KALAMAZOO (WKZO-AM) — Kalamazoo city officials say the next five years could make the difference between being a vibrant growing attractive community and a having a state-appointed emergency financial manager take over the city.
It all depends on finding new sources of revenue.
City Manager Jim Ritsema said the revenue model for most cities in Michigan is broken because they rely on property taxes, which took a huge hit in the Great Recession and still haven’t recovered. They are projecting growing deficits over the next five years.
Commissioners reviewed the report of a Blue Ribbon Task Force and weighed a list of ten possible alternatives.
A few were dropped because of technical and legal issues. The others were handed over to staff to be fleshed out and further investigated, including a city income tax, which was the only option that would solve the city’s problem by itself.
It would take several of the other options combined to produce the millions needed.
Commissioners have asked to have more details on a proposal by the task force to privatize the parking system, despite concerns by some commissioners that turning it over to a private company might mean higher rates and less control over a service that some see as a quality of life issue.
The income tax was endorsed by several commissioners who say it could generate the additional revenue needed by imposing a half-percent flat income tax on people who work in the city but live elsewhere.
They say 81 percent of the people who work in the city don’t pay for any of the services they enjoy while they are here, and on average they earn more than city residents.
It was also pointed out that an income tax would make it possible to lower city property taxes enough to not only reduce the total tax burden for many residents, but give Kalamazoo a property tax rate that would make it competitive with Portage and other surrounding communities for new business, retail development and offices.
Commissioners requested staff to provide an assortment of possible options for the income tax that could be presented to the community for discussion.
The city also plans to pursue some of the other suggestions made by the task force, including a shared 911 dispatch center, developing vacant properties, and possibly asking non-profits to chip in cash for city services.
Currently, over half the properties in Kalamazoo are not taxable because they are non-profit or government owned.
It’s not just the churches and the schools, but Western Michigan University, Bronson Methodist Hospital, Borgess Medical Center, the state hospital, Kalamazoo Valley Community College and Kalamazoo College all depend on some city services but don’t pay property taxes.
A suggestion that the city pursue a regionalized water and wastewater utility has been taken off the table because it doesn’t contribute money to the city’s general fund.
A Headlee override was also struck from the list of options, because the city attorney isn’t sure it would withstand a court challenge.
Other possibilities like special assessments on homeowners to fix roads, improve parks or even to pay for public safety are on the table, but unpopular because they just raise taxes on city residents.
The special meeting began with a presentation from city department heads of what they will have to cut if they don’t find a new revenues, after they have already spent the last eight years dramatically cutting staff and cutting costs.
It would mean delays in service for everything, from removing dead trees, to helping businesses get permits and site approvals. There would be less money to fix roads, plow snow, sweep trash from gutters, holiday decorations and it might mean abandoning the snowmelt system downtown.
Kalamazoo Public Safety Chief Jeff Hadley said he would have to cut 20 officers, which would approximately mean one whole division.
Some of those cuts may have to be implemented next year anyway, because whatever revenue enhancement the city pursues, it will take time to put it to voters and begin assessments.
Commissioner Jack Urban says continually cutting services and staff will make Kalamazoo less attractive, and one that does not grow and that no one wants to move to.
Finding new funding will make the city attractive to millennials and seniors who have raised their families and are looking for an urban setting where everything they need is nearby.
Urban says it’s the difference between living in a great city or just getting by.
Commissioners have asked to have some of the specific proposals fleshed out in more detail and will be shooting for either a late summer or early 2017 deadline for a final proposal to put on the ballot.
They plan extensive efforts to gather public input on the various proposals to find out which would be the most popular with residents.
Several of the options will require voter approval.
– John McNeill
