Continuing our discussion of a few days ago about Ypsilanti’s dire financial circumstances, I thought that I’d share this op-ed from today’s AnnArbor.com, in which our Mayor lays out the options before us as he sees them.
The city of Ypsilanti is at a fiscal crossroads and must replace lost tax revenues to survive. Falling property taxes and state revenue sharing cuts have created a severe structural general fund deficit that must be addressed immediately.
Declining property values are projected to reduce general fund property tax revenues from $6.7 million in 2010 to $4.4 million in 2017. This 35 percent revenue decline decimates funding for police and fire services as well as administrative functions at City Hall. Cutting staff to balance the general fund budget would eliminate 41 current employees, including some police officers and firefighters. The result would be a city with less than 32 employees by 2017. Reducing public safety and other city services is an untenable option.
Over the past decade Ypsilanti has significantly cut its budget. In 2003, the city Parks and Recreation Department and funding for human services was eliminated. In 2008, 14 vacant staff positions were eliminated, including six in the Police Department. In 2010, the city laid off two police officers.
Ypsilanti city government is now a lean organization with no redundancy. For example, the assistant city manager is also the human resources director, the planning department director, and the building official. Further cuts to staffing will result in the loss or delay of police and fire protection, planning, zoning, and infrastructure services. It is clear that City Council must consider revenue increases for the long-term sustainability of the city of Ypsilanti.
The laws governing Michigan cities limit the options for reducing expenses and raising taxes. What follows are the viable and not-so-viable options before City Council:
Give Water Street back to the bank?
Some have suggested eliminating the $1.3 million annual Water Street bond payment by giving the property back to the bank. In fact, Michigan state law requires payment of the $1.3 million annual bond; it is not like a mortgage that can be unloaded. Even if City Council were to decide to withhold funding, the bondholders could sue the city to require payment. The Water Street bond must be paid.
Turn the city over to a state-appointed emergency manager?
Some have suggested that a state-appointed emergency manager should take over Ypsilanti. An emergency manager would be saddled with the same lack of tax revenue that City Council is grappling with. An emergency manager can’t erase the Water Street debt. An emergency manager can’t raise taxes without voter approval. Finally, and most important, an emergency manager will not be representing the city’s residents. Turning the city over to an emergency manager is a terrible option.
Fold the city into Ypsilanti Township?
Some have suggested that the city should become part of Ypsilanti Township. But even after dissolution, city residents must still meet their financial obligations such as the Water Street bond payment. The township board would have the power to levy property taxes on the former city residents to pay outstanding financial obligations. Dissolution of the city will not solve its financial problems or transfer financial obligations to township residents.
Increase property taxes?
The state constitution limits general fund property taxes to 20 mills. Ypsilanti is at that limit. Police and fire protection as well as planning, zoning, and other city services are paid out of the general fund. Property taxes outside of the general fund must be dedicated for specific purposes.
A dedicated police and fire property tax can’t be proposed unless it funds a separate police or fire authority. An authority is an agreement between two or more municipalities to share services and costs. The city and the township have funded a police authority study and committee discussions are ongoing, but no action has been taken.
A dedicated property tax levy to pay the $1.3 million annual Water Street bond debt is a possibility. It would ease the burden on the general fund, and it would provide more funding for police, fire, and other services. The levy can be proposed by City Council, but it must be approved by voters. Unfortunately, if a Water Street bond tax levy were approved in 2013, the general fund reserves are projected to last only one additional year. More tax revenue is needed to balance the budget. Even so, City Council is evaluating a Water Street bond tax levy.
Institute a city income tax?
Because the city is at the maximum 20 mills property tax rate for the general fund, City Council is evaluating a city income tax proposal. An income tax would replace the revenues that will disappear due to the decline of property values and loss of state funding. According to state law, a city income tax of up to 1 percent can be imposed on residents, and half the rate on residents can be imposed on nonresidents working in the city. A city income tax must be approved by voters. In Michigan twenty-two cities have a city income tax. Property taxes can be reduced to offset the income tax. City Council has directed city staff to update the 2005 income tax study to provide a more accurate estimate of city income tax revenues.
Add a storm water utility fee?
City Council has the option of imposing a storm water utility fee based on the impermeable surface area of a property. This fee would apply to all taxable and nontaxable property and only requires City Council’s approval. Revenues would supplement funds to repair major streets. City Council is considering a storm water utility fee.
