Washtenaw County Commissioner Conan Smith just left the following response to my last post, and, as it directly contradicts what that I printed here (that I believed he was against the proposed Ypsilanti City income tax), I thought that I should move it up here to the front page:
Hi all,
Just to clarify, I fully support the income tax proposal. I support it because I love the city of Ypsilanti. I love what it means to the county. And I believe that the continued decline of the quality of life the city can offer will not serve the residents nor your neighbors.
I completely understand the worry and stress that residents feel about making this choice. It’s no secret that Ypsi’s citizens are overburdened with social cares and fiscal pressures that others in Washtenaw, for one reason or another, have managed to avoid. Choosing to add to that burden takes serious reflection, and, frankly the specific consequences in either direction are not certain.
It is undeniable, however, that should the proposal fail, the city will be forced, again, into draconian cuts. Suggestions that Ypsi’s budget woes can be resolved through intergovernmental partnerships or via reductions in city staff or services that will go unnoticed are myths that only serve to distract people from evaluating the real issue.
Excluding the Water Street debt payment or implementation of the city’s solvency plan, simply continuing the scaled-back services Ypsi is currently providing will result in an escalating debt . . . $250K this coming year and running upwards of $1.5M in 2009. Just to answer this deficit, the city’s looking at losing a dozen public safety officers and completely eliminating EMS.
None of this is the city’s fault. Michigan’s municipal finance system has put dozens of cities across the state in the same tough situation. Those, like Ypsi, that have depended on the manufacturing industry for tax base have been hit particularly hard. How we answer these challenges today will define our communities for generations.
I look at Ypsi, at the two dozen other cities I work with that are in the same position, and I can’t help but plead, “Invest.” Invest in tomorrow. It’s going to suck today. No doubt. But the citizenry that chooses to sacrifice self for community in these trying times is the one that will prosper as we make the hard transition to a new economy.
And we all need Ypsilanti to prosper.
Thanks for your thoughts, Conan… And sorry for speculating as to your position on such a controversial issue.
Now that we’ve heard from Conan, maybe we’ll hear from County Commissioner Ronnie Peterson. As I overheard him the other day saying that he was against the idea of the tax, I think his perspective would make a nice rebuttal to what Conan had to say.
17 Comments
Sorry, Conan, but I’ve got to take you to task on that explanation.
“I support it because I love the city of Ypsilanti.”
We all love the City of Ypsilanti. I doubt we’d be commenting on Mark’s blog if that weren’t the case. Loving it doesn’t in any way correlate with support for a tax.
The crux of the problem is the change that must be made to our chronically amatuerish approach to governing a city in the 21st Century. People can keep whining about what cuts have been proposed or not proposed or made or not made, but that whining is little more than a rhetorical technique designed to frame the issue in terms of cuts, rather than in terms of focusing on solutions. Most commenters seem to acknowledge that neither cuts nor a tax will actually solve anything – all they will do is postpone the inevitable.
Adopting a tax tells those sitting in the driver’s street to keep steering us down the same road at the same speed in the same direction by letting Water Street fester, continuing to make Ypsi unattractive and uncompetitive (even less attractive and competitive with a tax) so that in five years we’ve got exactly the same problem with exactly the same attributes with exactly the same approach on our hands to deal with at that time.
All a tax does is postpone – it doesn’t solve a thing.
“None of this is the city’s fault.”
That’s nonsense. The City hasn’t done diddley squat to fix the underlying problem except play the role of the victim since I moved here. Why would anybody in their right mind think the City is going to change its approach now?
We all know the City took on way too much risk with the Water Street project, and now the downside of that risk is being visited upon all of us. Rather than whine about it, and act like we are victims of circumstances beyond our control, or play the blame game, it’s time the City got its act together, attract businesses here and do the hard work of making this a viable town. If it can’t do that, a tax ain’t gonna make any difference. All a tax will do is maintain the status quo, and the status quo is the problem, not the solution.
The entire notion of a tax without any fiscal plan or approach to the underlying problems that we face is irresponsible, plain and simple. It rewards failure to act and buys time for some nebulous, unrealistically optimistic concept of “future progress” without actually requiring any change in course at all.
