buyer or tenant. We have other important work that must be done.

    Let’s get some perspective.

  4. ingrid
    Posted May 21, 2007 at 8:55 pm | Permalink

    Mark,
    I agree with much of what you write in your four points, but you haven’t touched on a key issue. Which income tax proposal? How do you feel about the proposed rollback of property taxes given the disproportionate impact on renters? Isn’t this a cyncial move to sell the income tax to the wealthier among us, counting on the old Ypsi proposition that the other people don’t vote or count?

  5. schutzman
    Posted May 22, 2007 at 10:47 am | Permalink

    yeah, what ingrid said.

  6. UBU
    Posted May 22, 2007 at 3:17 pm | Permalink

    sell ypsi on e-bay — if you include an ink stained t-shirt you’ll get at least a quarter…

  7. elviscostello
    Posted May 22, 2007 at 5:16 pm | Permalink

    There is another topic that no one addresses. It seems to be the third rail around here. Why, for God’s sake are there two governments sharing 36 square miles, with duplication of services, etc…Should’nt there be real discussion of merger with Ypsilanti Township? To make everyone happy, how about calling it all “Woodruff’s Grove”? Whaddya think?

  8. murph
    Posted May 22, 2007 at 5:30 pm | Permalink

    If nothing else, merger would create efficiencies by eliminating those several phone calls a day that every city staffer has to answer with, “I’m sorry – you’re in the Township. You need to call …”

  9. egpenet
    Posted May 22, 2007 at 6:43 pm | Permalink

    yeah, what Murph just said.

    Actually, it would solve a LOT of issues for everyone. Big IF. There are over 1800 local units of government in Michigan, plus Indian Tribal units. Overlapping issues, jurisdictions, responsibilities, public safety … etc. 1800 for Michigan … when, by the way, the average for all of the other states in the Union is 300.

    If we could agree to do more within the county structure, we could get a lot more done. If history is any indication, Grandholm is running into an even larger buzzsaw that Soapy. Don’t count on Lansing, in other words. Let’s do the job here, ourselves.

  10. mark
    Posted May 22, 2007 at 10:32 pm | Permalink

    Can I get back to you on that, Ingrid? I don’t know enough about the four proposals… I’m still trying to figure them out.

  11. Dr. Cherry
    Posted May 23, 2007 at 12:37 am | Permalink

    Should’nt there be real discussion of merger with Ypsilanti Township?

    I believe if the city loses it’s charter, it reverts back to the township. Then everyone can have chickens in their backyard.

    When I lived in the Township someone at Forest and Ford Blvd. had a pony in their yard.

    Of course when response times triple you’re property values will plummet, and you’ll probably want to buy some firearms.

  12. Ol' E Cross
    Posted May 23, 2007 at 8:56 am | Permalink

    As a merger fan, I spent a good bit of time researching whether Ypsi could simply revert back to township.

    A fellow at the Mich Citizens Research Council said no. (I’m not sure if I still have his e-mail explanation.)

  13. John Gawlas
    Posted May 23, 2007 at 9:29 am | Permalink

    Part of the discussion that needs to take place is to answer the question of essential needs and expectations of living in this community. The notion of dissolving the city unit simply implies adopting the services model of the township (albeit with some additional property assessments based on outstanding obligations including police/fire pensions). Police response, fire response, emergency medical response, recreational access, permitting, snow plowing, street sweeping and road maintenance, building inspection, etc. would probably reflect what township residents are currently experiencing.

    Regardless of what you personally feel about the tax liability, there are specific categories where service levels are higher in the city than the township. (In fact, certain categories are not even delivered by the township.) This is not meant to be a value judgement, although it would be a value judgement that residents face in deciding how much and at what cost.

    There is the potential for the city to simply reduce its services from what historically has been delivered. The actual legal obligations of existing as a city are rather minimal and do not relate to most of these aforementioned service categories. The city could rely on the county road commission to assume responsibility for roads, contract with the sheriff for police services, rescind or revise ordinances related to rental housing inspection, adopt a volunteer assisted fire department (similar to Pittsfield) and so on.