Ypsilanti City Council will hold three public goal-setting meetings on Tuesday evenings at 6 p.m. at City Hall to finalize a plan to balance the budget. The meeting dates are Nov. 1 and 29 and Dec. 13.
Along with the six other members of Ypsilanti City Council, I welcome everyone to the meetings and ask you to bring your comments and suggestions.
And here’s my favorite comment from the AnnArbor.com comments section. It comes from a fellow calling himself Ron Granger.
From what you describe, Ypsilanti sounds like the next Flint. If so, Ann Arbor doesn’t need a green belt but rather a wall to keep the crime out.
[note: The image of Paul Schreiber above comes from the first episode of Dreamland Tonight. To our knowledge, no one has had it tattooed on themselves yet.]
update: For those of you who don’t read the comments section, I thought that I’d move a few up here, to the front page. The first comes from our friend, Murph, Ypsilanti’s former City Planner.
Unfortunately, it doesn’t all come back to Water Street. It would be nice if it *did*, because that would give us a single thing to focus on and fix, but we’ve got more to worry about–none of it unique to Ypsi.
The taxable value decline, driven by the mortgage bubble popping, is the biggest issue, and is one that’s hit region-wide. Check out SEMCOG’s report from earlier this month on community fiscal capacity: region-wide, taxable value of property dropped by 6.5% just in the last year. About 30 communities lost more than 10% of their taxable value in the last year. Ypsi wasn’t among those–the city lost 6.1% of its taxable value last year; the Township lost 8.6%.
Retiree health care costs is another big issue that’s whacking everybody. Declines in revenue sharing is a third. The legislature is looking at eliminating the “personal property tax” (which businesses pay on machinery, etc, and has nothing to do with “personal”), which makes up about 6% of our taxable value — for some communities, PPT is 20% or more of their taxable value.
Point being, Ypsilanti is not unique in its budget problems, nor is Water Street the cause of them. Water Street might be twisting the knife, but it’s all these other things that put the knife in our back in the first place.
And, our second comment comes from a resident of Ypsi Township who calls himself EOS.
“A dedicated police and fire property tax can’t be proposed unless it funds a separate police or fire authority. An authority is an agreement between two or more municipalities to share services and costs.”
It’s never going to happen. It would require a majority vote of township residents and we are not about to make our safety concerns secondary to your budget crisis. We paid for a feasibility study over a year ago. The city has insufficient funds to participate in a partnership. You can add extra millages, you can tax non-profits in your city, you can cut 40% of your employees but you you still wouldn’t even be able to make your payments on the Water Street debt in a few years.
The County is not going to assume payments on the Water Street debt and they aren’t going to pay the City for the land on which they build a new Rec Center. It would be better if only city residents could sue Farmer, Schreiber and their friends for the damage they have brought about – risking taxpayer funds on a speculative venture that no private enterprise thought was favorable.
A state appointed emergency manager would represent the 99% who can’t afford more taxes. He could eliminate the city hierarchy with its large salary and benefits and hire employees at more reasonable cost, turn the city into a township/village of its own, reduce services, and replace the police with sheriff patrols, eliminate the excessive costs of recycling, and turn garbage collection over to private enterprises, among other things.
34 Comments
It sure seems like this all comes back to the Water Street project. I don’t know a whole lot about all that and I’m no lawyer, but my favorite comment on the annarbor.com site is the one from the guy who says turn that back over to the bond holders and let them sue.
Can’t we just change the name of the town, or otherwise make it really difficult for our creditors to find us?
If the county builds a rec center on some of that land (this is still a possibility?), would the county take on some of the Water Street bill? If they are still talking about it, how much might that help? Maybe we should start fund raisers and sell coupons or candles or pizza kits or have a car wash with the City Council in thongs, washing cars.
I don’t know if the anti-tax crowd would be as successful opposing the city income tax this time. Have mindsets changed? Or would a stronger advertising campaign make the difference? And are the anti-tax council members really considering a city tax now?
@sitedad – unfortunately, it doesn’t all come back to Water Street. It would be nice if it *did*, because that would give us a single thing to focus on and fix, but we’ve got more to worry about–none of it unique to Ypsi.
