Again, Saginaw community leaders will explore asking voters to remove property tax limits, for what they say is the sake of the city’s future.
They cannot change the devastating General Motors departure that was underway in 1979, the year voters approved a cap of $3.83 million on annual assessment revenue, with no adjustment for inflation. A related 7.5-mill limit also is in play.
GM generally is long gone, but the City Council can do something about those 44-year-old revenue barriers for basic city services.
Council members this week were unanimous in support of a Michael Balls resolution “to compile information for the citizens and to form a committee to review lifting the tax caps.”
Mayor Brenda Moore is directed to appoint three members, likely at the next meeting Monday, July 10. That’s more than two weeks away, and it could be two more years if and when voters decide, because this fall would be too soon and a top 2024 priority will be renewal of a 7.5-mill police and fire special assessment. City leaders do not want to risk losing past support for the public safety millage by throwing the penalty flag on the freeze at the same time. Therefore, 2025 may become the target year.
The general fund rate for the coming year is 7.22 mills, which translates to $7.22 per $1,000 in taxable value or SEV, or half of the sales value. Without the caps, City Councils in the future would possess optional power to raise the levy in any amount up to the City Charter’s 10 mills. The current max increase would be another $2.78 per $1,000 SEV, with low-income and seniors possibly eligible for state Homestead reimbursement.
For sake of comparison, this hike would be less than both the new school bond millage (2020 for Saginaw United, Handley, SASA) and separately the old millage (2004 for Thompson Middle and Loomis). It also would be less than the county’s combined small millages — sheriff patrols, mosquito control, Commission on Aging, parks and more — and less than for public libraries.
Voters elected them, won’t follow
Virtually all council members since 1979 have opposed the caps, some more stridently than others, except for Dr. Walter C. Averill III, a freeze originator with attorney Allan Schmid. They followed a national anti-tax movement that took root with Proposition 13 in California and the related clinching rise of Ronald Reagan.
The council’s confounding conundrum is how the same citizens who voted them into office don’t seem to listen when their informed elected leaders unanimously assert that the caps are bad news, not so much because homestead levies are frozen, but that the dollar limit precludes any gains from business development. To them, it also doesn’t make sense that citizens would support freeze-dodging special levies — like the 3 mills for trash, now a $220 fee, and like the separate public safety levy that matches the freeze’s entire 7.5-mill general cap — while they oppose removing the freeze itself that actually helped to cause these added special levies.
At the same time, cap backers led by Greg Schmid, Al’s son, will counter that one reason to oppose freeze removal is that city leaders already have figured out ways to work around the provisions and to thwart the voters’ intent, and that taxation will rise even more without the caps as last bastion safeguards.
Freeze critics on the council will counter-counter that a longtime tactic to discredit them is to hold them accountable, or to blame, for taxes collected or other taxing units in the City of Saginaw’s name, mainly for schools and the county, also including the libraries and Delta College.
Manager Tim Morales emphasized that future damage from the caps would be when, and if, long-term economic development occurs, and that the timetable for a referendum is not crucial on the immediate calendar.
Councilman Bill Ostash noted that the 7.5 mills for public safety pays to recruit, train, equip and pay 20 police officers and 10 firefighters. Based on those figures, removing the caps to the max short-term for 2.78 more mills would support another seven officers and three firefighters, and that would be only if the lion’s share of added funds were devoted to public safety.
Big names were backers
Efforts to repeal the caps were most intense directly after passage, during the 1980s, so long ago that the civic group named itself “E.T.,” not for the movie but for Eliminate Tax limits.
Major historic leaders came out, from Stu Francke to Henry Marsh, Rev Roosevelt Austin to Paul Wendler, Ruben Daniels to Sister Ardeth Platte, Daniel Soza Jr. to Larry Crawford. Even centenarian Frank Andersen came on board, with all his donations for the civic good, including a wave machine to replace the old standard pool in his name.
But after three defeats, trying to overturn the frozen limits during the anti-tax Reagan years, city leaders instead opted for a 1989 income tax increase. A main selling point was that with taxation of income, as opposed to property, suburbanites who worked in the city also would pay a “fair share.” In the end, the 50 percent boost, to 1.5 percent for residents and 0.75 for non, generated more revenue than a property tax freeze removal would have achieved at the time.
The higher income taxes helped mainly during the 1990s, but one effect of major federal and state revenue sharing slashes was that Saginaw couldn’t even afford to keep the extra community police officers first gained with funds from then-President Clinton, with Sen. Joe Biden’s strong support, much less paying for any city-funded recreation programs.
Anti-freeze efforts since then, in the new millennium, have lacked similar firepower and enthusiasm. Floyd Kloc, Moore’s predecessor as mayor, is a former city attorney who became a top opponent when he learned the ins and outs of the tax limitation. Kloc’s tactical approach to the revenue blocks was to aim for a citizens initiative to rescind the tax caps, mainly because election history showed that a referendum would stand a better chance at the polls if it did not appear to come from the City Council.
That handoff plan never came together, and the current council’s decision this week to take leadership is a more assertive outlook that will require more cooperation. Councilman Balls took the pre-planned lead, a sign of patchwork after he walked out of the past two meetings, asserting that his peers should do something constructive instead of bickering over non-issue procedures and then making rules to govern their own conduct and disputes.
Who will be on the committee?
Moore’s council conduct committee, still in place in spite of Balls’ “waste of time” opposition, is Annie Boensch, Reggie Williams III, and Priscilla Garcia. She now faces a similar restriction to three choices for the tax caps advisory panel, based on the council majority’s desire — other than Michael Flores and Monique Lamar Silvia — to keep meetings closed to the public, including news media.
Ostash is emerging as a leading tax caps expert. He already has started to shake cobwebs on the issue by bringing it up at neighborhood meetings and other citizen gatherings.
Following July 10, the council’s next session on July 24 will feature a six-month update on the federal ARPA infusion of a record-setting $52 million in pandemic hardship relief funds. However, the money is only for special anti-poverty purposes, not for the general fund, with the exception of capital improvement projects, mainly for City Hall HVAC, for Ojibway Island and for Hoyt Park, with some also for cemeteries. Therefore, funding for basics like police and fire will continue to run short under the tax caps.
One myth that numerous freeze foes have cited through the years is that City Hall is forced “to live on a 1979 income.” This is untrue because property taxes are less than 10 percent of the upcoming year’s $40.3 million general fund and, as Morales stressed, even after possible tax caps abolition.
For the short term, however, it appears the limits will remain a topic of civic conversation, not immediate action.
