I'd like to speak about a controversial topic...Saginaw's property tax caps. Some very hostile people are angrily advocating an "us verses them" election theme; the people versus city hall.
Your vote affects services ordinary citizens will have, not some isolated bureaucrat's job. This vote will determine Saginaw's financial ability to provide services. Voters must decide if our community will be better or worse off in five years if the caps are kept?
The consequences of the vote may affect the value of your property. It will determine whether children have recreation and summer food programs. What happens will not be miles away. The impact of your decision is the same as though you painted your house or paved your drive or coached some kids. It's visible right here.
The ballot is an opportunity. Strange as it may seem, this diversified, rust belt community represents a lot of the American dream. The vote is about overcoming obstacles. It is about a community knocked to the mat, getting up again. Voters will decide whether or not we have what it takes to pull together.
Put it in this perspective. In 1968, Saginaw was nationally recognized as an "All
American City." About ten years later the tax caps came with layoffs of city
employees. Shortly afterward, crime surged and blight popped up like mushrooms in
you know what. Then Saginaw's total property values plummeted from $618 to $535
million.
The County, Delta College and other taxing units saw their incomes drop. Individuals and community groups fought to improve the city. It's been a long tough decade, but they've done well. Saginaw's been on an upswing. Its image has been improving. In the past four years alone, investors have committed over $400 million to build new buildings, put jobs in the city and create new housing. Cultural centers and community events have brought people back.
I believe the caps are a hoax. Far too many citizens think their total tax bill is being capped and too few know the damage they've done. These caps never, ever capped anyone's total taxes. Look, between 1979 when the caps went into effect and 1994 when Proposal "A" removed school taxes, Saginaw's citizen's tax rate rose 22 percent (from 54 to 66 mills). How could taxes rise if there were caps? Because the caps only affect the city, not every taxing authority. In fact, two new taxing agencies were created after the caps were approved.
If the "caps" didn't cap taxes, what did they do? They've strangled funding for basic services to citizens and put a lot of people out of work. Within 36 months of enactment, about one third of city jobs were ended . At first, the cuts were things we didn't all notice much. Now, almost one half of the city's former work force is gone, city departments now number seven instead of fourteen and one out of every three police and fire and personnel are gone. Besides devastating individual families, every one of those lost incomes resulted in at least 1.5 other jobs being lost county wide.
Years ago Michigan's property tax burden was much higher than the national average. Now, it is about average and anyone seriously threatened can get relief. State laws prevent the widowed, the elderly or poor from being taxed out of their homes.
Increases from inflation are limited. Property tax refunds are available to anyone with an income of less than $82,600 paying more than 3.5 percent of household income in property taxes (even renters). Laws prohibit assessors from raising taxes on homes that have undergone ordinary maintenance and repair. The state even offers home heating credits.
One might ask about the cost of delivering services. Is Saginaw competitive, efficient and levying a fair millage rate?
Here are millage rates for a few communities: Bay City 21.4, Flint 16.1, Frankenmuth 11.6, Midland 12.0, Saginaw 8.5. If you own a $100,000 home: in Bay City you'll pay $1070 for your city taxes; in Flint $805; Midland $600; in Frankenmuth $580 and in Saginaw $425 for City taxes.
Oh, Saginaw collects an income tax. At almost twice Saginaw's rate, so does Flint. Lansing levies 15 mills plus its income tax. I'll bet the majority of resident income tax filers could add their city income tax to the property tax shown above and still find their total tax bill lower than cities without income taxes.
What about the cost of delivering services? A tax cap proponent recently said "a rational person might think that city government expenditures might exceed Saginaw Township expenditures by a 1.5 to 1 margin."
How do they compare? Dividing its total allocation by the total number of employees, Saginaw Township's budget reveals an overall cost per employee of $224,000; the city of Saginaw's is $182,000. The township's cost for Police protection is $100,000 per employee; the city's is $92,000. The township's cost for fire protection is $188,000; the city's is $108,000. The city does very well on other comparisons provided at the web site www.michiganpropertytax.com/saginaw.
What isn't fair is these caps prevent Saginaw's citizens from benefitting from new taxes when other local governments do. If something new is built in the city, its millage rate must be cut. Not in other local governing units! They keep their rates and collect new taxes! Donavan Rypkema, a consultant to the National Historic Trust said of this cap: "That's lunacy, total lunacy. It deprives the city of the benefits of its own efforts in economic development."
If the economy does take a dump, relying on the income tax to fund services may sound like lunacy too. In part, that is why economists recommend a combination of property and income taxes as the fairest way to fund government.
This is a critical time in the city's development. Few people want increased taxes. Most citizens want the city to get healthier and their property values to climb. When you want to sell your home you paint and clean. If we want to keep the current recovery going, citizens need to commit to a clean, safe city. You can't have it both ways. Nothing in life is free, but the impact of removing these caps is very low.
Voters may support successful efforts to move Saginaw forward such as those of the Garber and Shaheen families, Saginaw Future, St. Mary's and Covenant Hospitals, PRIDE's Friday Night Live, the Country festival; the County Event Center, the Children's Zoo, the Saginaw Art Museum and the new Children's Museum; or they can save the cash equivalent of one or two cups of coffee per week.
Vote yes to remove the caps.
Yours truly,
Joseph M. Turner, President and CEO
Michigan Property Consultants L.L.C.