    If the city were to implement the full range of proposals under the city manager’s solvency plan, these would be the obvious considerations that residents deserved to be engaged in.

  14. BVos
    Posted May 23, 2007 at 10:23 am | Permalink

    Don’t forget that an income tax passing would mean that AATA service would continue in the city. Without the income tax AATA will likely stop rolling through Ypsi once the City cuts its contribution to them. The new city budget with no AATA contribution starts July 1st of this year (if I remember correctly). I don’t know when we’re required to pay AATA their annual contribution, but it’s coming soon.

    So one factor to consider in the income tax debate and its affect on poor families and individuals is what would have a more disproportionate impact on them: an income tax or no bus service.

  15. John Gawlas
    Posted May 23, 2007 at 10:46 am | Permalink

    The proposed city budget for 2007/2008 includes a contribution to the POSA with AATA. Hence there would be no reduction in service through June 2008.

    I did not cover the public transit services in the absence of the city. The township does have a POSA (purchase of service agreement) with AATA. However it is unlikely they would expand their contract to encompass the same route schedule as presently exists unless they were willing to significantly increase the outlay.

  16. Sacred Cow
    Posted May 23, 2007 at 11:15 am | Permalink

    I believe some balance to the anti-tax crowd is desperately in order here. I am encouraging neither support nor opposition to the income tax, that is for every individual to decide for themselves. But I feel some glaring factual omissions exist in the arguments of Mr. Pierce and others with a blatent axe to grind here, and those bear some hashing out.

    Quoting Mr. Pierce: “The City should be doing everything they can right now to save cash. The City has had budget surpluses the last three years. Even with revenue cuts from Lansing, the City is still expecting a budget surplus next year. That is 4 years of budget surpluses.”

    Yes the city has run a minor surplus the past several years, however from my understanding we are talking a matter of tens of thousands of dollars out of a $14 million budget. Those incredibly minor surpluses have resulted from the city’s constitutional obligation to balance its budget. It’s disingenuous to reference those surpluses without pointing out what it has cost us to reach that point. I recall reading that in the past 4-5 years, in order to balance the budget the city has eliminated a good dozen full time positions, eliminated the recreation department and cut in half AATA funding, just to name a few cuts. These balanced budgets have come at a very real cost, despite any attempts to fudge that fact by opponents of an income tax. The question is how many more cuts will be required without an income tax in order to continue balancing the budget?

    Anyone interested in this issue needs to examine the City Manager’s solvency plan on the city’s website to understand the alternative to no income tax. As stated above, the balanced budgets of the past several years have already come at a cost to the city. Continued cuts are unavoidable in the future without a new source of revenue. Debating the merits of an income tax is beneficial, but we need to understand what the alternative is here. The debate isn’t “income tax vs. no income tax”, it is “income tax vs. solvency plan”. Mr. Pierce, myself, or anyone else may not like what we find in the solvency plan, but is there any reason to believe the city will not act on these recommendations if needed to balance future budgets? I don’t know about anyone else, but I do not envision a majority of our current Council disregarding the City Manager’s recommendations to balance the budget. Whether I or anyone else agrees with the solvency plan is irrelevant, because unlike the income tax us voters have no say in whether those cuts are implemented, beyond voicing our concerns to our elected representatives. The anti-tax crowd may be able to stir up enough opposition to defeat the ballot proposal this fall, but they sure aren’t going to come up with a majority on our current Council to stop the solvency plan from being implemented if it’s needed.

    Thus everyone ought to read the proposed budget cuts within the solvency plan, and then decide for themselves if the cost they will incur from a new tax is worth what they will lose in service provision. Opponents of the income tax can call the City Manager’s proposal “scare tactics” if they want, but it looks like reality to me. Expenditures outpacing revenues is a problem for most every municipality in the state thanks to our crippling and deplorable state fiscal policy. Unfortunately I’ve yet to hear much from the anti-tax crowd in terms of offering an alternative to balance the budget other than pie-in-the-sky promises to save millions through “regional cooperation” or other ideas that sound wonderful in theory, but offer little pragmatism. If anyone here thinks they can talk the townships into giving up their fire departments, etc. to hop on board with the city, I’d love to see it.

