You are viewing this article in the AnnArbor.com archives. For the latest breaking news and updates in Ann Arbor and the surrounding area, see MLive.com/ann-arbor
Posted on Sat, Jul 25, 2009 : 3 p.m.

Ann Arbor officials lay out city income tax plan to shift tax burden to commuters, increase revenues by $7.6 million

By Ryan J. Stanton

072609_incometax.jpg

Marcy Bailey is one of an estimated 75,000-plus people who make the daily commute to work in Ann Arbor, but don't currently pay taxes to the city.

Under a new proposal for a city income tax, the Fenton resident could see a portion of her paycheck from the University of Michigan redirected to Ann Arbor's coffers. City officials released the final draft of a feasibility study Friday that includes a 1-percent tax for city residents and 0.5-percent tax for non-residents - the highest amounts allowed under state law.

"I've worked in other cities that have city income taxes," said Bailey, a manager at the Hatcher Graduate Library. "It's not something that I find particularly offensive. And especially if the tax money that they collect is used for reasonable things - the greater good - then I wouldn't have a problem with it."

With Ann Arbor's future budget projections looking grim, talk of placing a city income tax question on the November ballot is gaining momentum.

Under the city's charter, if an income tax is adopted, Ann Arbor's general operating millage would be eliminated. That means property taxes would come down by 6.2 mills, or about 15 percent overall.

A property tax decrease would help offset the cost of the income tax for many residents, while non-residents would for the first time pay about $12.4 million a year to Ann Arbor.

"The burden continues to be on property owners to pay for local government services," said City Administrator Roger Fraser. "In our city, there are over 75,000 people that commute every day into work who do not pay for any portion of their services unless they happen to meet one of our finest on the street. We believe that in Ann Arbor, this question is one that we ought to be asking folks."

The Ann Arbor City Council plans to evaluate the idea and decide Aug. 17 whether to place it on the November ballot. Twenty-two other municipalities in Michigan have local income taxes, including Detroit, Grand Rapids, Lansing, Flint, Saginaw and Jackson.

"The most important thing to remember is the City Council does not decide whether or not there will be an income tax," said Councilman Leigh Greden, D-3rd Ward, one of the leading proponents of the tax. "Under state law, only the voters can decide. All the City Council does is decide whether to put it on the ballot."

Ann Arbor City Council members received a 53-page report Friday from financial consultant Plante & Moran, outlining revenue scenarios for an income tax at different exemption levels. City officials are considering offering generous exemptions to individuals - as high as $3,500 per dependent - to lessen the amount of income subject to taxation. For instance, a family of four with an income of $100,000 could be taxed on just $86,000.

At that level, a city income tax could generate $38.6 million a year for Ann Arbor, but that's before factoring in the loss of $28 million from eliminating the city's operating millage. Of the remaining $10.6 million, city officials predict $3 million would cover administrative costs, resulting in a net profit of $7.6 million if an income tax is enacted.

Fraser said the income tax could help Ann Arbor's budget, which already is stretched thin. He said the city will be forced to make dramatic reductions in the next two years in the absence of additional income.

"The stuff that we have to do to balance the budget is just draconian," he said. "We already believe that this year's forecast is overly optimistic. The information that we're getting on our revenue forecasts is telling us that we're probably going to have to take another couple million out before we get to the end of the year.”

Already, the city has implemented hiring freezes and asked managers in every department to begin reducing their expenditures to cut a projected 5 percent to 6 percent to balance this year's budget, Fraser said. City officials also have discussed closing the Ann Arbor Senior Center and laying off 14 firefighters.


  • Yes, we need to find ways to generate revenue.
  • Undecided, I need more information.
  • No, a city income tax is a bad idea.

Ann Arbor resident John E. Eaton, a private attorney who works in Southfield, said he's opposed to the tax.

"I think it's a silly idea," he said. "It would tax everybody's income but only relieve the tax burden of businesses and homeowners, so renters wouldn't likely see a reduction in their rents. The people who can least afford to pay more taxes would pay more taxes."

According to the study, Ann Arbor residents currently share 76 percent of the tax burden ($21.3 million) under the city's operating millage system, while corporations share 24 percent ($6.7 million). Under an income tax system, residents would assume 59 percent ($22.9 million), non-residents 32 percent ($12.4 million) and corporations 9 percent ($3.3 million).

City officials say the income tax would affect all 114,000 Ann Arbor residents, regardless of whether they work in the city limits. The only exceptions would be individuals who work in other cities that already have an income tax, in which case they would not pay Ann Arbor's income tax.

City Councilman Stephen Rapundalo, D-2nd Ward, said he's in favor of an income tax.

"I think we're obligated to put this out in front of the voters for them to have an honest dialogue," he said. "Residents want to perceive some equity that they are not the only ones having to shoulder the burden of the cost of services."

Greden said he believes most working class families would see a decrease in their taxes under the income tax system, and seniors and the disabled would see double exemptions. However, it could end up costing high-income residents more money.

"Some people will make money, some people will lose money, and some people will come close to breaking even," Greden said.

Councilman Mike Anglin, D-5th Ward, said he won't support the income tax.

"It hurts the renters," he said. "The landlords would probably not pass on this particular savings to their tenants, so I think what you'd have is an increase (for renters) and half of the people in town rent."

