Rick Snyder’s budget and the impact on cities like Ypsilanti

A couple nights ago, I posted something here about our Governor’s proposed 2012 budget. My impression, as I shared with you, was that, while he was doing some things that were both good and necessary, he was, for the most part, just shifting the economic burden to the local communities, who would be forced to pass additional taxes in order to compensate for the lack of state support. The resulting conversation was really good. People pointed out, among other things, for instance, that he was also shifting a disproportionate among of that burden to our aging cities, like Ypsilanti. As I know a lot of you don’t read the comments, I decided to move a few of the most interesting things that were said up here, to the front page… Before we get to that, though, I just want to say once again that I realize that we’re in difficult economic times, and that shard sacrifice is called for. And, I don’t have a problem paying more in taxes, if it can be demonstrated that said taxes are being used constructively, for the betterment of our sate and its people, many of whom are in desperate need of work, food, shelter, etc. I, however, would like to know that such sacrifices are being made across the board, by everyone in our society, and not just those of us who are still, thankfully, remaining in the middle class. With that said, here are a few of my favorite budget-related comments.

Pete Murdock:
$1.2 million loss in revenue sharing and an additional +/- $60K in Fire Protection money for providing EMU with fire protection – which was already only partially funded. This is about 10% of our general fund budget.The elimination of Brownfield Tax credits could hurt any redevelopment efforts of Water Street, since that was going to be the source of funding for infrastructure.

Yes, very depressing. A budget that increases taxes on low income residents and seniors and defunds urban communities to fund a massive tax cut for business. I guess this is really what Re-inventing Michigan looks like.

Murph:
As Pete mentions, the elimination of Brownfield Redevelopment Tax Credits could be pretty bad for Water Street, and any number of other projects in town. (An unnamed international company that was looking at the ACH property a while back noted that the state’s Brownfield credits were an absolute, positive must for them to even consider a project – I think they ended up in Germany.)

The proposed elimination of historic preservation tax credits is also pretty bad for Ypsilanti and similar cities.

Maurers used both the Brownfield MBT and Historic Preservation tax credits to finance the Mack & Mack building renovation (SPARK East + lofts ), and the Mellencamp building renovation underway (where the Rocket’s new space is). Beal has said that successful redevelopment of the Thompson Block will depend on the historic preservation tax credits (and he’s not wrong).

The irony is that the elimination of these credits is being pitched in the name of “leveling the playing field” and “stop picking winners and losers”, but, unfortunately, will do exactly the opposite. These and similar credits were created to level the playing field, and address the fact that factors like soil contamination, obsolete buildings, asbestos & lead, etc., made it difficult to do business in places like Ypsilanti – and to level the playing field by balancing out some of those extra costs. (At the same time, of course, we get public benefits out of it, like cleaning up soil contamination, removing health hazards, and so on.)

So the budget proposal not only cuts our revenue sharing from the State (the revenue sharing that was put into place to make up for the limits that were placed on our ability to fund ourselves) but also takes away the tools that are critical to supporting economic development in an older city. Good stuff.

And, as always, it’s worth noting that Ypsilanti is in no way alone on the fiscal yikes here – worries about water street aside, the city has done a great job over the past decade to get its house in order and avoid the level of pain that similar cities are facing:

Even before the budget was announced, for example, Ferndale was placing a 5.5 mil Headlee override on their May ballot; Hazel Park will have an 8 mil public safety millage on the May ballot; Ann Arbor, of course, is circling back to the income tax discussion again; Southfield is putting 5 mils on the May ballot; Madison Heights I think is asking 1 mil Headlee override + 1 mil dedicated for public safety. Romulus and Oak Park both have February ballots coming up asking for 2-3 mils.

Glen S:
And, from a political perspective — these measures mean tilting the playing field in favor of new economic development in rural, exurban, township areas (= rewarding Republican voters); and against older, urban, built-up communities (= punishing Democratic voters)…

Rick Snyder really IS a political genius, I suddenly realized yesterday.

Unlike Wisconsin Governor Scott Walker — who has ignited a national firestorm over his strident and quite overt efforts to bust unions, slash pensions and other benefits, and generally dismantle what’s left of any opportunity for Wisconsin’s public sector workers to enjoy a modest, middle-class lifestyle — Snyder has a smarter, but much more insidious plan.