    The income tax is a contentious issue that has both its merits and its drawbacks. We must, however, maintain a responsible discussion of this matter. Inferences suggesting an income tax proposal is little more than attempt for city staff to continue to line their own pockets with raises, or to appease special interests does a disservice to this community. Study the income tax proposal if and when Council decides on one, study the alternative solvency plan, and then decide for yourself which is the best of two lousy options.

  17. Whynotmi
    Posted May 23, 2007 at 5:20 pm | Permalink

    Earlier this month there was a terrific presentation on community cooperation delivered by David Rusk, a highly regarded figure in urban development and Myron Orfield, noted expert on urban sprawl and community cooperation. Anyone interested in really positive ideas for cooperation should read Rusk’s “Inside Game/Outside Game”. There is one copy available at the Ypsi Dist Library. The crux of his message is that aging communities like Ypsi, Ypsi Twnshp, Belleville, Van Buren, Pittsfield, etc. WILL fail unless they make significant partnerships with each other.

    Failure of these aging communities has less to do with management (poor or otherwise) as much as a system that rewards outward expansion. Communities such as Southfield, Dearborn and Grosse Pointe were once considered “good neighborhoods”. They’ve been on the decline for years now. How much of their wealth, and the wealth of SE MI has moved west and north? Drive along the 23 North corridor and check out the development. Look at the schools, strip centers, fire and police departments being built there.

    Look at the demographics. Look at the plans for these communities. Now think about the closed schools in this area. Look at the aging, under utilized but existing, facilities already available here.

    The numbers are there for those who want to look. While few are speaking up about it, the economic health of the township is looking more like the city each year. Ann Arbor isn’t immune either. There are infrastructure issues there, such as water and sewer, that require attention and dollars but the funds aren’t yet there to deal with the needed repairs and upgrades.

    By adopting revenue sharing practices several communities can work together to create projects that can win them grant money, add to the quality of life and become “players” when seeking positive development opportunities. The type of revenue sharing I’m thinking of would be based upon a percentage system assessed upon revenue increases. Incremental increases in revenues would be shared among the participating communities. If community “A” has a $10,000.00 increase they keep 70% ($7000.00). 30% ($3,000.00) goes to a “kitty” that can be accessed by the other participating communities. How the money is accessed is based upon a rule structure agreed upon by the communities. This would encourage development of ALL communites since ALL communities would benefit from growth.

    Standing alone, the city, township and other communities don’t have the clout to attract large developments or attract significant State and/or Federal funds. By working together they can have the best of both worlds: individual identity and governance as well as the “fire power” of a larger community base.

    I urge all of you readers to think long and hard about the success of our community and the success of our neighboring communities. Speak to your community leaders about cooperation. Talk to them about the concept of revenue sharing and the positive effect it can have on Washtenaw County. As a friend of mine is fond of saying, “A blade of grass feeds no one, a field of wheat feeds many.”

  18. MaryD
    Posted May 23, 2007 at 6:11 pm | Permalink

    A city income tax will only hamper all efforts to sell Water Street, or any real estate in Ypsi. Take a bike ride around town and see all the vacant properties and the many homes for sale. Those of us with all our wealth tied up in our homes are screwed. And those dying to stick it to EMU may be just shooting themselves in the foot.

  19. Gemini
    Posted May 23, 2007 at 7:08 pm | Permalink

    I absolutely agree with “Whynotmi” that the long-term solution for strugling cities like Ypsilanti is to advocate for better public policy and a fairer tax structure. Current State policies reward auto- and oil-dependent sprawl while punishing older, more densely-settled (and walkable) communities like Ypsilanti, and that definitely needs to change.

    However, history has shown that changing long-entrenched attitudes and formulating better policies (not to mention actually getting competing and self-interested communities to work together effectively) will likely take years… if not decades.