The idea of an income tax in Ann Arbor has been discussed many times over the years; it was twice rejected by voters decades ago. But city officials have been evaluating the idea more closely since the University of Michigan announced it was buying Pfizer's 177-acre campus for $108 million.

The property owned by Pfizer, the city's largest taxpayer, disappears from the tax rolls since U-M is tax-exempt. Pfizer paid Ann Arbor $4.1 million and the county $1.3 million in taxes in 2008.

Though U-M doesn't pay taxes, it has 38,000 employees - the majority of whom commute to Ann Arbor - who would be subject to an income tax.

Greden says he's looking forward to a robust debate in the community about the pros and cons of an income tax.

"We have to make a decision," Greden said. "Do we want to look for a way to bring in some new revenue to protect fire services, to protect parks, to protect things like the senior center? The income tax could be structured in a way to generate new revenue."

Photo by Ryan Stanton: Fenton resident Marcy Bailey, a manager at the University of Michigan's Hatcher Graduate Library, is one of an estimated 75,000-plus people who make the daily commute to work in Ann Arbor but currently don't pay taxes to the city.

Ryan Stanton covers government for AnnArbor.com. He can be reached at 734-623-2529 or ryanstanton@annarbor.com.

Comments

aubreywheaton

Tue, Oct 27, 2009 : 8:57 a.m.

The people of Ann Arbor need to learn some philosophy. Philosophy as in Ayn Rand. Philosophy as in Adam Smith. Philosophy as in the Laffer Curve. The taxes in Ann Arbor are far higher than the neighboring towns because of socialist Democrat policies ripping off the people that they purport to support, by promising pensions and benefits that are not congruent to what others receive in the free market sector! What Ann Arbor elitist Democrats don't realize is that while Ann Arbor has a rich history of being a nice place, it's not so wonderful and unique that people (who thankfully have free choice despite what Obama and the rest of the Ann Arbor leftists would like) will just go elsewhere to live, play, eat, spend money and even {OMG} buy their overpriced art in a stinky art fair in another town. Increasing taxes is NEVER the answer, though I don't give a rip if Ann Arbor decides to or not.... Cutting spending IS the answer.

Blicero

Wed, Aug 12, 2009 : 8:53 a.m.

It's amusing how many critics of this plan are also angered by the University's tax exemption... do you not see that the real goal of this tax plan is to finally get some tax benefit from the University. True, this is at the employee's expense, not the University's, but at least we can finally get some money from the U. I can see why commuters would be annoyed by this, but they don't get to vote on this;). As for AA residents/property-owners, in most cases it will be a break-even scenario. So, break-even in order to get the city $7-8MM more in revenues? Sounds like a decent deal to me. I think we could all at least agree that reducing property taxes in Ann Arbor is a good thing. No?

David Bardallis

Wed, Aug 5, 2009 : 11:52 a.m.

No to any new taxes. Find something to cut, like bloated union contracts. Quit ripping off honest laborers to pay the expenses of the more politically connected. Live within your means already, government. This jumped out at me: "Twenty-two other municipalities in Michigan have local income taxes, including Detroit, Grand Rapids, Lansing, Flint, Saginaw and Jackson." You been to Detroit, Lansing, Flint, Saginaw, and Jackson? I have. Does Ann Arbor really want to emulate any of these cities? (I admit Grand Rapids is a pretty nice place, but in spite of, not because of, income taxes.)

Mark Hergott

Sat, Aug 1, 2009 : 4:41 p.m.

An income tax scheme will prop up an unsustainable spending plan... for the near future. The University will slowly strike deal after deal to move as many jobs as possible out of the city with its unions. Remember, it is the University of Michigan, not the University of Ann Arbor. The millage reduction will be ever so short lived, when the income tax revenue starts to dry up. I guarantee you that will happen. New businesses will migrate to the townships, and older businesses will slowly branch out and extricate themselves to cheaper pastures. I am talking about a decades long period of time, here, by the way. And spending will not be cut until absolutely necessary, after decades. After the culture, business climate, and academic atmosphere of Ann Arbor have been utterly crippled. It's happened before. The harder you squeeze a mobile populace, the faster it pops through your fingers.

owsider

Wed, Jul 29, 2009 : 10:48 p.m.

The city commissioned a study to figure out this city tax effect on revenue....this is reflective of the systemic problems in the AA city government. Nobody seems to think any of the work is THEIR job! Yes we hired you to WORK. Not to contract the work. to someone else! As for the UofM. Are they really following their charter as a state university and educating the residents of the State of Michigan? Talk to any high level person and they all think they are supposed to educate the "Best and Brightest from around the Globe"..their words not mine. We'll fine. Take away their state status, make them private and tax the heck out of them. Just think every grant they get AA could share in the revenue. Then city hall could really be FAT. Regards

gulfstream

Wed, Jul 29, 2009 : 3 p.m.

