YPSILANTI CITY INCOME TAX ? FACT & FICTION

The City of Ypsilanti has not been spending your property tax money wisely. More tax money is not going to fix Ypsilanti's problems.

FICTION 1

A CITY INCOME TAX WILL SOLVE THE CITY'S FINANCIAL WOES

FACTS

  • The Ypsilanti City Manager Edward Koryzno's Solvency Plan shows that even if a City Income Tax is passed, the city will still be in deficit after six years even with no restoration of proposed service cutbacks. The answer is wiser spending, not more taxes.
  • The 2007 annual budget for the City of Ypsilanti is $16.1 million dollars. The proposed City income tax adds $ 4.2 million dollars per year to General Fund local tax revenues (40% to 50%) - the equivalent of over 10 mils or a 30% increase in taxes. This will hit poor working people the hardest.
  • It would cost over $400,000 to collect and administer an income tax for the city. The rest of the money would go to pay off the $28 million dollars the City Council and Mayor committed to borrowing for the failed Water Street development project. The project has been halted by serious environment and pollution problems. No developer is willing to build on the property.
  • Paying off the loans for the empty Water Street property will require the equivalent of 3 mils increased property tax revenue for the next 20 years.

Sources:
"System Failure / Michigan's Broken Municipal Finance System." Plante & Moran, PLLC.
"Proposed Three-Year Solvency Plan Update" City Manager Edward Koryzno. 6/6/2006.
"Income Tax Feasibility Study" Plante & Moran, PLLC. 6/2005.

FICTION 2

The City of Ypsilanti will fall into "receivership" without a city income tax

FACT

Receivership is imposed on a city whose management irresponsibility causes bills and payroll to go unpaid, or the city borrows money it can't pay back.

Source:
"Securing the City's Financial Future" Assistant City Manger Robert Bruner. 8/2/2005 pages 10-19.

FICTION 3

Ypsilanti is following the lead of other Michigan cities benefiting from a City Income Tax

FACTS:

  • A study by the Ypsilanti Area Chamber of Commerce concluded: "We have not found any city in the State of Michigan with a city income tax that is doing well. Most are experiencing job loss with companies moving to the surrounding areas where the income tax is not a factor."
  • Michigan cities with a city income tax include: Detroit , Flint , Pontiac , Saginaw , Highland Park , Hamtramck , Ionia and Battle Creek . All have experienced significant loss of business.

Source:
Ypsilanti Chamber of Commerce

FICTION 4

The Ann Arbor Transportation Authority (AATA) will cut back services to the City of Ypsilanti because the city can't pay its bill.

FACT

A City Income Tax will not increase City payments to AATA. Ypsilanti City Council went on record last year with these unanimous resolutions and budget actions:

  • Supported a passenger fare increase of 25 cents to generate revenue.
  • Opposed a proposal to guarantee funding of AATA by a city millage.
  • Supported a county-wide transportation system supported by its own millage, not City money.

FICTION 5

City of Ypsilanti Revenues and Expenditures Declined Dramatically

FACTS:

Tax rates for the City of Ypsilanti have increased over 5 mils (over 20%) in the last six years even with Headlee rollbacks.
  • State "Proposition A" annually increases property values and taxes by the rate of inflation.
  • Property tax paid by residential property owners has increased 60% in the six years since State Proposition A ? more than 3 times the rate of inflation. A City Income Tax would be a 35% increase in City taxes for the average household.
  • New property buyers are being assessed even higher ?pop-up' tax rates.

Source:
"Income Tax Feasibility Study" Plante & Moran, PLLC. 6/2005.

FICTION 6

City of Ypsilanti residents are willing and able to pay more taxes

FACTS:

  • High taxes discourage potential buyers for homes and property.
  • The City of Ypsilanti has the highest tax rate in Washtenaw County ? one of the Top Five tax rates in Michigan .
  • Analysis by Mayor Schreiber shows the proposed City income tax will increase local tax burden per household to 1-1/2 times the tax burden of Ann Arbor residents.
  • A recent New York Times front page story featured a typical west side Ypsilanti family struggling to raise a family and keep their house. One need go no further than across the street from the Mayor's house to find a house in foreclosure.

Sources:
"City of Ypsilanti Tax Comparison" Mayor Paul Schreiber. 11/14/2005.
Washtenaw County Equalization Department