The taxable value decline, driven by the mortgage bubble popping, is the biggest issue, and is one that’s hit region-wide. Check out SEMCOG’s report from earlier this month on community fiscal capacity: region-wide, taxable value of property dropped by 6.5% just in the last year. About 30 communities lost more than 10% of their taxable value in the last year. Ypsi wasn’t among those–the city lost 6.1% of its taxable value last year; the Township lost 8.6%.
Retiree health care costs is another big issue that’s whacking everybody. Declines in revenue sharing is a third. The legislature is looking at eliminating the “personal property tax” (which businesses pay on machinery, etc, and has nothing to do with “personal”), which makes up about 6% of our taxable value — for some communities, PPT is 20% or more of their taxable value.
Point being, Ypsilanti is not unique in its budget problems, nor is Water Street the cause of them. Water Street might be twisting the knife, but it’s all these other things that put the knife in our back in the first place.
“A dedicated police and fire property tax can’t be proposed unless it funds a separate police or fire authority. An authority is an agreement between two or more municipalities to share services and costs.”
It’s never going to happen. It would require a majority vote of township residents and we are not about to make our safety concerns secondary to your budget crisis. We paid for a feasibility study over a year ago. The city has insufficient funds to participate in a partnership. You can add extra millages, you can tax non-profits in your city, you can cut 40% of your employees but you you still wouldn’t even be able to make your payments on the Water Street debt in a few years.
The County is not going to assume payments on the Water Street debt and they aren’t going to pay the City for the land on which they build a new Rec Center. It would be better if only city residents could sue Farmer, Schreiber and their friends for the damage they have brought about – risking taxpayer funds on a speculative venture that no private enterprise thought was favorable.
A state appointed emergency manager would represent the 99% who can’t afford more taxes. He could eliminate the city hierarchy with its large salary and benefits and hire employees at more reasonable cost, turn the city into a township/village of its own, reduce services, and replace the police with sheriff patrols, eliminate the excessive costs of recycling, and turn garbage collection over to private enterprises, among other things.
EOS speaks for the Township.
You guys are fucked.
Murph is right. The Water Street debt is a problem, but it is only ONE component of Ypsilanti’s long-term structural budget crisis, which is primarily caused by: lost tax base, a terrible economy, falling taxable values, Michigan’s completely broken system of funding local government services primarily through property taxes, and a Governor and Legislature that — rather than working to encourage reinvestment and redevelopment of Michigan cities — is openly hostile toward older, denser, urban (read, minority and Democratic) communities.
As a result, Ypsilanti right now is kind a “canary in the coalmine” pointing the way toward what many other Michigan cities, townships and counties will likely experience in the next few years.
Nobody is happy about this situation, and nobody likes the idea of higher taxes. But, neither on the numerous threads on this topic here on this blog, nor on similar stories on AnnArbor.com and elsewhere, have I heard anybody suggest any serious alternative — unless you consider turning the City of Ypsilanti over to an unelected, accountable “Emergency Manager” (while maintaining all of our current debts and liabilities) to be a serious alternative.
The time has come for Ypsilanti residents to realize that we have reached the “end game” of a financial crisis that has been looming for well over a decade. The economic “good old days” are not coming back, and nobody in Lansing or Washington is going to save us. If we are going to continue to be a viable (liveable) community, we’ve got to figure out how we’re going to provide core services (police, fire protection, etc.) and how we, as a community, are going to pay for them
The time also has come for Ypsilanti City Council members to declare their intentions regarding a financial survival plan — and to prepare to put that plan to a vote of the residents. At this point, additional time spent foot-dragging and playing the “blame game” will only delay the problem and make it worse.
In the mean time, Ypsilanti residents need to prepare themselves to make a crucial choice: Do we want to tax ourselves a bit more to maintain City staffing at levels that protect public health, safety and quality of life — or are we *seriously* prepared to turn over the keys to City Hall to an unelected, Snyder-appointed bureaucrat who will have nearly unlimited power over decisions in our community.
Can we become part of Ann Arbor?
I say we rent a bus and go to Lansing.
I hear that Wayne County Executive Robert Ficano is good at making profitable land deals. Perhaps we should consult with him.
I know no one really seems interested, least of all council, but shouldn’t we be working to reverse our declining revenue through positive means?
Putting our DDA to work promoting our city as a great place to live, work, and play, working on our long standing image problem, and sponsoring events like Heritage Fest and others that put a positive spin on the city? Working with local artists and landlords of vacant building to create pop-up holiday retail and shopping guides? We have only to look to, well, almost any other DDA in existence for examples on how DDAs help their districts through more than bad parking and dumpster plans or new crosswalks that leave the streets with new pot holes.