“But the citizenry that chooses to sacrifice self for community in these trying times is the one that will prosper as we make the hard transition to a new economy.”
Most of us who get to vote on the tax won’t be making any real sacrifice. I work in Detroit and will get a credit for the income tax I pay there, AND I’ll get a millage rollback. I’ll actually come out ahead if the tax passes as will all landowners who work in Detroit.
Our city officials have set up a tax that takes from the poorer among us, from renters, and from people who choose to work here in Ypsi who have no political representation. They will be making the sacrifice, as they will pay a larger percentage of their income even though they are starting with less money. At the same time, the tax provides a discount to resident landowners. That, to me, and to many in our community, is little more than a betrayal of our progressive values.
Conan, if you’re monitoring this, I’m sure many of Mark’s readers would be interested in your response to the issues that I’ve raised. No doubt it would keep the discussion going . . .
I love the city of Ypsilanti too. And I expect I will live here for the forseeable future. There are several houses for sale in my neighborhood that have been on the market for at least a year. Some have been taken off the market because they cannot sell. One is being auctioned. If this taxz passes, no one will want to move into the city and no one will be able to sell their house. If me or my wife happen to lose our jobs, we wouldn’t be able to sell and bankrupcy here we come.
If you want to destroy Ypsilanti, vote for this tax. If you want to love ypsilanti, find another solution.
Seems to me it is individuals who make up the city, many of whom post to this blog, who are the city’s great hope–much more powerfully so than instituting a tax whose revenue will, if history teaches us, be misused. Just like the bigger national story, as our country sputters and forfeits its collective soul, still there are stunning individuals among us who make it possible to have hope. Heartening to see what plain, regular (stunningly impressive) people can do, with what energy and bright thinking, while ensconced in a reckless, beleaguered bureaucracy.
I trust the bright, energetic, forward-looking individuals here and in the country at large and thank them enormously. And I trust that the city income tax will be rejected overwhelmingly–not because people don’t love their city and want to see it prosper but exactly the opposite–as our way to take hold of the reins and demonstrate that stodgy, fear-filled strategies are no longer welcome.
Walking around Ypsilanti, it’s hard not to notice how many houses are for sale, nor the homes in foreclosure. The downturn in Michigan’s economy is clearly hitting Ypsilanti hard, and many families (and neighborhoods) are struggling.
Still, I don’t understand – considering everything else we have working against us right now – the argument that choosing to make drastic cuts to police, fire protection, EMS, public transit, etc., is going to benefit families or neighborhoods in the long run.
Since the income tax is just that – a tax based on income – those who make the most would pay the most, and those make the least would pay the least. It is, in fact, much fairer, and more “progressive” than a property tax, and many seniors, lower-income residents, and those who are unemployed would pay little, if any at all.
For those with the means to pay, 1 percent seems like a fairly small price to maintain safe streets and safe neighborhoods, decent parks, public transit, etc. And – that doesn’t even take into account the “hidden” costs of diminished services – in the form of lower property values, higher insurance costs, etc.
Moreover, studies have repeatedly shown that both residents and businesses who are looking to relocate place a very high value on clean, safe communities with decent public services. Local taxes usually place much lower on their list of concerns.
While I do not in any way wish to diminish the arguments of those who are concerned about struggling families, I don’t think this issue is one that lends itself to a simple mathematical calculation. The income tax issue is simply much more complicated that that.
Again, I would ask: What is it worth to us, individually, and as a community – to maintain decent public services that protect our health, safety, and quality of life? What will be the actual costs (hidden, and otherwise) of not doing so?
Please understand that in no way was I trying to suggest that someone doesn’t love the city if they don’t support this tax proposal. This is a tough enough issue without that kind of rhetoric. Rather, I wanted to explain why someone who neither lives nor works in Ypsi would care to get involved in this debate. It’s easy enough for those of us who live in other communities to close our eyes and turn our backs on Ypsi. True enough, it’s been done so many times in the past.
I agree that this discussion would be better and more productive if it were focused on solutions, but to get to that point there needs to be a shared understanding of the forces at work that have driven the city to this point.
