After almost a year of research, Municipal Analytics presented its findings on the feasibility of a city income tax to the Hillsdale City Council on Monday night.
The council commissioned the Ann Arbor-based firm last April to determine if a city income tax could be a viable option to pay for much-needed road renovation. The firm did not conduct the study to convince the council to adopt the tax but only to determine if the tax could solve the city’s road problem.
John Kaczor, the founder and principal consultant for Municipal Analytics, presented a Power Point presentation to the council at Monday’s meeting.
The tax would affect both city residents and commuters. Commuters would be taxed half of the amount levied against residents. Residents could only be taxed up to 1 percent.
Kaczor determined that the city’s almost 4,000-person work force, in addition to the nearly 6,000 commuters, would generate a net $1.1 million in income tax revenue every year.
The city’s roads require $39 million worth of attention –– $25 million for the local streets, as in residential roads, and $14 million for major streets, like Hillsdale Street. With only the income tax, the city would take 35 years to fix all the roads.
As of now, the city has no means to pay for road reconstruction outside of taking money from the general fund or acquiring grants from the state. Grants, however, are only available for major streets, and if the city were to continue its current practices, Kaczor said it would take 76 years for all the roads to be fixed.
Property tax millages would, Kaczor said, probably be the best alternative to the income tax. However, the disadvantages of a millage, he said, would be that the weight of the tax would rest solely on Hillsdale residents’ shoulders, rather than sharing some of that burden with commuters, as the income tax would.
Also, he said, in comparison to the income tax, it would take 7.3 millages to generate $1.1 million. Over 20 years, it would take the city 13.25 millages to generate the needed $39 million.
The council was generally favorable towards the tax. Mayor Doug Moon said that while people don’t like taxes, the city has run out of options to deal with roads.
“On principal, people may not like the tax,” he said, “but by God, we can’t keep doing the same thing we’ve done for 40 years.”
The tax can only be adopted through a vote by the people of Hillsdale. The council decided to table making a decision on whether to put the tax up for a vote until it can better gauge city residents’ sentiment.
Other news in the city government this week:
The Michigan primary will be held on Feb. 28. Not only will Hillsdale residents be deciding between their preferred GOP candidate, Barack Obama, and an “undecided” bubble, but they will also be voting to elect a city clerk. Nominees are Amy England, Julie Kast, James Pruitt, and Adam Stockford. Contact City Hall at 517-437-6448, or go to the city’s website for further voting information.
