The city of Hillsdale is in crisis. The roads are bad. To rebuild them, the city needs $39 million, which it wouldn’t be able to stockpile until 2088. An income tax proposal will be on the November ballot. Vote yes if you want decent roads in Hillsdale before your great-grandchildren are born.
For 20 years, the city has built roads under a pay-as-you-go system, using money from its general fund in combination with state grants. Unfortunately, state grants are only available for certain major roads, like M-99, State Street, and Hillsdale Street. Residential roads, or “local roads,” such as Howder Street or South Street, are paid for solely through the general fund. Major roads require $14 million for reconstruction, locals $25 million.
Hillsdale roads cost about $1 million per mile of road to build – or about $190 per linear foot. The city’s total expenditures for its 2011-12 budget are $7.7 million. At $39 million, the road problem costs six times the annual budget.
State Street has been under construction since June. The entire project is expected to cost over $700,000, more than half of which is covered by a state grant. These road projects explode in price not because asphalt is so expensive (although it is not cheap) but because a construction project contains many costs besides just replacing the roads, including the cost of mobilizing equipment and labor, tearing up the road, rebuilding sidewalks, re-landscaping terraces, and laying down road base.
Costs for construction projects continue to rise every year, even as tax revenue for the Hillsdale city government declines. This year’s budget projects the city to lose $140,000 in property tax revenue from last year due to falling property values.
The city council commissioned a study on the feasibility of a city income tax in early 2011.
The study concluded that an income tax, requiring 1 percent from city residents and .5 percent from commuters, would produce about $1.1 million in revenue yearly. The city council decided that, while the income tax would not immediately solve the road problem, it could provide a mechanism to at least begin dealing with it.
Therefore, the “Uniform City Income Tax” proposal will appear on the Nov. 6 ballot. The council added two stipulations that are unique to any city income tax implemented in Michigan: it contains a “sunset provision,” ending the tax after six years, unless voters choose to extend it, and the money generated from the tax will, by law, only be used for road projects. If passed, the income tax will begin Jan. 1, 2013, and end on June 30, 2019.
The words “new” and “income tax” might be scary next to each other, especially considering the current economic climate. Another argument against adding a new tax might be that it will deter investment in the city.
Rebuttal one: This is an income tax and it will not affect the unemployed or retired.
Rebuttal two: What do companies care more about – a small tax on income or the infrastructure of the city in which its putting its capital?
The roads are bad. The city budget is stretched. The city needs to rebuild its roads. Passing an income tax is the cleanest solution to an otherwise messy problem.