Making all city services customer friendly. It can be quite hard to navigate city departments, especially when it comes to inspections. If we are going to charge an outrageous amount of taxes for few services, then those services we have ought to be responsive and helpful. Currently, many are viewed as an obstacle to accomplishing anything.
Get the recreation center deal done. Water Street is worthless, every bit of it, util we get something going on it. The county wants to put a rec center there and connect it by trail to the rest of the county. They are also willing to foot much of the infrastructure bill (roads utilities) for the site. Ypsilanti doesn’t even have a recreation department! Who is going to offer us that kind of deal, and only ask for some worthless land that no one else wants in return. And maybe, just maybe, if they build this complex and infrastructure, someone else will want to buy some of the other land. Doing nothing on has gotten us nothing. Lets try doing something on Water Street.
If I ever hear Paul talk about becoming an arts and entertainment based economy again I’ll scream. He gives it lots of lip service, but votes on council show it to be false. Put the DDA to work with Shadow Art Fair and DIYpsi. Put them together with the CVB for entertainment packages. REPEAL THE FESTIVAL TAX BEFORE YOU DRIVE OUT ALL OF OUR SMALL CAR SHOWS AND FESTIVALS. Work with the people trying to make this an arts and entertainment based economy. They are trying to help and you keep slapping them in the face.
Fix the long term pension and healthcare issues, and do it yesterday. Sacrifices are being made by everyone in that department, and we have to as well. Its the first thing and EFM would do. Get it done.
I know none of these is going to pull us out of the budget abyss, but they can help. If we’re going to take more negative measures (cuts, taxes) then for once, lets see some positive measures taken too.
andy is right. this town is a shit hole. the sooner people realize that the faster we can fix it.
the faint din of city hall discussion continues while this dinosaur is lumbering toward extinction
@Andrew –
Fix the long term pension and healthcare issues, and do it yesterday. Sacrifices are being made by everyone in that department, and we have to as well. Its the first thing and EFM would do. Get it done.
I’m curious — do you think that City Council and the City Mgr aren’t aware of this issue, or aren’t already trying everything they can? It’s not a matter of understanding or will, so much as a dearth of options.
Do you have any suggestions for legal ways to “get it done”?
Murph,
Don’t be so obtuse.
How many years ago did the Headlee Amendment pass – where the citizens told their local governments not to grow faster than the rate of inflation? Local officials routinely ignored it and kept signing labor contracts with pay and benefits growing far faster than the rate of inflation. They’ve acted oblivious to the concerns of the taxpayer, assuming that the state would step in and and hand over large sums of cash so that they could continue to grow government as usual. Now they have to deal with reality.
As much as you might write that this isn’t about Water Street, but that all communities are effected – the sad fact is no other community in the county is in as bad as shape as the City of Ypsilanti. It is about the poor choices of locally elected officials.
It drives me nuts that I am better informed after living here for 6 months than many of the commenters on a2.com who claim to have lived in ypsi for years. The city council packets are quite readable. Here’s a good one from earlier this month: http://cityofypsilanti.com/bd_city-council/Council%20Meeting%20Packets/2011%20Packets/10-11-11_council_packet
The city government has shrunk drastically over the past 10 years. It just hasn’t been enough to keep up with collapsing property values. The people whining about their taxes going up are idiots. City property owners have seen huge decreases in property taxes. Harping on the poor choices of 10-20 years ago does nothing to fix the problem. Either find replacement revenue, pick out the specific line items you want to see cut, or shut the fuck up.
As for me, I think the city is far too small to require or support a 100% professional fire department. I grew up in a town with twice the population and 10 times the area and it had a hybrid department that was perfectly adequate. Hate to agree with EOS, but the police department should probably be eliminated in favor of the county sheriff. Short of that, the City Hall building likely has space for police operations or vice versa, reducing operational costs. The stormwater utility might actually succeed in getting some money out of EMU, not that they don’t have their own budget issues.
The City has a headstart, but long term the Township is just as fucked. From the 2010 Township financial statement, “Property Tax revenues are $17,402,537. The decrease of $1,244,871 (6.7 percent) is largely attributable to a decrease in taxable value due to an inflationary decrease, declining property values and minimal new construction.” A few more years of that and the A2 assholes will be looking down their noses at both Ypsies.