By dramatically slashing revenue-sharing, per-pupil student aid, and other forms of basic support for Michigan’s struggling cities, school districts, etc., to such a degree that unprecedented restructuring clearly will be necessary, Snyder is, in effect, “outsourcing” the dirty work of breaking unions, reneging on promised pension benefits, etc., to locally-elected city councils, school boards, county commissions, etc.

This way, over the next two years — while hundreds of individual Michigan cities, townships, counties and school districts are all busy fighting their own individual battles with their own individual workers and unions — Snyder will appear to be keeping his hands clean from all of the local budget “unpleasantness,” — while he continues to promote himself as as a genial, and business-minded “one tough nerd,” whose only agenda is promoting “shared sacrifice.”

Of course, you can bet the “shared sacrifice” he envisions won’t include any of Michigan’s wealthy citizens or corporations doing any of the “sharing.”

Thomas S:
I lost my job due to the recession and although I found work I earn less than half what I did five years ago. The idea of increased millages is very scary since I can barely meet my mortgage. I may be hypocritical since I was opposed to the income tax before but an income tax or sales tax increase would now be prefereable for me. I hope the mayor and others takes our current under/unemployment situation into consideration when deciding what would do the least harm. More foreclosures aren’t good for anyone in our city.

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18 Comments

  1. Edward
    Posted February 19, 2011 at 5:46 pm | Permalink

    Have either David Rutledge or Rebekah Warren weighed in on this yet? We elected them to look after our interests, right? I’d also be curious to know what John Dingell makes of this.

  2. dp in ypsi
    Posted February 20, 2011 at 2:17 pm | Permalink

    Rep. Rutledge: no public response noted on his office website (as of this posting)
    http://054.housedems.com/

    House Democrats make their response here, but Rep. Rutledge is not a featured speaker: http://www.housedems.com/

    It’s worth noting that there is no substantive discussion of alternatives to Gov. Snyder’s proposals, or where revenue should be found to make up any of the budget short falls.

    Sen. Warren: no public response noted on her office website (as of this posting)
    http://www.senate.mi.gov/dem/warren/press.php

    Senate Democrats do not have the media-forward audio sound bites, but do have two brief press releases that mostly reiterate the points made by the House Democrats. http://www.senate.mi.gov/dem/

    They have, however, taken a strong position on the Earned Income Tax Credit, and by doing so I would deduce that this would be their “line in the sand”, and thus choose not to speak to other issues in the budget with a unified voice.

  3. Edward
    Posted February 20, 2011 at 3:44 pm | Permalink

    Thank you, DP. I will be writing to each of them and asking what, if anything, they plan to offer in the way of an alternative to Snyder’s proposal.

    Might is make sense to have a letter sent from our City Council on this subject? It would seem that time is of the essence.

  4. Posted February 20, 2011 at 6:02 pm | Permalink

    Edward, I don’t know if Sen Warren or Rep Rutledge read MarkMaynard.com as often as I do, so allow me to: give a brief comment on the budget as an area lawmaker; and, publicly thank Mark for this site.

    This budget is a train wreck for Michigan’s economy and the sacrifice is not being shared. If passed as is, we will have larger class sizes, lower quality teachers, higher tuition and weaker colleges and universities. Gov. Snyder proposes $471 cuts per pupil and a 15-22% cut to higher education (there’s an unspecified 7% competitive program). Also, local governments will be strangled by the revenue sharing cuts. Some communities that could otherwise make it, might be pushed into bankruptcy. For these communities, their alternative is to slash police and fire budgets. Public safety is what cities, townships and county’s do; it’s not as if they can cut the budget for unicorns.

    So, Gov. Snyder says that he wants to create an environment for economic growth, but I don’t know what kind of companies we’re trying to attract when the solution to our budget problem is to take it all out of local police, K-12, and higher education. Suffice it to say that my strategy would be the opposite. Education drives real prosperity.

