Ypsilanti Cannot Afford A 50% Tax Increase

(August 2, 2005) Mayor Farmer is fond of saying, “You can’t love services and hate taxes.” Yet there isn’t much to love about the proposed city income tax.

The income tax is a whopping 50% tax increase. Property taxes in 2006 will be $7 million, and the income tax will generate an additional $3.8 million — and a staggering $4.1 million by 2009.

When the Blue Ribbon Committee met over a year ago, city staff said the budget shortfall was $500,000.

Council is ignoring one BRC recommendation that said, “Substantial engagement of Ypsilanti residents is essential if City Council decides to move forward (with an income tax).”

Council is fast-tracking the ballot measure in 14 days by hastily calling two special meetings because they need to balance the budget. Council shouldn’t budget based upon a tax that may never pass and then make that budget the excuse for rushing the vote.

The BRC recommended a 5-year sunset clause and said the income tax is a stop-gap to meet projected shortfalls. Yet in 5 years, the cost of creating an entirely new city tax department and new accounting systems could total over $1 million. Thus, a large portion of new revenue will go to collecting taxes, not city services. Worse, over 60% of city residents won’t benefit from the proposed 2 mill roll back because they rent.

The tax study is flawed because it assumes population growth. In fact, Ypsilanti has seen a steady decline in population over the last 15 years, and SEMCOG is predicting a decline over the next 25.

Ypsilanti already pays the highest taxes of any community in Washtenaw County. With an income tax, Ypsilanti will shoot to the very top of the highest taxed communities in Michigan. This is a list where we shouldn’t be proud to be number one.

To survive, Ypsilanti must increase its population with a diverse mix of income groups. The income tax will be a psychological sledgehammer to anyone wanting to live or work in Ypsilanti. It discourages new jobs and businesses and will chase out residents that can afford to move to escape new taxes. Thus, an income tax will drive down property values making our fiscal problems even worse.

The problem lies in a flawed revenue sharing system and continued cuts by Lansing. City officials say the income tax will buy time for Lansing to fix the problem. Lansing has known about this problem for at least 10 years and has done absolutely nothing about it. It is impossible to imagine that, by our taxing ourselves even more, we will encourage Lansing to fix the system. In fact, the result will be the exact opposite.

It has been said that “A government bureau is the nearest thing to eternal life we’ll ever see on this earth.” City Council, once it begins feeding from the income tax trough, will never vote it out of existence even if Lansing increases funding.

Of all the potential options to address the fact that Ypsilanti wants to spend more than it has in revenue, an income tax is the worst.

Steve Pierce, is a member of the Mayor appointed Blue Ribbon Committee on City Finances, the Ann Arbor/Ypsilanti Smartzone, and the Downtown Development Authority.


One Comment on "Ypsilanti Cannot Afford A 50% Tax Increase"

  1. ireland on Mon, 16th Jul 2007 9:39 am 

    If the tax passes, that is the day I start looking to sell my house. Considering my family is an upper-middle income household and I won’t be against selling to a rental company… the city should worry.

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

You must be logged in to post a comment.