    In the mean time, the fact is that Ypsilanti faces an immediate and unprecedented budget challenge, and we need to decide (and soon) how the City will continue to fund basic services.

    If Ypsilanti ever hopes to take advantage of its strengths as an attractive compact and walkable community in order to attract new residents and busineses — not to mention make a success of Water Street — we will need adequate resources to maintain city infrastructure (including parks and city buildings), and to continue providing the quality public services residents expect, such as public safety, recreation and public transit.

    If a temporary city income tax can serve as a kind of “bridge” that allows us to maintain essential services while our we work to revitalize our community (and join with other urban communities to advocate for changes in state polcies), then I’m all for it.

  20. egpenet
    Posted May 23, 2007 at 8:07 pm | Permalink

    Stop spending new money.

    Cut services.

    Go part time at city hall.

    Simplify and digitize all applications, forms and paperwork that interfaces with the public.

    Do whatever it takes (with voter permission) to merge, blend, salve, ooze our way into cooperation with all of the other townships and cities in the county.

    At the same time, while the powers that be deal with Water Street, we have to get the rest of the city in shape and deal with public housing, planning, zoning, vacancies, landlords, empty industrial sites capable of adaptive reuse, downtown vacancies and decaying structures. By far, the majority of the city is in much need of attention … let alone Water Street.

    Let’s take back our town … and get it growing once again.

  21. murph
    Posted May 23, 2007 at 8:11 pm | Permalink

    whynotmi –

    While I personally think that tax base / revenue sharing is a great idea, from my study of existing programs, I’m pessimistic. Typically, these programs are imposed upon (at least half of) the participants by the State. “How the money is accessed is based upon a rule structure agreed upon by the communities,” as you comment, is rarely the case.

    The most significant regionwide tax / revenue sharing initiatives are the Twin Cities Fiscal Disparities Program – which Myron Orfield spearheaded as a MN legislator in 1970 (or ’71?) – and the New Jersey Meadowlands Commission, also created around 1970. In both cases, the State Legislator had to take a heavy hand. In MN, the inner city legislators managed to convince enough rural legislators to band with them to impose the program despite the opposition of all of the suburban legislators; people who were involved in the NJ program told me flat out, when I asked what it would take to replicate the program elsewhere, “Crisis. Things have to get bad enough that the State steps in and implements this, because you’ll never get the participants to agree.”

    In both cases, I think the programs are, 30-odd years later, considered successes – but they certainly weren’t at the time. So if we’re assuming that we have to fend for ourselves right now, ruling out intervention from the State, I don’t think tax base sharing is the right tool.

  22. murph
    Posted May 23, 2007 at 8:17 pm | Permalink

    Egpenet – I’m curious how you would go about both making City Hall part-time while also increasing the amount of attention it pays to all those things on your list.

  23. ingrid
    Posted May 23, 2007 at 8:20 pm | Permalink

    Mark,
    Re: your comment “Can I get back to you on that, Ingrid? I don’t know enough about the four proposals… I’m still trying to figure them out.” Sure, I’m looking forward to it.

  24. Posted May 23, 2007 at 9:31 pm | Permalink

    I think it’s quite nice to see all this optimism, with a strong desire for “pragmatism” and “balance.” I also think that bodes well for collectively meeting the challenges ahead.

    However, platitudes and value statements suggesting equity somehow requires a counterpoint to the obvious won’t change the underlying facts. Pragmatism and balance require, as prerequisites, an understanding of how Water Street, the structural deficit, and current budget projections negatively affect our ability to maintain fiscal stability. If you actually take a moment to look at those things, it will appear obvious that an income tax, no matter how well intentioned, is not going to do diddly squat to solve the problem.

    People can think that it will work, and they can say it will work, and they can dress it up with all sorts of fair-minded, pleasant, equitable words, but none of that is going to change reality. Focusing on a solution for Water Street, and actually coming up with something workable, while there is still time, very well may.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Connect

BUY LOCAL... or shop at Amazon through this link Banner Initiative Bat Attack