Ypsilanti City Income Tax

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The Ypsilanti City Council has placed a question on the ballot for the November 2007 Election, asking voters whether a city income tax should be enacted. The income tax would be 1% for city residents and 0.5% for non-residents, and would expire after five years. The Council has approved a 2-mill rollback of property taxes that would take place if the ballot item is approved.

Contents

[edit] Ballot Language

The following language will appear on the November ballot for City of Ypsilanti voters:

ADOPTION OF UNIFORM CITY INCOME TAX
Shall Ordinance No. 2007-1065 adopting the Uniform City Income Tax Ordinance, which:
  • imposes an annual rate of income tax of 1 % annually on corporations and resident individuals, and 0.5 % annually on non-resident individuals who are employed within the city.
  • allows a $1,000 exemption for each individual and dependent with additional cumulative exemptions for individuals over age 65 and for individuals with qualifying disabilities.
  • exempts income from pensions, Social Security, annuities, disability payments, and other qualifying sources of income
  • becomes effective July 1, 2008, and
  • expires July 1, 2014
be approved?
Yes ( )
No ( )
Ypsilanti City Council adopted Ordinance 2007-1065, Uniform Income Tax Ordinance, subject to voter’s approval. The purpose of the city income tax is to increase revenue and expand the tax base. Without a revenue increase, city administration projects that additional service cuts will be required to balance the budget for fiscal years 2009 and 2010. City administration projects that revenue from the proposed income tax would allow current service levels until at least fiscal year 2012. According to the Plante-Moran Income Tax Feasibility Study commissioned by the city in 2005, the income tax would generate approximately $4 million in annual revenue from 10,600 non-residents who work in the city of Ypsilanti and 11,400 working city residents.
If the income tax is approved, Ordinance 2007-1067 adopted by Ypsilanti City Council reduces the city property tax rate by 2 mills.

[edit] Positions

Advocates of the tax, including the group Campaign for Ypsilanti's Future, say that recent and on-going reductions in State revenue sharing, as well as loss of industrial tax base, require new sources of revenue. City spending has been "cut to the bone", claim advocates, and further spending cuts will increasingly impair quality of life. An income tax would help diversify the tax base, they say, by capturing revenue from commuter employees of Eastern Michigan University and other major employers.

Opponents of the tax, including the group Stop City Income Tax, claim that the tax would discourage investment in the city by placing an extra burden on residents and property owners. Further, they point to projections released by the city government to show that the tax will not solve the city's financial woes - assuming no further changes in the city or State funding processes, in five to six years the city's budget will likely be back at its current state. Opponents of the tax ask why residents should be asked to pay a new tax that will not permanently solve the problem, and advocate instead additional budget cuts.

On October 8, 2007, the Ypsilanti Area Chamber of Commerce Board voted to recommend a "no" vote on the ballot item.

[edit] Lawsuit

In late September, Stop City Income Tax, joined by Councilmembers Brian Robb and Trudy Swanson, filed suit against the city, asking the Washtenaw County Circuit Court to declare the ballot language invalid. The suit claims that the ballot language is misleading, inaccurate, and was placed on the ballot improperly.

[edit] Sources

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