    It gets perhaps uglier. While the Governor largely filled our budget holes by severely cutting education and public safety, he also had a $1B campaign promise to business that had to be funded somehow. I have to admit, I’m surprised at his brazen proposal to shift $1.3B of the state’s tax burden from corporations to pensioners and the working poor (recipients of the EITC). Seriously and with a straight face, our Governor just proposed increasing taxes to the tune of $1B on pensioners and $330M on the lowest income workers to give corporations a commensurate tax break (this shift represents about 15% of the GF). I suppose this is the philosophical divide that separates the left and right, but the magnitude and transparency of his proposal is staggering.

    Finally, I was in the middle of composing a longer budget response when I diverted my attention Maynard-ly. I’m sure that each of your area lawmakers will be issuing and posting statements and reactions soon and for the next few months as more details emerge. Of course, if you want to read more of my thoughts, please sign up for regular email updates at my site (http://053.housedems.com/).

    Mark, thanks. I’ve always enjoyed and learned from your site. On another level, without markmaynard.com and all of the crazy fun contributions you make to Ypsilanti, Washtenaw County would be a less excellent place to live.

  5. dp in ypsi
    Posted February 20, 2011 at 6:35 pm | Permalink

    Thanks, Rep. Irwin, all that nice talk is going to go straight to Mark’s head! ;-)

    I just signed up for the email newsletters for yourself, Sen. Warren, and Rep. Rutledge. I’ll look forward to hearing your positions on the budget, and to seeing your proposals.

    I think it’s worth noting that what follows Glen S’s “genius” comment, above, are good observations. I have friends in WI that are quite excited with news that recall petitions are circulating for legislators at the protest sites around the state (the Governor cannot be recalled there until 10 months after the election). Here in MI, it seems that the response is more muted, although the net effect on those working in the public sector will likely be the same.

  6. Glen S.
    Posted February 20, 2011 at 6:54 pm | Permalink

    @ DP

    As I mentioned above, in contrast to Wisconsin, I think Snyder’s personality and comparatively low-key approach, coupled with the “stealthy” aspect of his proposals make what is happening here both insidious and quite dangerous.

    I don’t think we have the luxury of waiting to see how this shakes out through the legislative process. Once the final budget “cake” starts to set, it will be difficult, if not impossible to roll back the worst aspects of this plan — some of which we may be stuck with for a generation, or more.

    What I would really love to see would be to have as many of our local elected officials as possible travel to Lansing as a group to demonstrate to the legislature how devastating these cuts will be to local communities. We are way past the time for sternly-worded letters and testifying at “show” legislative hearings. What we really need is a good publicity stunt to get statewide and national attention regarding the gravity of this situation — for instance, having mayors of Michigan’s largest cities, along with County Commissioners, city council members, school board members, etc., travel to Lansing to make the case against these cuts … along with as many of their constituents as possible.

  7. Ez Marsay
    Posted February 20, 2011 at 7:17 pm | Permalink

    Can anyone jot down a list of business and/or civic interests in our county that are close to the Governor’s heart (and pocketbook)? We might begin to write directly to these local entities to express our concern. Possibly even boycott—

  8. Posted February 20, 2011 at 8:00 pm | Permalink

    In reference to Glen S’s post above, I heard on the radio that the Detroit city council led by Charles Pugh is asking other municipalities to join them in going to Lansing and protesting to the governor. They want to try to get out ahead of the state budget so mayors and city council members state wide are not simply reactive. Give Snyder sets of keys to all the cities as Glen S. has suggested and put the responsibility back on him. Make him balance his budget on the backs of unions, schools and the middle class and justify tax cuts for the wealthy and for corporations. I would like to see the Ypsilanti mayor and city council connect with Charles Pugh and look into this further.

  9. Posted February 20, 2011 at 8:08 pm | Permalink

    One more thing. What attracts businesses and people to an area is clean, safe cities with good schools and services and a stable economy. In this regard, Governor Snyder’s budget and the resulting cuts are not pro business. Furthermore, you do not cut government spending in a recession because that results in job losses and more people with less money and on and on.