When I say that it is not the fault of city leaders that the city is in this position, it is certainly not nonsense. Take away any, or all, of the past major city decisions that people have taken issue with (including Water Street) and Ypsilanti still will face an ongoing fiscal crisis. This is the inevitable fate of built-out cities in Michigan, thanks to a broken municipal finance system and our constant subsidization of urban sprawl.
The issue that residents must address is two-fold, rooted in the undeniable fact that Ypsilanti does not have enough revenue to maintain its services.
First, there is a rampant debate about the appropriateness of those services. Many have suggested that the city’s budget should be cut to the point that expenses meet revenues. Fair enough. The city administration has identified sufficient cuts to follow this course. The value of the services that would be lost is not really an empirical question. It’s up to each voter to judge whether their city would be better off without those services. Perhaps more important is the question of whether the city can expect to revitalize or prosper without them. In my own judgment, the answer to both those questions is no.
There is an empirical question on the expenses side, however. The challenge is the escalation of the deficit over the course of time. Because the city’s revenue base is unsustainable (i.e. income grows more slowly than the rate of inflation, necessitating continuous service cuts), this year’s cuts will not meet next year’s deficit. Therefore, next year, and each year following, your elected officials will be forced into making more cuts. Ypsi’s citizens have the opportunity to head off this cycle of decline by supporting the income tax.
Second, then, is the question of revenue. I will not argue that the income tax is the best revenue solution. It is, given Michigan law and the state of our economy, the only revenue solution for this time of crisis. Michigan’s entire system of municipal finance — including, significantly, its city income tax law — is pitiful and woefully inadequate. Cities can only take advantage of a narrow set of revenues: property tax, fees, revenue sharing and the income tax.
Ypsilanti could increase property taxes by one mil to the constitutional limit. That would raise about half a million dollars, but the interaction between Proposal A and the Headlee Amendment guarantees that that revenue will not continue to grow at the rate of inflation. Fees for city services can only cover the cost of those services, so they will not contribute to other general fund obligations. Revenue sharing is completely in the state’s control and has been steadily decreasing as the state taps into that fund to balance its own budget (incidentally, despite the tax increases recently passed by the Legislature, the state has a $400M budget deficit of its own to meet through more cuts).
There are systemic solutions to this crisis, but implementing them will take several years, and even then their success is not wholly certain. The income tax will provide short-term relief for the city, keeping it from sinking lower while these other strategies can be adopted.
I wholeheartedly agree that adopting this tax without a strategy to address the underlying issues would be irresponsible. I’ll argue, however, that this is not case. There are residents, business leaders and political officials at every level of government working on those questions. None of the solutions that are truly tenable will result in immediate revenue. So, yes, the income tax would buy time. But it is time that is essential and reasonable — six years. Then the residents will have the option of evaluating the success of those efforts and reevaluating the income tax.
Here’s how I see the systemic solutions to Ypsi’s fiscal crisis shaping up.
The state needs to address municipal finance policy. They need to fix the Prop A / Headlee issue, and they need to renew and stabilize the revenue sharing policy. It would be immensely helpful if lawmakers would also enable a handful of additional fiscal tools (alternative taxation, bonding authorities, support for regionalism), but those other issues are essential. The advocacy community has mounted a strong campaign around these policies and there is solid data to back them up. Whether this dysfunctional legislature will act or not is an entirely different question.
At the regional level, there are ongoing discussions about sharing services among the eastern county governments. These agreements are tough to design and negotiate, often incur significant start-up costs, and take a few years to realize savings. Nonetheless they are important part of the overall strategy. I don’t know where Commissioner Peterson stands on the income tax issue, but I do know that he has been aggressively advocating for a new economic development strategy that will help Ypsilanti find systemic solutions to the economic crisis. In part due to his advocacy, the County is increasing its investment in economic development activities and partnering with SPARK to open an eastern county business incubator. I expect that our investment will have a measurable impact on the city, but it will take a few years.
