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Jul 24

Analysis?

Comments (0) 12:00 AM posted by admin |

Does Ypsilanti need an income tax?

The City of Ypsilanti is in a serious financial crunch. There are a lot of people who are going to get blamed for why we are in this mess—the people in Lansing, the Headlee Amendment, Proposal A, Eastern Michigan University, Visteon, the Ford Motor Company, our school system, Ypsilanti’s lower-income residents, and me are all potential scapegoats.

The City needs to change the way they do business. Because the Michigan economy has been going in the tank over the past couple of years, the State is providing less funding to cities. This has absolutely been a burden to Ypsi. The thought is that an income tax could raise the money that would allow the City to continue providing services at their current levels with the hope that some things like the Recreation Department could be restarted. That’s fine if your only problem is lack of money. The real problem you see, is lack of money AND the way the City does business.

Both the Plante & Moran report and the Blue Ribbon Committee on City Finances final report clearly stated that an income tax is a “stopgap measure to meet projected shortfalls.” Should the City continue to operate like it has in the past, an income tax will only delay a financial disaster by a couple of years. The City Manager and members of City Council believe that a tax would give the State of Michigan the time to correct the way they fund cities. That is a serious misconception. The State has been cutting funding to cities by as much as 20% a year over the past couple of years. Lansing is projecting to continue making these cuts into the forseeable future. We must change now or it will be City Council’s successors who are forced to deal with this issue.

Give credit to the BRCCF for coming up with a recommendation on how to make up a $2.5M annual shortfall, but unfortunately their report doesn’t tell us what impact their plan will have on the City.

The BRCCF report didn’t say:

  • local business owners like the owner’s of Bombadil’s or La Fiesta Mexicana will be taxed twice under a city income tax
  • what the start-up costs of an income tax would be
  • how much the City would have to spend in order to get the voters to approve of an income tax
  • what impact an income tax might have on the Ypsilanti School District’s ability to recruit quality teachers
  • how the City would be able to attract suitable replacements for Visteon and Exemplar

Finding the answers to these important questions is the reason why the decision to put an income tax on a November ballot should not be rushed through the system. A poorly thought out plan to put this to a vote before all the questions are answered could be disasterous to both the plan and the City. When asked, City officials will tell you that if we wait until February or May of next year, we will have to pay $20K for a special election and we haven’t budgeted for that.

That’s right. The City would rather rush through a plan that has serious consequences that they do not yet understand rather than wait until the gather the knowledge to make an informed decision.

This decision will be the most important of their political careers. Approving this ordinance isn’t like vacating an alley behind McDonalds. City Council needs to do their due diligence to ensure they can make the the right decision.

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