I'll have a extremely difficult time supporting any city income tax knowing that the City hasn't done its part to reduce spending. For example, I cannot -- for the life of me -- figure out why the City finds it necessary to take seemingly unnecessary extra costly steps to enable street sweepers/cleaners on the restricted parking residential streets near downtown. From what I have observed, the City: (a) pays the utility companies to mark all of their gas and water lines along these streets; (b) sends around a crew of one to measure off and mark where 'no parking' signs should be posted; (c) then sends a crew of about five (not kidding) and at least two city trucks to put the no parking signs in the ground -- and put bags over the regular permanent parking signs; (d) take approximately 90 seconds to sweep that one block; (e) send yet another crew of at least two, to remove all of the signs; And, what really gets my goat is that they had already swept the street about a week before as part of their regular street sweeping rounds! Finally, someone has already commented on it, but seeing people retire from the City at age 50 (after 25 years of service) with full pension and benefits seems to be a rather obvious choise for saving the City a few dollars.

lulugee

Wed, Jul 29, 2009 : 2:23 a.m.

Councilor Rapundalo admits an income tax would not be a panacea. I appreciate his frank admission that the problem is much larger than the extra $7+ million the city might rake in with an income tax. Indeed the problem is much larger than the shortfall from property taxes, and its origins lie with the city council itself, and the administration. We are burdened with a government whose priorities are grossly misaligned with the needs of the citizens. Not long ago, I happened upon the city's mission statement and judged it to be a straightforward annunciation of the city's priorities. Most of it is necessarily vague--"municipal services that enhance the quality of lifeblah, blah, bah for all. But then we learn that our city values an "environment that fosters fair, sensitive and respectful treatment for all employees and the community we serve". Its interesting, is it not, that "employees" precedes and "community" follows dutifully behind. I am most grateful for this unintended glimpse behind the curtain, a PET scan catching the lizard brain in the act of discharge. It takes heroic, willful ignorance of the history of democracy to write this slop. And Ann Arbor citizens shouldnt dismiss the plentiful evidence that our city government, far from being citizen-centric, considers Itself to be the very soul, the source, le raison dtre, sine qua non of city government per se, sui generis. This might explain why Mr. Fraser, who, thanks to us, will soon be the proud warden of a super-max court/police facility, cautions us to heed not our rebellious natures. He threatens to whip out his pen and perform draconian service cuts upon the civic body if we dont straighten-up and vote right. Where o where is the reach around? Were we not assured, only last year, that no harm would be visited upon us from the hubristic funding of an ostentatious addition to city hall? A year later, none seem more surprised than Messrs Fraser, Greden and Rapundalo that, having tempted fate, fortune would actually chose to abandon us to the winds of chance. Theyve cop a plea: ignorance of the workings of fate. Being but men, how could they have foreseen the calamity of falling bridges, cratered roads and declining property taxes? Now with sociopathic insouciance, these same are flagrantly attempting extortion so as to fund the next grand project (a parking structure). This parking structure is another in a series of transfers of public wealth to private pockets facilitated by our public servants. It is of no benefit to the citizens/taxpayers of this city. It is but a gift to downtown developers, who have been relieved of their responsibility for the provision of sufficient parking for their own tenants. What might we need to forego next year? Might we forego the parking structure, our city administrator? The mayor and his codependents, under the influence of a manufactured zeitgeist, are driving this city into a really deep ditch; and some of you reading this will continue to celebrate their negligence and dress up their misdeeds as progressive policy. They need only pronounce a some magic words--"Light Emitting Diodes and Light Rail please and thank you-- or laud the latest civic-art fetishes to keep you pious get-alongers smiling in the front pew. Why tax your weary brains when you can just tax your neighbors. Sorry, I really don't know how to put this nicely. Please stop enabling this mess!

Laura Bien

Tue, Jul 28, 2009 : 10:38 p.m.

Here's one question about telecommuters. I live in Ypsi but do occasional work from home for an Ann Arbor business. That income is taxed by the state and feds. Would my telecommuting work count as taxable under this plan? I imagine it would--but I'd be paying for services I never use since we only go to AA for Art Fair/MI Theater/occasional UMS show/dinner (and spend money when doing so). How many other telecommuters live outside AA but work for an AA firm? How will this tax affect them?

pseudo

Tue, Jul 28, 2009 : 7:01 a.m.

LiberalNIMBY: what you are seeing here is not that people don't understand the proposal, they do. They just don't BELIEVE the proposal. This is a proposal developed to win the voters over and political cover for those who want to lead the effort to pass an income tax. Something the City of Ypsilanti tried recently. I don't think the voters in Ann Arbor are any more likely to approve this than the Ypsilanti voters. It is not something that is realistic beyond the vote. The city will have to hire staff, come up with career paths for these bureaucrats and pay benefits and raises... the painful reality is that Ann Arbor has plenty of money/revenues compared with other cities in our state and across the country. The city has to get real what the services it provides, the expense of programs. I, for one, think patrolling my trash can is beyond silly. It will be a tax increase soon enough. The city does indeed need to learn within its means. I don't see any of the comments here a specious.

JonesM

Mon, Jul 27, 2009 : 6:52 p.m.

A city income tax is a bad idea for a lot of reasons, but I'll give you a good real life example of why I say that. I work for an 80 employee company in the Lansing area and we recently moved to a larger location. During our search for new office space, we found a nice site within the Lansing city limits, but decided not to move there and the major reason why was because we didn't want our employees to have to pay the Lansing non-resident income tax. In other words, there was a direct correlation between the income tax and our decision not to move to the city of Lansing. Does Ann Arbor really want companies to have to make that same kind of decision?

jeff4179

Mon, Jul 27, 2009 : 2:35 p.m.

