If Saginaw City Council members ask voters for local property tax reform, their 2024-25 budget will stand as their benchmark for transforming 45 years of history.
Approval of the spending plan is slated for the meeting at 6:30 on Monday, May 20, although the City Charter deadline isn’t until the end of the month.
A decision on if, and when, to seek an election that would wipe out the 1979 tax caps won’t come until later.
Leaders will need to explain why they are seeking more funds when the total city budget of $233.9 million is up by one-third over the current year, and even the tight general fund will rise by 10 percent for a sum of $44.6 million.
The answer is that huge boosts in special revenue sharing from the feds (American Rescue Plan Act) and from the state (downtown Medical Diamond for health care) inflate the numbers but do not help with basics like public safety, street upkeep or recreation programs.
Those types of details are important. Budget Director Yolanda Bland is offering her 18th annual document, which reflects an uncommon depth of experience, but she still sees a need to point out in the introduction that less than 25 percent of a property tax bill is for City Hall, with the bulk for other taxing sources. Some people perceive that the entire sum is for 1315 South Washington.
ARPA’s rules do not allow funds to be used for restoring public safety employment. Therefore, police and fire personnel remain reduced far more sharply than the population has fallen, with state police taking more duties and the closure of the Hess Fire Station leaving an entire city quadrant without a facility.
Tax caps in focus
Two main strategies for reversing this trend are canceling the tax caps and reversing the population loss. One cap limits property tax revenue to $3.8 million, while the other caps the rate at 7.5 mills.
The current millage, rounded off, is 6.7 mills in order to avoid exceeding the $3.8 million. Lifting both caps would allow a 10-mill max, a 3.3-mill increase, or about $100 per year for a home with a $60,000 sales value. This would generate $1.4 million, adding slightly to the general fund.
Freeze-lifters say the key is that if Saginaw ever attains major economic development, the caps must be removed to allow the full value of increased revenue. Voters passed the provision when tax-cut fervor reached a peak during Ronald Reagan’s national rise to power and rejected repeated 1980s attempts at repeal, one named “Eliminate Tax Limits,” or E.T. after the hit sci fi movie.
Saginaw’s tax caps are different because they allow no inflation adjustment, which has caused leaders through the years to state incorrectly that “we’re living on a 1979 income.” This false premise overlooks major cap dodges, including:
- A rubbish tax that reached 3 mills before past council members switched to a flat $240 fee.
- A 3.2-mill transit levy,
- A switch to a countywide Civic Center with an 0.225-mill tax.
- A 7.5-mill assessment for police and fire.
Voters have confounded leaders with mixed measures. Every member elected since Dr. Walt Averill III in 1977 has opposed the tax caps, or at least remained neutral, but that so far has made no difference. And why would voters keep the caps while also supporting the higher tax for public safety, along with a 50 percent hike in the city income tax in 1989?
In Michigan, town councils and school boards often seek tax approval in low-turnout special elections. This would put the Saginaw City Council on track to seek a referendum early in 2025, a similar approach to them renewing the public safety measure in February of this year. However, this low-key approach no longer locally is set in stone, because the Board of Education passed the Saginaw United bond issue in the high-turnout presidential election of 2020.
Facts for taxpayers
Among some budget highlights that stand out, tax caps or no tax caps:
- In total spending, the biggest chunk is $99 million for a water/sewer system that serves beyond the city limits to include almost the entire county. The sum is up 22 percent, mostly to replace aging copper and galvanized pipes at residences. The state mandate was sparked by the Flint water crisis, even though the Vehicle City’s problems were caused mainly by errors in chemical treatment, not the age of the pipes.
- For streets, $9.4 million comes from the federal and state governments, with the city’s required match at $1.5 million.
- The DDA, Downtown Development Authority, “captures” $920,000 for economic development that otherwise would go to the general fund. Old Town has been added, along with the riverfront between the two business districts that existed prior to Saginaw’s 1890 merger.
- Retiree benefits continue to dent the plan, with health care costs alone up 15 percent over last year.
- Page 41 contains the best visual breakdown of how city funds are spent. Overall, the visual explainers are far superior to those found in other local budget outlines.
To see the budget document, click here.
To view Yolanda Bland’s review at the May 6 meeting, click here.
