As winter looms, the city of Hillsdale struggles to fix the damage inflicted by last year’s record snowfall and freezing temperatures, and drastic state funding reductions have left the city unable to fix many of its local roads.
“Villages and cities are going to have to look at some form of creating revenue at the local level because . . . the [state] dollars aren’t going to be driven do to the local level,” said Hillsdale Board of Commissioners member Brad Benzing.
While crumbling roads have burdened the city for more than a decade, city government hasn’t determined how to generate the revenue to fix them. Yet, Hillsdale Financial Director Bonnie Tew staunchly defends the city’s financial decisions, explaining that the city has substantially reduced its budget to only cover necessary functions.
“While we want the money for the streets, we still need additional revenue to operate,” Tew said. “The revenues are down and costs are up.”
At a Department of Public Services meeting on Sept. 29, local government officials discussed measures to proactively address the road-funding issue with a mix of new ideas and repackaged old ones.
Current Road Funding Proposals
During the course of the two-hour meeting, a group of city and county government leaders examined revenue generating options proposed in a list compiled by the Hillsdale City Council this spring.
Some options briefly mentioned include: instituting a fee for leaf pick-up; installing parking meters in downtown Hillsdale (which were seen as detrimental to local business and torn out 25 years ago); borrowing money through city bonds; asking surrounding municipalities to contribute to recreation costs; and closing streets deemed unnecessary — possibly Ferris and Cook streets near Saint Anthony’s Catholic Church.
Options discussed in greater detail included: promoting special assessment tax increases to pay for individual street repairs; reintroducing a city income tax; and selling the Board of Public Utilities.
Though considered to be viable, the special assessments option garnered mixed support from the group.
“In special assessment, you’re going to get a lot of criticism for the low income neighborhoods that never get fixed,” said Mary Wolfram, Hillsdale director of economic development.
Mary Wolfram and Hillsdale College Professor of Political Economy Gary Wolfram strongly advocated reintroducing the Hillsdale income tax coupled with a reduction in the city property tax.
“The beauty of the income tax is it captures the people who drive in for work,” Mary said.
She added that contrary to what many income tax opponents argue, the tax wouldn’t deter businesses from coming to Hillsdale, shown in the example of Paragon Metals, Inc. choosing to move to Hillsdale despite knowing an income tax may be implemented.
The group then discussed selling BPU.
Although the city collects $450,000 a year in payment in lieu of taxes (PILOT) from BPU, if BPU is sold its assets are estimated to be worth around $20 million. Last spring, Hillsdale attorney Kevin Shirk said selling BPU was “not realistic,” but Councilperson Patrick Flannery is confident the sale would be beneficial.
Unlike the other two major funding options discussed, the sale of BPU would give Hillsdale a lump sum of money instantly, raising revenue capable of fixing 20 miles of roads at a cost of $1 million per mile.
State Government’s Role
“I was hoping that’s what we could zero on, at least for tonight, to operate under the assumption that there is no help coming from external sources, especially the state,” Councilperson Adam Stockford said.
The committee focused on raising revenue at the local level because it doesn’t believe the state is a reliable resource for road money. The stipulations for spending Act 51 Gasoline Tax money, the way statutory revenue sharing is doled out, and the passage of Proposal 1 were cited as examples for their concerns.
According to Gary Wolfram, the way state funding is distributed has an especially negative effect on local roads.
“MDOT doesn’t particularly care if Vine Street gets paved,” Gary Wolfram said.
He said any state Act 51 money received by the city can’t go to local roads, like Vine Street, and has to go to trunkline roads.
Furthermore, he explained Gov. Rick Snyder has shifted statutory revenue sharing away from a “per capita” based system to a system where money is distributed based on meeting certain economic specifications. According to Gary Wolfram, this change hurts Hillsdale.
Gary Wolfram also argues the passage of the Proposal 1 referendum in the Aug. 5 primary election will hurt Hillsdale.
With the passage of Proposal 1, companies that own less than $80,000 in taxable personal property will no longer be taxed on that personal property (that which isn’t part of the company’s building), with industrial personal property taxes completely phased out by 2022.
State Sen. Bruce Caswell disagrees with Gary Wolfram’s analysis of Proposal 1, saying that any revenue lost by municipalities from Proposal 1 will be replaced by the state until at least 2021.
Current Winter Plans
While city government discusses raising revenue to fix the roads, city preparations for winter are going forward exactly the same as they have in years past, according to Mayor Scott Sessions.
Sessions believes that despite the heavy toll last winter took on the city’s roads, the city did a good job with snow removal. He said winter just adds snow plowing and salting on top of the city’s year-round pothole-filling effort.
While there is hope that Hillsdale will not only endure the upcoming winter but also raise the revenue necessary to fix the roads, those in city government know it won’t be easy.
“You’d beat your head up against the wall trying to make this thing work,” Tew said.