Saying "spend within your means" is not a meaningless rant. It's a legitimate philosophy recognizing that people have been taxed enough, and have been hit hard by the economy, and have no more money to give. So, people are asking the politicians to figure out how to do what people with dwindling disposable incomes are forced to do -- determine where spending can be limited. Crunch a few numbers to figure out which Ann Arbor residents will benefit from the income tax replacing part of the property taxes. If you pay $5000 a year in property taxes (reasonably high for Ann Arbor) and have a household income of $100,000 (probably pretty low for two-income families in Ann Arbor), that would mean you would save $750 in property taxes (15% savings, according to the article), and pay $1000 in Ann Arbor income taxes. (Or, only $840 for a family of four if the city gives the "generous" exemptions noted in the article.) The only Ann Arborites who will benefit will be those who have very significant property values so that the tax decrease in property taxes is as much as the tax increase from income taxes. For those who haven't overreached in terms of home buying but who have decent incomes (e.g., me), there will be a signficant increase in taxes because the property tax "savings" are nowhere near the income tax.

AAresident

Mon, Jul 27, 2009 : 2:17 p.m.

In the section of the study titled "Burden Shift & Effect on Individuals" (page 14), it says that corporations currently pay 46% of the tax, which is $12.8 million. Under an income tax system, corporations would pay $3.3 million, or 7.3% of the tax. What is the reasoning behind this shift in burden? And why hasn't the city discussed this issue? Anybody know?

LiberalNIMBY

Mon, Jul 27, 2009 : 11:40 a.m.

The net effect of this tax is that it's a tax SHIFT for Ann Arbor residents, not a tax increase. Let's make sure we know ALL the scenarios regarding who wins and loses. From what I understand, property taxes for the average homeowner in the city limits would significantly decrease. The state is effing us royally by not giving cities their fair share of state tax revenue, and we're not allowed to levy local taxes like most other sensible states in this country. So what do you propose... realistically? Close some pools? Ha--tried that. Pick up garbage every other week? People aren't running away from New York, Chicago, San Diego, San Antonio, Phoenix, etc. because they have income taxes on commuters. It's specious to say that we shouldn't just because Detroit does. Please, either enter into the debate reasonably or stop cluttering the board with rants like, "Spend within your means!!!!!!!"

Sarah

Mon, Jul 27, 2009 : 8:17 a.m.

I'm with zero2sixty... I don't get any services now, why should I be taxed? I want to see the roads maintained (and, also, why do lane repainting etc only seem to occur during rush hour), be it pot holes or plowing... the U never closes, so why does the city clean the parking lots of the grade schools on a snow day, rather than their streets? I spend my money in the restaurants and stores in town... where does the city think that I'm going to find the income tax from? It's not coming from my mortgage, car payments, or energy bills. It'll come from the cash flow I have to spend during my work day in town!

eglenna2

Mon, Jul 27, 2009 : 8:17 a.m.

Ann Arbor has sold itself to the University now it needs to learn to deal with that decision. Is it fair to tax the residents who already deal with a heavy tax burden? Maybe. Is it fair to tax the income of the people who work in the city and spend their money in the city? Maybe. Is it unrealistic for those people to move out of the city and start spending their money elsewhere? No.

aataxpayer

Mon, Jul 27, 2009 : 7:23 a.m.

To all those that commute to Ann Arbor and spend money here... THANK YOU.

George Hayduke

Sun, Jul 26, 2009 : 7:37 p.m.

discgolfgeek's list above nails it, as far as I'm concerned. To be blunt.... a few swigs of water out of a drinking fountain, a couple of leaks and a dump in the toidy Monday-Friday shouldn't run me 4-bills large a year. I'm already getting nicked for 6 bills just to park my car... something I NEVER had to pay at any other professional (or blue collar for that matter) job in my 30+ year career. As the others on here are saying..... live within your means. Cut the funding of your city employee's perks first. -GH

Pyro

Sun, Jul 26, 2009 : 6:59 p.m.

I agree (annarborman) What about all of the fans from outside of the city that attend the U-M sporting events, do they pay? And the people visiting for the Art Fair. do they pay? The City of Ann Arbor has to go back to the basics.....Water, Sewer, Garbage, Police, Fire and street maintence! After that they pay for what they have money for. Residents of AA already pay the HIGHEST taxes of any city in Michigan, and the leaders of the great city want more. Why do the department heads get personal vehicles with unlimited gas cards to drive back and forth from their homes Fraser (Webster Twp) McCormick (Lansing)...on top of their 130K salaries! Why not charge the U-M a 1% property tax as all universities should pay. When the checkbook is empty you cannot keep asking for more. YOU STOP and go BACK TO THE BASICS!

annarborman

Sun, Jul 26, 2009 : 5:33 p.m.