It is doubtful that the county sheriff wants to take on Ypsilanti.
I’m no expert but I can envision resistance.
@Murph,
One of the few things I’ve found myself agreeing with Pete and Brian on lately is that long term, structural costs must be looked at. Chief on that list, healthcare and pensions. And yea, from what I can gather, no one but Pete or Brian seems to want to talk about it, so I give them props on that one. One approach I might try is appealing to the folks this would affect on a sense of community and shared sacrifice. It might not hurt to have a conversation about how we can work with them, as oppose to and EFM, who will impose his/her will on the situation. Isn’t it worth looking into?
J, council had done a great job of trimming the budget and raising fees and taxes. But that’s where there work has stopped. I want to see some positive to go with all the negative.
Looking at the County Sheriff as a policing option is something we should do — but don’t assume that the City would automatically save money that way.
The current cost per officer for County Sheriff contracts is about $150,000 / year. (includes things like car, uniform, admin, etc.) The city has 36 officers, which would come to $5.4 million. Our current police department costs are something like $4.75 million. Replacing our current YPD with an equal number of Sheriff “service units” looks like it could cost us more than keeping our own.
So, sure, we should be talking to the County to see what can be done pricewise, as we’d be the largest contractee in their system (and figure out how many fewer officers we can deal with), but let’s not automatically assume that we’d save money that way.
Not to mention that its long proven local policing, where the officer knows the community and neighborhoods, has long proven most effective. Having WCSD may also seriously hamper the events we have in Riverside, dealing another blow to our local economy. Say what you want about YPD, but they do a damn good job, especially considering the resources they have to work with.
“It is doubtful that the county sheriff wants to take on Ypsilanti.”
I don’t think the county sheriff has a choice. Last time I checked, the City of Ypsilanti was still part of Washtenaw County, and city residents pay county taxes that support the sheriff’s office. We can argue about the level of policing that would be supplied and the cost to the city, but I don’t think the sheriff’s office can just flat-out say “no” to Ypsi.
Yes, cmadler is absolutely correct.
There are parts of the County that are not covered by the Sheriff’s department–that opt not to contract for patrol service–generally more rural townships in the western part of the county. Call 911 in these areas, and you wait and see whether the Sheriff or State Police answer first. (In at least one case, I know this may involve a 30 minute response time, and that’s for a 911 call with shots fired and potentially fatal injuries.)
So it may be that the Sheriff’s department can’t “just flat-out say no to Ypsi”, but they can certainly give us much worse service than we want. I’m not sure I want to play the “let’s disband our police department and dare the Sheriff to not cover us” game. If we want real coverage, we’d have to pay for it–like EOS’s township does.
The Township contracts patrols from the Sheriff at half the per capita cost that the city residents pay for their police.
You’re misleading everyone EOS (again).
The township pays a lot more than the city for one officer. The township has a lower per capita cost because they don’t have enough officers to do a good job of policing. The township has over 50,000 residents and 30 officers. The city has 19,000 residents and 32 officers.
If you push EOS hard enough he’ll eventually say that we should all be armed, and live under Biblical law.
In your opinion Walt. Some would say if the City can’t pay it’s bills, maybe they should realize that they can’t afford an excessively large police force with its high infrastructure and legacy costs. The city has ten times as many officers per sq. mile as their neighbor.
Ypsilanti Politicians are like Drug Addicts……Desperate for another fix of our cash (and I have so little leftI’m getting desperate enough to speak out)
JUST SAY NO! (They have been known to lie)
I’m merely speculating here, but If we were to follow EOS’s plan to its logical conclusion, and it were a cheaper deal, all localities would cede policing duties to a single, national police force.
Or maybe she would just dispense with the police and install cameras to keep tabs on all those pesky, depraved poor people.
@ Walt
I agree. Not to mention … Because of EMU, we have many short-term residents and commuters who create the need for additional police resources — but aren’t counted among our ~19,000 full-time residents when calculating police on a per capita basis.
Glen,
I don’t think Walt counted the EMU campus police in his totals of city officers either.
From AnnArbor.com:
“Ypsilanti City Council floats drastic ideas for solving budget crisis”
Read more:
http://www.annarbor.com/news/ypsilanti/ypsilanti-city-council-floats-drastic-ideas-for-solving-budget-crisis/