A2Y Chamber Opposes Ypsilanti City Income Tax and Water Street Millage

Ann Arbor / Ypsilanti Regional Chamber
Statement of Opposition to the Ypsilanti City Income Tax and Water Street Millage

May 2, 2012

The City of Ypsilanti has proposed two ballot initiatives for the May 2012 election. These are the adoption of an annual rate of tax on corporations and resident individuals of 1%, and on non-resident individuals of .5%; and a Water Street Debt Millage to meet the bond payments due to investors in the Water Street Project. The City of Ypsilanti faces serious fiscal challenges ahead. These challenges are compounded by the facts that Ypsilanti is small in area and roughly 35 percent of its land is owned by the State of Michigan, thus it is not taxable by the City. Ypsilanti has also lost many of its largest corporate tax payers in the last fifteen years. In response to these and other challenges, the City Council has placed these two items on the May ballot as a possible solution to address its fiscal challenges.

The Ann Arbor/Ypsilanti Regional Chamber agrees that a solution is needed, but it does not believe the income tax is that solution. An income tax would place too much burden on residents and employees of Ypsilanti businesses who already face an already high property tax level. An income tax is also too broad and permanent in terms of tax policy at a time when there are many uncertainties about the City’s fiscal situation and tax changes, such as repeal of the Personal Property Tax, at the State level. The City and its leadership are absolutely right that it needs more revenues, but the Chamber believes an income tax is the wrong way to get those revenues.

To its credit, the City Council has proposed an idea for addressing the City’s fiscal challenges. It has also provided for drastic reductions in its workforce over the last five years. The Chamber advocates for Ypsilanti to enter into increased cooperative agreements with other units of government, such as surrounding cities and townships, along with Washtenaw County, to meet its service needs and provide fiscal relief, such formation of joint authorities. The City has explored some of these options and we hope it continues to do so. In addition to these efforts the City should continue to work with Eastern Michigan University on any and all efforts to retain graduates once they have completed school. A program about to be launched would create incentives for EMU employees to buy homes within the City, and the Chamber and the community as a whole should actively support it. Finally, Ypsilanti should actively seek to benefit from its relationship with the City of Ann Arbor, the University of Michigan, and its proximity to vital transportation networks such as I-94, US-23 and Wayne County Metropolitan Airport. Ypsilanti is a special place unto itself, but it can enhance its chances for growth by marketing itself as fully connected to a broader community that is both unique and vibrant.

The City has also proposed a solution for meeting the bond payments due on the Water Street Project. The Chamber opposes this millage because it has too much uncertainty. It allows for future decision makers to control the amount levied and it provides too broad a definition for what can fall under the budget area of “Water Street.” Voters will not know exactly what they are getting if they vote for this millage. With further clarification such a millage should be discussed.

Although the Chamber disagrees with the City’s proposed solutions, we want to recognize the fact that the City’s leadership have at least proposed them. Critics of the income tax and Water Street Millage need to do more than just criticize this plan. That means providing their own solutions, building organic support for them from all segments of the public, and advocating them in a way that is both practically feasible and politically realistic. So far they have failed to do this. The Chamber will seek to provide assistance in that effort. The Chamber recognizes the City’s fiscal challenges and applauds the City for putting forward a plan to address them. Though we disagree with the plan, we urge all parties to meet after the election to discuss new ways forward and we stand ready to serve as the organization to facilitate such a meeting.

PDF link to A2YChamber opposition to City Income Tax and Water Street millage