The idea that non-residents don't pay their fair share is absurd! Non-residents spend hundreds of millions of dollars on food, clothing, entertainment, etc., in A2! This is just a case of the City not being able to live within a budget and the price we all pay with one party government (whether Dems or Republicans!) I assure you that the unintended consequences of a City income tax will be vast and harmful. Most certainly, businesses will leave the City. Keep in mind, the surrounding townships (Pittsfield, Scio, Lodi, etc.) have plenty of office space and can be very accomodating. In fact, in anticipation of a City income tax, we had our Landlord write into our lease that we could cancel within 180 days of the implementation of a City income tax. I suggest other businesses do the same or don't sign long-term leases. We'll pull out of A2 before we subject our employees to paying more taxes! We're all over-taxeed as it is already!

K2

Sun, Jul 26, 2009 : 4:58 p.m.

The AA income tax is a bad idea that keeps resurfacing. An income tax increase almost always results in a revenue increase in the short term and a decrease in the long term. Business have a choice where to locate. If I'm a non-retail business owner, I'll locate in an area which affords me the lowest overall costs yet remains convenient for my staff. Moving a few miles down state street or plymouth road is hardly inconvenient (better parking too). If I locate in AA, I'll have to pay my staff 1% more to equalize their pay. (This applies to non-profits- like the UM- too.) Ann Arbor already has higher business taxes than the surrounding townships, so an income tax increase further reduces by incentive to stay in Ann Arbor. When businesses leave, homeowners follow. The existing businesses will stay in the short term but will drift out over time. The loss of growth companies, many of who start in Ann Arbor but will choose to expand elsewhere is the hidden opportunity cost of a tax increase. For individual homeowner with a modest income,(like a retiree) the overall tax burden goes down. If I'm a middle orhigher income homeowner (like most Ann Arbor non-student residents), it goes up. If I'm a renter, my burden goes up. The net result is a decrease in demand for most apartments & homes in the city, which results in lower property prices, which reduces city revenues ever further. Local business suffer too, as lower income residents purchase fewer products and services. Traffic, Parking and service demands increase too as workers choose to commute instead of walk, bike, or bus to work like many city residents. If you take into account the tremendous administrative burden (on taxpayers and the city), this is a really bad idea.

MjC

Sun, Jul 26, 2009 : 2:51 p.m.

Great - no way to fix a typo once posted (sorry folks, I'll be more careful next time). I agree with Jim that we are taxed to death in this city. But, again, if our property taxes were reduced (note no typo) I'm willing to share the pain with the people who drive into our town just to work here.

MjC

Sun, Jul 26, 2009 : 2:45 p.m.

I support this proposal IF property taxes are significantly reducted (very doubtful).

Jim Mazak

Sun, Jul 26, 2009 : 1:50 p.m.

I see again Ann Arbor is out to pick the pockets of residents, and the crime is being led by City Council (not by those who oppose). Ann Arbor is one of the highest taxed cities in the state, and you want more. Ever since I have lived here, I have seen nothing except run away taxation. Trickery in placing increases on uncommon voting days seems typical here. The Democratic Party here is the party of high taxes, prove me wrong! Now you want residents to pay more. We already pay for U of M services and create a wonderful place for people to visit, eat, and shop. You want more, go to them! I am sick of supporting outsiders. If you want to tax income, tax the people who come here and leave us alone. Why don't you create a dining, liquor, or entertainment tax? And the nerve of asking for a higher percentage from us also. A property tax decrease, what are we stupid? You can manipulate that back up with your hocus-pocus calculations. I have no children so dependant exemptions mean nothing to me, other than discrimination by Council for not having them. My spending has reduced due to the economy, I expect the city to do the same. When times were good, you reaped the benefits. Now times are bad and you do not want to cut back. If you do not have any money, explain the new municipal center! My house is old, nobody is buying me a new one or paying for a remodel. That money could have been spent on us, our roads and services. You couldn't even keep Pfizer here or keep it taxable property, letting it go to the college. You have failed, is there no shame. Your job is to improve our lives, that's what we pay you for, the entire city for. You keep forgetting that. It's going to be my job to remind you, and everyone who lives here, wants to move here, or visit here.

Sarcastic1

Sun, Jul 26, 2009 : 11:01 a.m.

The problem of tax revenue in the city is really the University of Michigan. The school owns half the city and pays no taxes. A fee should be attached to all employees and students to supplement the city services they use on a daily basis.

Matt Kaz

Sun, Jul 26, 2009 : 10:19 a.m.

When is the University going to start paying taxes? And to lessen the burden on corporations? A lot of these people probably commute into Ann Arbor because they can't afford to live here already...

Ryan Munson

Sun, Jul 26, 2009 : 9:57 a.m.

What ever happened to passing the responsibility of taxes to the corporations? It was only 50 or 60 years ago when corporations covered a majority of the taxes payable in the city. I support taxes that go to good causes, but I think there are other places we should look before the people of the city, and commuters alike.

zero2sixty

Sun, Jul 26, 2009 : 9:45 a.m.

