Snyder passes the buck to local Michigan communities

Governor Rick Snyder presented his budget recommendations this afternoon to members of the Michigan legislature. As promised, there were no big tax increases for business, but lots of cuts in State programs. Among other things, the Snyder proposal includes a 4.1 percent reduction in per pupil foundation grants for K-12 schools, which comes to about $470 less per student each year, and a 15 percent reduction in funding for higher education. And, while the pensions of retirees would be taxed under this proposed plan, bringing in some additional revenue, Snyder would offer “$1.8 billion in tax breaks to corporations.”

That quote about tax breaks comes from the Michigan Education Association. I suspect it’s true, but I’m just now starting to read through the budget for myself to verify it. If you’d like to join me, you can find the budget here.

From what I can tell thus far, it looks like most of the pain is just being passed on to local communities, who are going to have to shoulder the burden themselves. The administration in Lansing, according to Snyder’s plan, would significantly decrease the amount of state revenue shared with individual communities, which will clearly translate to deeper cuts in Ypsilanti, and, I suspect, eventually, increased local taxes. Here’s a clip from AnnArbor.com:

…Essentially, Snyder’s proposal equates to a $92.1 million — or nearly a one-third — reduction in statutory revenue sharing funding. The move will impact more than 500 local units of government across Michigan, including Ann Arbor and Ypsilanti.

Snyder noted there still would be a $25.5 million or 4 percent increase — for a total pot of $659 million — in constitutionally protected revenue sharing payments to local units of government next year. That’s based on estimated sales tax collections.

He also proposed a dedication of $2.6 billion in both 2012 and 2013 to state and local bridge construction and maintenance projects.

State Rep. Jeff Irwin, D-Ann Arbor, said Snyder is talking about about cutting a huge part of revenue for cities, townships and schools “in a very significant way.” He said the governor’s proposal makes it clear why there’s so much urgency by the administration and Republicans in Lansing to reform Public Act 72, also known as the Emergency Financial Manager’s Act…

Given all of this, I’d be surprised if a city income tax isn’t on the ballot the next time we head to the polls in Ypsi and Ann Arbor. Our Mayor, Paul Schreiber, wasn’t asked about that specifically, but he was asked what Snyder’s cuts might mean for Ypsilanti. Here’s another clip from that same Ann Arbor.com article linked to above:

…Ypsilanti Mayor Paul Schreiber said the best approach might be to assume that Ypsilanti will lose all of its statutory revenue sharing from the state next year.

“We’re going to have to wait another month to determine what metrics are going to be used to determine who will get some of the funds,” he said. “So for trying to determine our budget for the next year, I think we’re just going to have to say we’re not going to have statutory revenue sharing and then figure out how we’re going to win some of that back.

“It’s confusing, to say the least, but I think we’re going to end up having a revenue reduction and the question is — how much is it going to be?” he added.

With property taxes already down by about $1 million, further cuts to the city’s budget will hurt, Schreiber said. And the city has few options for increasing revenues.

“We’re really in a box,” he said. “We’ve already made cuts to police and fire and we’re down to some departments with a single person working in them. All of our departments are stretched, so it’s going to be really tough for Ypsilanti.”

Both Ypsilanti and Ann Arbor officials say they can only hope the Legislature is mindful of the importance of having healthy urban core communities when it comes time to dole out money…

Kind of depressing, isn’t it?

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20 Comments

  1. Edward
    Posted February 18, 2011 at 8:42 am | Permalink

    I guess everyone is too depressed to comment. I’m not sure how much less the city of Ypsilanti will be getting, but my guess is that this will cost us in terms of the number of police and fire personnel we have, which could translate into higher insurance and crime rates. I appreciate that Snyder is in a tough spot, but I don’t see how it helps to lay the burden at the feet of the most vulnerable communities.

  2. Meta
    Posted February 18, 2011 at 9:08 am | Permalink

    From a different AnnArbor.com article.

    Snyder is eyeing a 4.1 percent reduction in K-12 education funding, which would take away $300 per pupil — in addition to an already budgeted $170 per pupil reduction. The cut in funding stands to save the state about $452.5 million, according to budget documents.

    An expected increase in retirement rates will also cost school districts about $230 per pupil.

    That combined $700 loss per student could spell significant trouble for Washtenaw County’s school districts, which have grappled with budget problems for the last several years — prompting school closures, consolidation efforts and other measures. Per pupil state funding — which varies by district from about $7,500 to $9,000 locally — makes up the bulk of each district’s general fund dollars.

    http://www.annarbor.com/news/local-school-officials-concerned-about-cuts-to-public-education-in-gov-rick-snyders-proposed-budget/

  3. Meta
    Posted February 18, 2011 at 9:14 am | Permalink

    Jeff Daniels on the cutting of the film incentive program.

