Voters in East Lansing will decide the fates of two proposals the city hopes will resolve long-standing financial woes next week. The city is in debt to the tune of $190-million, a shortfall blamed on state revenue sharing cuts and growing obligations to retirees. Workforce reductions haven’t kept pace, so East Lansing officials are urging approval of dual proposals: a new income tax, paired with lower property taxes.
Here are the basics: the income tax would cost East Lansing residents one percent of their income, and people who work in East Lansing but live elsewhere would pay one-half of one percent, starting January 1st.
The second proposal would cut the city’s property tax rate from about 17 and a half mills to 12.5 mills. Leaders hope that will make the income tax more palatable to voters.
It’s expected that the income tax would generate $10-million of revenue, with about half of that going back to homeowners in the form of lower property taxes.
City council member Mark Meadows serves as mayor in East Lansing. He says he has long wanted to lower property taxes. "People buy houses just like they do cars," Meadows states. "How much is it going to cost me a month? When we can lower that and get you more product, you can market your house for a higher number. People can say 'it's only going to cost me $1,500, but I'm now buying a $250,000 house instead of a $175,000 house'."
Thomas Morgan, campaign manager for an opposition group called Citizen’s for East Lansing’s Future, disagrees. "We talked to the Greater Lansing Association of Realtors," he explains, "and they project that if the income tax passes, existing homeowners property values will decrease. This proposal could backfire, because that means lower property tax revenues coming into the city."
The city has long held Michigan State University doesn’t pay enough for services provided to the campus. MSU President Lou Anna Simon appeared to acknowledge as much in an exchange of letters with Mayor Meadows, ultimately offering the city up to $20-million over time to take the income tax off the ballot. However, Meadows says negotiations failed to gain enough support on the university’s board of trustees and the proposal stayed on the ballot. Simon has a slightly different view, saying "I think we just ran out of time on both of our groups and what they chose to do."
Michigan State University employees who don’t live in East Lansing would see an income tax of one-half of one percent for the first time if the tax is enacted, leading some to complain of taxation without representation since they don’t have a vote on this proposal.
The MSU Clerical Technical Union opposes the income tax. 117 of their 1,450 members live in East Lansing, and the CTU is urging them to vote “no.” CTU President Deb Bittner says the tax would disproportionately affect lower-income MSU workers like her members. "It appears that the proposal will benefit primarily retirees who have left the work force," she says, "not lower income employees like my members. It may also affect those who have higher property values. We feel that that's not an appropriate way to balance your city budget."
The city addressed the concerns of low-income taxpayers with a $600 exemption, and persons earning less than $5,000 a year wouldn’t pay the tax at all. The tax would also not be charged on retirement income and military pay.
Mayor Mark Meadows is urging voters to support the property tax cut proposal even if they plan to vote against the new income tax. "I can predict that if they pass the charter amendment, that that will protect that reduction," Meadows concludes. "I think that's good advertising for us as a community, to have the lowest maximum property tax in the state."
East Lansing voters will also choose two of three candidates for the city council on November 7th. Incumbents Susan Woods and Ruth Beier are supporting these two proposals; challenger Aaron Stephens is also backing yes votes on both measures.