There must be something Im missing here, but after much thought I cant come up with the services I am privileged to use while working in the city. Heres the potential list Ive come up with: 1 Parking we already pay. 2 Drinking water I bring mine. 3 Snow plowing Traveling a long distance on winter mornings Im more likely to get stuck or in an accident on Ann Arbor streets since they dont get plowed early in the morning or are so slippery my car cant climb the hills. 4 Street use Potholes in A2 have caused enough damage to my car to pay at least a few years of the proposed income tax. 5 Restaurants & shopping Cant afford to eat or shop in A2. 6 Heat, A/C, water usage, garbage disposal I think my employer is obliged to pay bills for the building their employees work in. 7 Public transportation Designed to serve those who live in the city. Theres no public transportation for many outlying areas. 8 Public parks, pools, bike paths, etc I work in Ann Arbor and dont utilize these extras. These are perks I use in the town I live in, even if theyre not up to Ann Arbor standards. 9 Public library Since Im not a resident, Im not allowed a library card. 10 Air & occasional sunny day Last time I checked these were still free. Other factors to consider: First, I own a home in a town other than Ann Arbor and I already pay property taxes that are not low (but they are lower than Ann Arbor). The services Im afforded in my town reflect that. Second, I dont live in Ann Arbor because I couldnt afford a home in Ann Arbor. I was fortunate to have the opportunity to buy a home after being hired to work in the city, but to my dismay I realized quickly that Ann Arbor real estate and property taxes were out of my league.

discgolfgeek

Sun, Jul 26, 2009 : 8:11 a.m.

Bad idea unless you want to end up like other cities that have done it. I do not know of a single city that I would want to live or work in that has a city tax.

aacitizen

Sun, Jul 26, 2009 : 8 a.m.

I am all for generating new income but feel that the City has some wacky ways of deciding where to spend the money. HELLO, for all of us, WAKE UP - this City needs to continue to shore up the police and firefighter groups. The AA News has done a disservice to the community when they have chosen to not sufficiently highlight the true needs of the city. We do not live in a community free of crime and issues like so many of us would love to believe. As you cut these valuable resources and instead chose to build a palace to the Mayor, you have a serious disconnect in the choices that we are making. YES, this should be a vote, but there are bigger issues that need to be highlighted. I am not at all confident that the city will chose to spend the additional income more efficiently, nor that the corporations should get such a break.

dlmiller

Sun, Jul 26, 2009 : 7:49 a.m.

It's more than past the time when Government - Federal, State and Local need to do as its citizens do when faced with financial challenges - that is to reduce costs and curtail spending. Typically elected representation falls back to threatening the population that the only reduction in costs or expenditures that can be made must come from essential services. Or, elected officials elect to ignore the economic reality of raising taxes which in turn hurts overall economic activities. I would suggest instead that the University of Michigan begin to pay some portion of property taxes, and that a complete review of retirement and entitlement costs for City and State workers be conducted. It is more than disconcerting that the employees that provide services to Michigan and Ann Arbor taxpayers have far more generous and rich benefits than those of us that pay the tax bill. Also, unless designated as a private road, the gasoline and fuel taxes, coupled with targeted excise taxes that we each pay when we fill-up and/or register our vehicles or buy tires, is to pay the cost of maintaining and expanding road capacity. However, we do need to support an increase in the gasoline and fuel taxes, as they have not been indexed to inflation NOR the improved fuel economy that newer vehicles produce, thus leaving a large short-fall in funding our highway and road systems so necessary to growing and maintaining a vibrant economy.

GoblueBeatOSU

Sun, Jul 26, 2009 : 7:21 a.m.

It's amazing how government employees (elected or not) think. The economy isn't doing well so the only solution government can come up with is to increases taxes. Perhaps reducing government wasted spend might help solve some of the issue. A good example, hiring a German artist to work on a new city hall. As I write this I am beginning to think about my own spending. I work in downtown AA but I don't have to. So what does that cost me? $130/month for parking. I spend $10+/day for lunch, that's about $200/month. Of course there are the coffee houses, and the snacks I seem to need to buy. I go to Zingerman's and the farmers market weekly. A couple times a month I take things home to the kids. The wife will join me for dinner a couple of times a month in downtown AA. I must spend an easy $600+ in just downtown AA per month, plus the cost of driving in, etc. What do I get for that? I can easily work from home and spend that money on other things. You know, thanks AA government employees. You made me think about my expenses. Why am I spending $7,200+ per year in downtown AA? An income tax is only going to increase the cost of my working in AA. I'm sorry I am a burden to the city of AA and the taxpayers of AA. I'm sorry I am a burden to the business of AA. This income tax issue has raised some great points. On Monday I'll take steps to work at home or someplace else and save that $7,200+ I'm now spending in AA. There are people I work with that are in the same situation. Funny how none of us ever looked at what it cost us to be working out of AA, or the burden we place on the city. This is going to be an interesting discussion on Monday. I wouldn't be shocked if 10 or more of us stop coming into AA for work. I hope that helps reduce our burden on the city and the businesses of AA. Plus, if 10 of us stop coming into the city maybe that will eliminate a job or two in the city and reduce the burden on the city even further. If enough people stop working in AA then the AA city government can eliminate some jobs as well, reducing the burden on the city further.

Fred Posner

Sun, Jul 26, 2009 : 2:01 a.m.