    “The sound you hear today is of people packing and leaving the state,” Daniels said by phone, describing the potential impact of Snyder’s budget proposal, which would eliminate the film tax credit as we now know it.

    Daniels said Snyder told him privately that he didn’t want to eliminate the incentives and discussed reductions in the current rate, which is up to 42%, and asked him what affect reductions would have.

    “It’s really disheartening,” Daniels said of Snyder’s budget plan. “It’s not what he told me privately, so to be honest, I guess he’s a politician after all. Say one thing, do another.”

    http://www.freep.com/article/20110218/ENT01/102180431/Jeff-Daniels-Snyder-said-one-thing-did-another

  4. Pete Murdock
    Posted February 18, 2011 at 9:28 am | Permalink

    @Edward
    $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.

  5. karen
    Posted February 18, 2011 at 9:36 am | Permalink

    Mr. Murdoch, will you bring back the income tax like Mark is proposing? If we don’t have an income tax to pay for water street, how are we going to pay for it?

  6. Yardburgh
    Posted February 18, 2011 at 9:41 am | Permalink

    How depressing this is will depend on how our community responds. Here’s hoping city council can come together with a plan that protects our core services and garners support from constituents.

  7. Posted February 18, 2011 at 9:56 am | Permalink

    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.

  8. Posted February 18, 2011 at 10:17 am | Permalink

    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.

  9. Glen S.
    Posted February 18, 2011 at 10:23 am | Permalink

    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).

  10. Andrew Jason Clock
    Posted February 18, 2011 at 10:27 am | Permalink

    I really haven’t been able to get my head around how to start talking about Snyder’s budget. I want the Michigan Business tax replaced, so I like that, except for the $1.8B tax cut that came with it. Pretty sure we need a lot of that money right now, and seems like at least part of that would fall into the “shared sacrifice” we keep hearing about. But the cuts? Schools, universities, cities, the film industry and the oh-so-conveniently overlooked trickle down its provided, roads & bridges…. I’m just going to stop. I hope the Democrats grow a pair this week, but I’m not counting on it.

    On the positive side, I talked to my mom, who just retired from a state job at the end of the year. She told me she’s ready to “go Wisconsin on them” and march on the capital. We’ll be carpooling.

  11. Knox
    Posted February 18, 2011 at 11:08 am | Permalink

    There’s a storm a brewin’ in the Midwest.

  12. Tomas S
    Posted February 18, 2011 at 1:12 pm | Permalink

    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.

  13. Stephen
    Posted February 18, 2011 at 2:25 pm | Permalink

    Snyder hasn’t mentioned collective bargaining yet, has he? From what I hear, Ohio is preparing to follow the lead of Wisconsin and try to bust their public employee unions.

  14. wetdolphinmissile
    Posted February 18, 2011 at 4:10 pm | Permalink

    Yea Karen go ahead and increase our tax load on top of all this…

  15. John Galt
    Posted February 18, 2011 at 4:31 pm | Permalink

    I think that we should have special uniforms made for our ruling class. Maybe they wouldn’t be uniforms. Maybe we’d just reserve a certain color for them. Like blue. The idea would be that no one who makes less than one million dollars a year could wear blue. That way, we’ll know who we should avert our eyes from, and who we should allow into our homes to take our valuables and make love to our women. I think that would simplify things considerably.

  16. Ms. Pacman's Lover
    Posted February 18, 2011 at 10:22 pm | Permalink

    after reading the all that’s in the news the last few days, I feel like I’ve been repeatedly kicked in the balls.

  17. Ypsi Lover
    Posted February 19, 2011 at 10:16 am | Permalink

    Do the tax credits just stop? If say, Mauers have already applied, do they still get them? This will have a tremendous impact on the redevelopment of downtown

  18. Posted February 19, 2011 at 11:21 am | Permalink

    @Ypsi Lover – the Governor’s budget proposal indicates that tax credits already awarded through various programs will be honored, but new applications would not be able to get credits.

  19. Glen S.
    Posted February 19, 2011 at 11:50 am | Permalink

    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.”

  20. TaterSalad
    Posted March 11, 2011 at 5:11 pm | Permalink

    Right to Work Petition:

    http://paracom.paramountcommunication.com/hostedemail/email.htm?h=f336e16eca0355e4a1edcc46851b97c8&CID=7909362570&ch=C04897ADA2DF2CE199C82D0718B3686E

    Union dues Refund application:

    http://www.unionrefund.org/

2 Trackbacks

  1. […] 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 […]

  2. […] encouraged. Those of you interested in reading 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 […]

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