Mount Pleasant officials consider income tax study amid need to boost revenue
Mount Pleasant officials will look into the feasibility of an income tax, citing future needs to boost revenue and maintain the current level of services.
Last week, city commissioners were given a rundown of Mount Pleasant’s recent financial history before giving city staff the green light to search for a firm capable of completing a study of what potential an income tax could have.
City Manager Kathie Grinzinger pointed to two major areas that could continue to weaken Mount Pleasant finances — an $8.6-million cost to city residents with the loss in state-shared revenue over 11 years and proposed legislation in Lansing that could eliminate the local collection of personal property taxes.
“I don’t want to raise anyone’s blood pressure with them thinking, ‘Oh, they’re going to do this income tax,’” said Commissioner Sharon Tilmann at the Feb. 13 meeting. “No, we’re trying to study what would be the best alternative for the city so we can continue to provide service.”
The city has already invested several thousand dollars into exploring an income tax twice in little more than two decades, according to city documents.
First in 1990, Mount Pleasant employed the Ann Arbor-based firm, Stauder, Barch & Associates, to finish an analysis for $7,500. It later paid the Michigan Municipal League $18,000 for another in 2000.
The first estimated possible revenue based on census data, while the later depended on employer data.
Because of the unlikelihood of state-shared funds being restored to a previous level, which was 50 percent of the city’s revenue about a decade ago, Grinzinger said officials have been in “constant review” of the city’s level of services, what they cost and how to increase efficiency.
Over that same period of time, she said the city has reduced its number of positions by 12 percent and increased some fees, among other adjustments made, to preserve funds.
The concern now for many officials, however, is that with the suggested elimination of personal property taxes, they may not be able to balance the 2013 and other future budgets without a “drastic” reduction in services or a substantial increase in “real” property taxes generated.
An income tax would collect money from residents, as well as those who work in the city.
As it is only one of the multiple mentioned options to increase revenue, Grinzinger said city staff will not know more about which is the preferable choice until an independent study is conducted.