I have to say, and without the ability to properly filter myself, that implementing an income tax is most likely the stupidest idea Ive heard from city government. I thought long and hard about using the word stupid and yet, hear it is. Why did I choose this plainly offensive word? At the very basic definition level, stupid is lacking intelligence or common sense. And, when applied to the consideration of an income tax for Ann Arbor, MI well, to quote the philosopher Forrest Gump, Stupid is as Stupid does. Heres why this idea is stupid. Firstly, in case anyone is in a bubble, Michigan currently leads the country in unemployment. Basing a new tax structure on the basis of employment, when there is a current pattern of increasing unemployment makes no sense whatsoever. Secondly, there is a movement here that seems to think commuters to Ann Arbor cost the city money. I profoundly disagree. Commuters to Ann Arbor generate the city money. They come in and at the very least work in the city. Providing either the ability of a company to generate money, or the ability for the University to attract people to come to town and spend money. Either way, the commuting workers of Ann Arbor generate revenue, and whatever costs are associated with roads and traffic are completely offset by the revenue they help generate. Plus, they come to town, work, then go home. They dont need fire service, they dont need a parks budget, they just come here, spend money, help make money, and go away. These people should be sent Thank You cards. They should not be sent a bill for services they do not use. Lastly, there is a fundamental difference of thinking between my brain and anyone who feels that taxing is a good idea. Before you consider paying a single cent in tax, have you actually reviewed the money spent by the city? And I dont mean a summary here, I mean taken a look at the amount of waste that flowing from the elected officials (which incidentally, taxing non-residents who do not get a representative for their tax money seemed like a bad idea at the Boston Tea Party, and seems bad now). The current state of economy in Michigan is so bad that even the Geese are looking for greener pastures. People throughout the state are getting by on living with less and even worse, attempting to just live with now having nothing. The state and city needs to lead by example. To raise any taxes in this time is a blatant disconnect from reality. Trim and purge. Let people keep whatever they can, encourage them to spend local and help keep a business alive. This is a time to encourage people to save and invest in the future. This is not the time to take from the few that remain. If an income tax is created in Ann Arbor, you will see MORE businesses close. You will see more unemployed, and you will see the population decrease as people relocate to places that have jobs as well as allow people to keep their paycheck. The bottom line: This is a stupid idea.

Alan Benard

Sun, Jul 26, 2009 : 12:56 a.m.

The city income tax is not as appropriate as raising more state income taxes more equitably -- through a progressive tax -- and distributing revenue to the cities and school districts. We are now seeing the state legislature squandering the federal stimulus money by tossing it into the general revenue hole, rather than using it for job-creating projects. All because they lack the will to tax those who can afford it in this state. The Stadium Drive bridge will collapse before our state comes up with its share of highway funds to match the federal portion we will lose because Michigan does not generate enough revenue. The quasi-governmental nature of the state universities is also not helpful. While it gets state funding, U-M is at the same time a non-taxable non-profit and a state-chartered educational program. Leaving Ann Arbor with the hole to fill. All of Michigan benefits from the university system, and all of Michigan must pay for it.

righta2

Sat, Jul 25, 2009 : 11:31 p.m.

the well "is running dry" hmm, than MAYBE they should reign in their SPENDING

vishonte

Sat, Jul 25, 2009 : 11:05 p.m.

The City of Ann Arbor has to pass the income tax... the well is running dry...and we need to tap the U of M MIGRANT workers who contribute nothing to the City of Ann Arbor... M go Booo....

dougfroma2

Sat, Jul 25, 2009 : 9:21 p.m.

Flint, Saginaw, Muskegon, Detroit. What do you think of? What do they gave in common? City Income Tax. Ann Arbor next? Really?

xl123

Sat, Jul 25, 2009 : 9:14 p.m.

As a long time Ann Arbor resident, it seems ridiculous that we end up paying more and more taxes as the years pass. I lived in Ann Arbor Twp and received virtually identical services for almost half the cost! The real issue is the University. While it defines us as a town, it also uses a lot of our resources. When it expands, our tax base diminishes. We need to find a more equitable solution with them. Taxing outside commuters who work in Ann Arbor makes some sense, but increasing the taxes on people who are living here (and paying taxes as it is), seems ridiculous. Especially if those Ann Arbor residents are commuting outside of Ann Arbor for work! We have to keep in mind that in the cesspool that is Michigan's economy, Ann Arbor has been resistant to the tumult that has affected the rest of the state. Additional taxes on people that work here couldn't possibly make this a more attractive place to work.

pseudo

Sat, Jul 25, 2009 : 7:41 p.m.

Plante & Moran has gotten paid a bunch of money to do these studies all over the place, not terribly unlike all the money they made studying how schools districts could save money by privatizing busing. I think its all a sham. They have created a political argument (blame it on the commuters) but the reality is that this will raise taxes by definition. I do not buy the argument that this will save me a dime in the long run. I do not think this city government/administration has the discipline to control costs and make difficult choices and get rid of the waste. I believe it "governs" way to much - almost like stereotypical micro-managers. Further the city council members have proven to the be personally ambitious to the point of clouding their judgment basic fiscal issues as the email disclosures have shown. They are too busy scripting discussion for us dim-lights to see in public to really work out solutions that impact the bottom line. So, find ways to reduce costs and build up a rainy-day fund and I might think about an income tax some day. But not now, not when I'm dragging my city-required trash can down the block, over the city plowed snow, to save the city money. Not now, when I get patrolled for how that can is darn thing is stored when not in use. Not now when they are building a huge monument to the city administration and are angling to spend a disgusting amount on some artist to make it pretty. Not now when the sewers suck or blow up and when the city streets are inn such disrepair. Not when bike paths are unmaintained. I could continue with the strange duplicity of what this city is spending money on -vs- the services they truly provide. Nope, show me some discipline. Too many other college cities do just fine by comparison.