  10. Maria
    Posted February 20, 2011 at 10:06 pm | Permalink

    Rick Snyder is union busting with this budget. This isn’t shared sacrifice, it’s a deliberate attempt to bankrupt municipalities, towns, cities and schools that aren’t doing well and then send in Emergencery Financial Manager’s like Bob Bobb and “that’ll straighten things out.”
    This a dangerous game for many reasons. Desequilibrating this many lives so cavalierly is cold, without thought of what that may mean to the lives that are going to disrupted, dismantingly the process of negotiation between labor and city administrators, school boards etc and moving into the control of one person will allow a different kind of imposition of power and corruption, without good checks.
    Removing the earned income tax credit I also particularly disagree with, especially to give some businesses tax breaks. That is way cold, and I don’t believe that particular amount of money was going to make a difference in job creation or in Michigan’s business climate.
    I am not a particularly pro union person, but I strongly believe in the right of collective bargaining. Checks and balances, compromise, concern for other’s well being is the mark of stability and reason.

  11. pYpsisqueak
    Posted February 23, 2011 at 11:29 pm | Permalink

    I’m a parent of a child in Ypsi schools (God bless em). This may seem off topic but I think it’ll get there.

    Monday was an obvious snow day. Tuesday was another snow day. The reason given on the robophone call was that local streets were still not clear. Parents, as you know, talk. Snow days, while a delight for kids, are a pretty harsh challenge for us working stiffs. Many of us were surprised and challenged by the Tuesday snow day.

    Not so many years ago, Ypsi had stellar snow removal. As public services go, I would’ve put snow removal at the bottom of the list. But, as my family and many others missed work, I began wondering of the economic cost of delayed snow removal, both for me and businesses around town (to say nothing of the cost of scraping our undercarriages over crusty banks). How much income (or vacation days) did we all lose from cuts in our snowplow budget? I doubt the precise answer is worth the time of council or city staff, but does anyone know how much was cut for this service and how much it would cost the average tax payer to return the service to its previous level?

    My guess is that for an extra fifty bucks in taxes we could refund snow removal. I easily lost more than that with this one extra snow day. From the word around the schoolyard, I’m pretty sure I’m far from alone. Just thinking.

  12. Glen S.
    Posted February 24, 2011 at 6:33 am | Permalink

    Yesterday, the Michigan House passed legislation under which State-appointed “Emergency Financial Managers” (EFM) would be granted broad powers to toss out union contracts, strip mayors of power and dissolve city councils and school boards. This hasn’t yet gone to the Michigan Senate, but it is very likely to be passed there soon, before being sent on to Governor Snyder to be signed into law.

    Detroit News: http://detnews.com/article/20110224/POLITICS02/102240418/House-OKs-tougher-approach-to-faltering-cities–schools#ixzz1EsCLB8aV

    Many Michigan cities’ and school districts’ budgets were already suffering a “slow burn” financially because of the weak economy. Now that Republicans have decided to add fuel to the fire by cutting taxes and slashing state funding, it is likely that we will see a cascade of new “financial emergencies” within the next few years.

    Apparently, it soon will be up to our new Republican Governor and legislature to determine what constitutes a financial emergency that triggers the appointment of an EMF, but clearly, this is most likely to happen first in larger, older, more urban, and more diverse communities — that are by and large represented by Democrats.

    When this begins happening — Republicans in Lansing will be free to send EMFs into our communities and school districts armed with the legal right to “fire” our democratically-elected officials, throw out city laws and regulations, break union contracts, sell off public assets (including parks, etc.) — all with no input or oversight on the part of citizens and taxpayers.

    So, is everybody O.K. with this?

    A few years ago, Naomi Klein wrote an important book, title “Shock Doctrine” (http://www.naomiklein.org/shock-doctrine) that detailed how this phenomenon works. Essentially, powerful private interests make plans to take advantage of a natural disaster, or — barring that, create an unnatural disaster, such as a financial crisis — and use the ensuing chaos as a pretext to trample on individual and collective democratic rights, and generally, to grab as much money and power as they can, while at the same time taking the opportunity to permanently alter laws and institutions to their advantage.

    However, I’m sure what is happening in Michigan and other states, such as Wisconsin, is merely a coincidence.

  13. Glen S.
    Posted February 24, 2011 at 9:01 am | Permalink

    “EFM,” I meant.