Locally, the city can realize increased revenue without raising taxes by fostering redevelopment, which is exempt from the Proposal A / Headlee issue. However, to meet just next year’s deficit the city would need to see an unlikely $26M in new projects. And more the year after that. The city needs more time to rationally attract and support that level of redevelopment, time which could be provided by the income tax. Redevelopment might mean jobs, which would increase the value of the income tax. It might also mean new residents, which would increase the value of both the income tax and the property tax.
Attracting new development and new residents, however, depends heartily on the ability of the city to provide stable services. The two major demographic groups expressing interest in city life are retiring Baby Boomers and their children and grandchildren (the Millennials) who are eager for the amenities urban life provide. They do not rank tax concerns among their major deciding factors for choosing a place to live. Rather they evaluate communities based on the quality of life they offer.
I doubt very much that Ypsilanti will be able to present an attractive face to this essential group of potential residents and investors without securing the revenue necessary to halt the decline of the city’s quality of life. Is it worth it to the current residents to dig even deeper into their pockets to fund a long-term recovery strategy? I can only hope so.
Well, now we know where Conan stands…I guess the question now is — what does Xena think about it?
His third comment should be posted on the front page.
It is a very well thought out answer that is based completely in reality. It also takes into account the entirety of the situation which is lacking from the anti-tax rhetoric. Unfortunately this man will be proven right if the tax proposal is rejected by the voters or the voters are prevented from voting on it by lawsuit. While their is value in hearing from elected officials on the issue, most of the time they lack the expertise of policy experts such as Conan. Perhaps someone holding a Phd in economics or government could be located to present the anti-tax side of the issue.
How many votes are needed for the tax to pass–a simple majority?
Not sure anything in this will be simple … but yes.
“Locally, the city can realize increased revenue without raising taxes by fostering redevelopment, which is exempt from the Proposal A / Headlee issue”
I don’t understand this part, Conan. Why is redevelopment exempt from the Prop. A property tax pop?
When Conan says:
“I doubt very much that Ypsilanti will be able to present an attractive face to this essential group of potential residents and investors without securing the revenue necessary to halt the decline of the city’s quality of life. Is it worth it to the current residents to dig even deeper into their pockets to fund a long-term recovery strategy? I can only hope so.”
I have to wonder how attractive Ypsi has been to potential investors when Water Street has sat empty for over 5 years. And again all those empty houses, in a rental market that is very slow too.
I know an income tax is a deal killer for investment too. The mayor from Pontiac stated that people with money left the city and while he had to hire 4 people to help implement the tax, he said he needs 2 more. A very slippery slope, as they say…
And Glen, it is about struggling families.
Thanks, Conan, that was the most rational, level-headed explanation I’ve heard yet.
You make some excellent points, but the one aspect of a tax that seems to be inherently speculative, inherently subjective, and consequently a point on which we probably won’t agree, is what a tax will do to our ability to attract residents and businesses. Everyone does seem to agree that’s a key part of the puzzle.
I remain unconvinced, however, that a regressive tax, and one that makes us less attractive to move to, work in, or build a business in will help us more than hurt us.
Thanks for the thoughtful response.
18 of the 23 cities that have an income tax implemented the tax before the mid 1970’s including Pontiac. The income tax has been in place so long in those cities that comparing them to Ypsilanti doesn’t matter. They passed the tax 40 years ago and since then have failed to be fiscally responsible. Ypsilanti would use the tool of the income tax along with being fiscally responsible to help it weather the next several years. Pontiac, Hamtramck, and Highland park are irrevelvant in this discussion. They continued to spend spend spend when there city councils enacted the income tax 40 years ago. That is why they are in such fiscal trouble now even with the tax. Ypsilanti is a COMPLETELY different situation.
OK.
Shit. Now I have to think about this all over again. I still think the tax is a bad idea , but Conan’s certainly given me reason to pause and go over this whole thing again. Thanks for the well thought out response, man. Seriously.
“Conan, what is good in life?”
“Crush your enemies, see them driven before you, and hear the lamentations of the women.”
I didn’t know where to put this piece of news about Washtenaw County Commissioner Ronnie Peterson.
Maybe now we can finally get him out of office.
The rest of the article can be found here.
http://www.annarbor.com/news/a-federal-judge-has-ordered/