Matt Postiff

Sat, Jul 25, 2009 : 6:55 p.m.

The article sounds quite supportive of the boiler-plate solution to a lot of government financial problems--raise taxes. How about checking the other side of the ledger? * re-evaluate what are absolutely necessary services * make a more equitable deal with UM and others who use the services that are of concern. The UM seems to be the major issue behind this. Maybe it is easier to pinch a lot of little guys instead than to do some hard but necessary negotiating with the big boy in town? * make some of those so-called "draconian" cuts - 5% and hiring freezes sound pretty mild -- they are just things you do when you have budget problems! Many families are having to make more sacrifices than that. * pointing to other cities, some of which have failing tax policies, is no comfort. If Detroit wanted to fix its economic problems, one of the quickest ways to do it would be to ELIMINATE the income tax and attract more companies and workers into the city. * A city income tax will not help retain jobs, which we desperately need. * certainly don't look to implement taxes without representation--that is quite un-American * The extra administrative overhead is excessive for the marginal extra tax revenue that would supposedly be gained. * We are taxed out. NO MORE TAXES!

aataxpayer

Sat, Jul 25, 2009 : 6:51 p.m.

A big problem is that Ann Arbor has been giving "sweet deal" retirements to employees and negotiating pension terms that are way too generous. We will soon be spending 35% of the entire city budget only on retiree pensions and health care. That's clearly unacceptable. New contract negotiations are going on now, but the city won't discuss there negotiation goals. Lets get real - it's time for public sector unions to accept concessions like those accepted in the private sector. An income tax will send people and business migrate to the townships. Bad idea.

Mumbambu, Esq.

Sat, Jul 25, 2009 : 6:08 p.m.

Laura, With all respect...I don't see what your argument is? You mention non-resident workers... I think it's a stretch to say the burden is on "them". The fact is the "burden" is on those who ACTUALLY pay for it. No matter where you live...if you work in AA, you should contribute to the transportation infrastructure you use. If you're opposed to this tax; more power to you! However, don't ever complain about gas taxes, your water bill, cluttered bike lanes or any other existing or compromised City service. The fact is, City residents pay for the 75K commuters that come in to the city, just like the thousands of A2 residents that work in Detroit pay them... Pay to play, yo! Good talk.

Hiram

Sat, Jul 25, 2009 : 4:25 p.m.

Yes I like this idea to pay City income tax but only for non-residents. Ann Arbor residents currently have pay to much.

redeye

Sat, Jul 25, 2009 : 4:08 p.m.

This would be a great thing for Ypsilanti. Ann Arbor doesn't have a monopoly on office space, or even on lab space. Many kinds of business are easy to move. And most new businesses can start anywhere, especially if there's lots of free parking. And I don't buy the argument that, as a commuter, I am not paying my share. Taxes are paid by the office I work in, and by places I shop on the way home. This part of my life is taxed by the city in which it happens. But the Ann Arbor fire department doesn't come if my house burns. Police, fire protection, and services that benefit me at home are paid for by property taxes on my home. If the Ann Arbor city government has a bad deal with the U of M, then that's what they should fix. Going after commuters who don't have a vote on the issue will not pay off in the long run, because people and businesses can still vote with their feet and their wallets.

Anthony Clark

Sat, Jul 25, 2009 : 3:20 p.m.

This will hit the renters hard. I really don't think any of the landlords will lower the rent if they get a property tax break. Why do businesses get such a big break? From 24% down to 9% of the total tax burden ($6.7 million down to $3.3 million)? Really? We're going to give corporations a 3.4 million dollar tax break?! Meanwhile, people who can least afford it get a tax increase. Yeah, that's fair.

Swaney

Sat, Jul 25, 2009 : 3:19 p.m.

I work and live in Ann Arbor and my tax burden is already way to high. Now they want more.I don't want to leave Ann Arbor nut it gets harder and harder to justify the expense of living here. How about instead the city spends less to make up for the loss in taxes from Pfizer.

doctorbill

Sat, Jul 25, 2009 : 2:42 p.m.

It's about time! Ann Arbor residents currently have to bear the burden of having a large part of the city's real estate tax exempt. The many commuters who work for tax exempt organizations do not pay their fair share of the cost of services. I disagree with the argument that this will hurt renters. The rental market in A2 is becoming increasingly competitive, with all of the new dorm construction. Landlords will be forced to pass on the cost savings.

1bigbud

Sat, Jul 25, 2009 : 2:41 p.m.

and that did what for Detroit oh they are still broke

Arieswoman

Sat, Jul 25, 2009 : 2:28 p.m.

Maybe,just maybe they might try to live within a budget? Just quit spending more than you have!!!!

Mumbambu, Esq.

Sat, Jul 25, 2009 : 2:20 p.m.

I like this idea a lot, however, I don't like the 3 million dollar administrative cost that comes with only an estimated increase in profit of 7.6 million. That seems too much for too little. It's good that this discussion is on the table.

Cosmonican

Sat, Jul 25, 2009 : 2:19 p.m.

Would someone please explain why the net effect is a halving of corporate taxes to the expense of individuals?