Income Tax Looks Likely for August Ballot

Thursday, May 10, 2018, 4:46 pm
By: 
Jessy Gregg

East Lansing’s City Council is one step closer to determining which revenue-generating ballot proposal will be put to public vote. Based on the discussion at this week’s City Council meeting, it is looking likely that voters will see a new version of an income tax proposal, and that voting will take place on August 7, alongside the primaries.

Nine different tax proposals were technically scheduled for public hearings Wednesday night. Most of the proposals fell into three categories: an income tax; a Headlee override, which would have the effect of increasing property taxes; or issuing bonds which would be paid back with new property taxes. The specific differences between the nine different proposals were explained last week by ELi reporter Chris Root; click here to read more.

The only public comment related to the revenue proposals actually came during a different public hearing, namely the one on the proposed budget for Fiscal Year 2019. (The Council will vote on the budget on May 22.) East Lansing resident Mary Pollack asked the Council, “Why didn’t you come to us earlier asking for money? We’ve been in this problem for a long time.”

Pollack said she hoped East Lansing would be able to maintain its high level of City services so that people would “want to come here, want to do business here.” She criticized the people behind the “vote no” campaign last year, specifically naming the Lansing Regional Chamber of Commerce and calling their opposition of the income tax “short sighted.”

Several members of the Council referenced a recent phone poll by Epic MRA which polled 300 East Lansing residents about how East Lansing’s expenses should be funded. City Manager George Lahanas expressed his surprise at the wide margin of people preferring a version of the income tax over the property tax-based revenue options. He called it “definitive,” and “significant.” (Read EPIC-MRA’s full report of the phone poll here.)

Lahanas also said that, based on the feedback from several public engagement sessions and the phone poll, “infrastructure” (meaning streets and sidewalks and the water and sewer systems) and “public safety” (police and fire) had emerged as two priorities for funding.

Council Member Ruth Beier said that she could “cross some things off,” and explained that she wasn’t interested in a bond, because that would create more debt and “that’s how we got here.”

Beier said, “If we can avoid it, I don’t really want to consider a property tax in any form . . . because we have, depending on how you count it, between the fifth and the tenth highest property taxes in the state of Michigan right now.” (Last November, voters approved a property tax reduction which will take effect if voters approve an income tax.)

Beier said her preference for the income tax stemmed from the fact that it “spreads the tax burden further than we have it now because we have a lot of people who will be paying that tax that aren’t right now.” That’s because an income tax would tax not only East Lansing citizens, but also non-citizens who earn income in East Lansing.

Regarding whether the proposal should be put to voters in August or November, Beier said, “I don’t think that we can wait.” She added, “I prefer going in August, and if that fails, going in November, and if that fails, going to another city.”

Council Member Aaron Stephens said that his perception is that voters prefer a dedicated tax, where the income generated is legally tied to a specific purpose, and one which has a time limit. “Me, personally, I am not going to be voting to put something on the ballot which is not dedicated to a specific purpose and has a time limit or renewal date,” he said.

Speaking about the escalating payments required to meet East Lansing’s pension obligations Mayor Mark Meadows commented, “We can’t get out of this process and we can’t have a financially healthy city going forward unless we start to make these extra payments now, and that’s what this is all about.”

Meadows continued, “Nobody wants to cut the things that we are cutting in our budget. We are not doing it because we want to do it. We’re doing it because we have to do it. We have to deal with this issue or we won’t have a City of East Lansing in the future.”

He also stated a preference for an August vote, saying that in November the East Lansing proposal would be at the end of a long ballot. “Historically that means that there’s a lot of interest that falls off, especially if there are multiple ballot proposals on the ballot, which it looks like we will have.”

Meadows also addressed the fact that public sentiment supports infrastructure, public safety and parks and recreation: “The polling that we did . . . clearly shows that, if there is an income tax, it has to be dedicated to certain services, and the three things that I just described . . . have to be the services that we dedicate some money to, whatever that amount of money might be.”

Said Meadows, “I think, personally, that the most dangerous thing that we’re dealing with is this unfunded [pension] liability and that we ought to put all of our money into paying that down as rapidly as possible, but I think the public has indicated that it should be split in some way.” He also said he sees importance in adding a time limit to make the tax proposal more appealing to voters.

Mayor Pro Tem Erik Altmann said he preferred to put the revenue proposal on the August ballot as well, since the poll which is informing the Council’s decision-making process was framed around an August ballot. He noted that the sample pulled for the phone survey was based on people’s likelihood of voting in the August election, not the November election.

Altmann also addressed the issue of the City’s pension liability by saying, “We are going to make those payments for past service. We are going to. We are legally and morally obligated to. I want to put to rest that we can walk away from them. We can’t walk away from them any more than you can from a mortgage.”

Because Council Member Shanna Draheim was unable to attend the meeting due to a work conflict, the final vote on which strategy to pursue for revenue enhancement has been scheduled for a special meeting on Monday, May 14. Citizens who wish to communicate with Council on this issue can email council@cityofeastlansing.com.