A NO Vote on Tax Proposals is Good Financial Policy

In August of 2014 Detroiters will be asked to vote on local, county and state proposals that will continue or increase property taxes. This year Detroiters are also in the midst of the unknowns involving the bankruptcy of the city. By the time voters either approve or reject these proposals the city will not know the actual path or plan for improvement of city finances. The bankruptcy trial is scheduled to begin over a week after the election. With the extreme risks of bankruptcy and the unknowns involving Detroit’s financial future, voters would be best served by rejecting these tax proposals.

The first fact to clearly understand is that a rejected tax proposals can emerge again in the future. This provides those who are asking for your money to rethink their proposal and make improvements more favorable to the tax payer. This is clearly the situation with Proposal L which affects the Detroit Public Library. This proposal is asking for a renewal of property taxes. The problems with this proposal include the fact that a portion of this property tax will be collected for use by businesses in the Downtown Development Authority to be used on projects that have nothing to do with the library system. Additionally, if and when the city emerges frrom the bankrutpcy process, millions and perhaps billions of debt will be eliminated. This allows the city of Detroit to resume funding services at a lower cost to the Detroit tax payer. One of these services should be the library system. With the money the city of Detroit saves frorm the bankrutpcy process, the library can be fully funded without more taxes for individual households in Detroit.

There is a county tax to be collected and then shared by various public school systems. Wayne RESA. Detroiters should reject this because of the existence of an Emergency Manager in the Detroit Public Schools. At this time Detroiters do not have control over DPS and the finances. Detroiters, to some degree, have a voice on the partially elected school board, but that school board does not have that ability to set or influence financial policy. Regardless of what the board says or what the people want, the Emergency Manager can use tax funding for any activity within the school district. This would include the funding of charter schools or even the Education Achievement Authority schools. Based on this broad funding scheme, lack of accountability and the apartheid nature of an emergency manager, this proposal should be rejected.

Another county proposals asks for a continued tax to support the SMART bus system. Wayne County Transit Authority Millage Renewal. This tax does not affect those residents in Detroit even though the SMART bus drops off and picks up paying customers within the city of Detroit. Wayne, Oakland and Maccomb counties will be asked to continue the tax and the voters should reject this proposal. In 2013 SEMCOG changed the formula for shared federal and state funding of the SMART and DDOT bus systems. More funding was provided to SMART even though the systems themselves did not change. This change alone should alter the amount of taxes needed by SMART to support its activities. DDOT is currently funded by Detroit’s general fund and not supported by a dedicated tax source. The very public M1 Rail, the new century update to the People Mover, will ask voters for a property tax as early as 2015 to fund its operations. Additionally the new Regional Transportation Authority will need a property tax levied on the counties served to support its operation. Because these taxes are need to support additional layers of government created by the current Republican controlled state legislature and signed into law by the current Republican governor have not yet been factored into what the average household will pay, the current proposal should be rejected until the true future costs of regionalized transportation are made to be transparent to the tax paying citizen.

The last tax proposal is from the state of Michigan. Proposal 14-1. This proposal was crafted by the Republican majority with generous help frorm the Democratic minority in state government. This proposal provides for a tax cut to businesses. The burden of funding government again shifts more to the local individual tax payer. The Republican and Democrats are promising that nothing in state or local government will be cut or suffer reduced funding based on this reduction in taxes collected. The reality is that local governments will experience a reduction in revenue that is generated by this tax. The state of Mcihigan will suffer a reduction in revenue that is generated by this tax. Somewhere programs will have to be eliminated or simply never get funded because of the reduction in funding. This funding reduction has not been forecasted but based on prior statewide business tax cuts, the range could be frrom one to two billion dollars lost. The supporters of this tax cut have declared that businesses will be able to invest in newer equipment and business property and perhaps even higher more workers. However none of these claims can be proven. None of these claims have been promised. The last time businesses taxes were cut by this governor and state legislature, the impact to the state’s economy was a negative hit due to the cuts in state programs due to the reduction in funding. Based on how businesses taxes work, its doubtful that any new investment occurs based on this tax break and its unlikely that this tax break leads to any increase in jobs for the state. Those supporting this tax cut will not provide any predictions of any benefits with their proposal. However the potential downside is enormous. This proposal should be rejected and the state legislator should craft a more equitable method providing a tax cut without a shift in the tax burden and without a risk of shutting down essential government.

Detroit is now again, leading the nation in property foreclosures due to unpaid property taxes. Like the very publicized shuttoff of water to those who need assistance, the taking of property from those same persons is an epidemic that does not get the same amount of attention. There are people in the city who complain about squatters. However, when property is taken through the foreclosure process, these families must find somewhere to live. A family with children does not have a set goal to squat in a home. They share the same american dream as do we all of home ownership. Detroit has the highest property taxes in the state. Detroit has the highest unemployment rate in the state. For a city as large and with the many multi-billion dollar businesses and indivuduals, more than anywhere else in the state, the city has the lowest household income. These circumstances force a rejection of every tax proposal that is presented before the voters. Before the government asks for more money, make sure that you as a household and an individual will get more than what you currently receive from the government.

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