  14. Oliva
    Posted February 24, 2011 at 9:50 am | Permalink

    pYpsisqueak, really worthwhile comment.

    This year’s big snows have happened a few times on Sundays/holidays, so maybe that has something to do with the slower removal–employees would be getting paid overtime if they worked those days. If Mother Nature keeps having such timing, I suppose it’ll be more than 50 extra bucks a year in taxes–but still worth it. So many side streets and sidewalks were dangerous for walkers and drivers into Tuesday, maybe today too. Such a wet heavy snow, plowed late, big slippery trouble along sidewalks where the plow tossed up so much heavy, icy snow upon shoveled walks.

    Be extra nice to postal carriers–they’re working very hard these days in unpleasant conditions, on slippery walks and steps.

  15. Leona Cimpi
    Posted February 25, 2011 at 3:24 am | Permalink

    Have the Democrats formally responded yet?

  16. Glen S.
    Posted February 25, 2011 at 6:27 am | Permalink

    http://www.nytimes.com/2011/02/25/opinion/25krugman.html?nl=todaysheadlines&emc=tha212

  17. Glen S.
    Posted February 25, 2011 at 9:34 am | Permalink

    I urge everyone to click visit http://www.legislature.mi.gov/documents/2011-2012/billengrossed/House/htm/2011-HEBH-4214.htm and actually read the legislation.

    It is long and dense, but the “takeaway” is that this bill will give unelected bureaucrats — based on purely subjective criteria — the legal means to appoint private, for-profit contractors to take over your local community or school district to run as they see fit.

    Once this happens, you will be obliged to continue to obey the law and pay your taxes — but you will no longer have any say, either directly or indirectly — in how your community is run, how your tax dollars are spent, etc.

    The best part: YOU (through your tax dollars) will end up paying for these outside contractors to come in and manage your already cash-strapped city or school district!

    And, since these private contractors will be profiting for this arrangement for as long as they’re charged with managing your community or school district, there will be virtually no incentive for them to declare your city or school district’s “crisis” over. Therefore, the longer the “crisis” continues, the longer they can continue to profit.

    For those who believe that “outsourcing” is the solution to nearly every economic problem, this is the ultimate win. No longer merely content with working to privatize things like public services and schools –they’re now planning to replace our locally-elected (and locally-accountable) governments and school boards with unelected, unaccountable corporate managers.

  18. TaterSalad
    Posted February 25, 2011 at 11:44 am | Permalink

    I don’t have a problem with Snyders budget proposal and wanting to place a tax on the pensions…..as long as it is fair across the board and everyone is paying their fair share. One more thing has to be corrected. Michigan has a “huge expense” placed on the taxpayers because of the illegal immigration situtation in this state and sanctuary cities like Flint, Pontiac and Detroit are the culprits whining about debt and money problems. Yet, these cities are being placed in jeopardy because these illegal are sucking the live-blood out of the system. Get the illegal problem corrected before coming to the taxpayers to bail them out.

5 Trackbacks

  1. By State Rep. Jeff Irwin on Snyder’s budget on February 20, 2011 at 9:03 pm

    […] I posted a compilation of comments from MM.com readers on how Governor Snyder’s proposed budget was likely to impact older urban communities like Ypsila…. In the ensuing discussion, a reader by the name of Edward wondered how our elected officials were […]

  2. […]  For one there’s the elimination of brownfield and historic preservation tax credits, which as Mark Maynard argues is going to be especially bad for older communities.  (I have heard the same thing from other […]

  3. […] more should check out the following posts. Snyder passes the buck to local Michigan communities Rick Snyder’s budget and the impact on cities like Ypsilanti The state of Ypsilanti This entry was posted in Economics, Michigan, Politics, Uncategorized and […]

  4. […] the state not wanting to “pick winners and losers,” I’d encourage you to read the comments left on this site a few days ago by former Ypsi City Planner Richard Murphy. This entry was posted in Economics, Michigan, Politics, Ypsilanti and tagged Ann Arbor SPARK, […]

  5. […] to ask what, if anything, we might be able to do to influence change at the state level, where the policies of the Snyder administration that have adversely impacted older cities, like Ypsilanti. And, it may be too late to for us, but might now not be a good time to wage a coordinated […]

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