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Commission Weighs Income Tax, Other Revenue Sources to Deal with Deficit

Sehvilla Mann
/
WMUK

The City of Kalamazoo says an income tax would generate enough revenue to close a growing budget gap. Commissioners are weighing whether to propose such a tax, which would have to be approved by voters before the city could levy it.

Kalamazoo’s budget shortfall is projected to come in at under $2 million next year. But by 2021, it’s expected to rise to more than $5 million. Last night commissioners said they wanted to consider many of the ideas put forward by the volunteer Blue Ribbon Revenue Panel the city appointed last year, which met to look for sources of revenue.

But the city says that even combined, the panel’s proposals that are “viable” in the next five years - countywide emergency dispatch and growing development – would only narrow the budget gap to $2.55 million in 2021.

If voters approved an income tax, the city could collect up to one percent of residents’ income and up to half a percent of income for workers who live out of town.

An income tax would come with automatic property tax relief. The city charter mandates that Kalamazoo reduce the property tax to 14 mills if it creates an income tax, and it could choose to lower the property tax rate even further. Right now the city levies more than 19 mills on property.

Commissioner Shannon Sykes says lower property taxes would be a great help to businesses and homeowners. She says she’d like to see the rate set even lower than 14 mills.

“I have met a number of people who said, ‘I moved here from, you know, Seattle, I moved here from this part – I chose not to move into Kalamazoo because the property taxes are too high.’ So if we want to grow, if we want to attract new talent, if we want to attract new businesses, property taxes need to go down and the way I see that happening is through an income tax,” she says.

Sykes says an income tax means people who live out of town, but work in Kalamazoo, would pay toward the cost of running the city.

“Everybody that I talk to that doesn’t live in the city is wanting to that,” she says.

“They want to contribute to a solution here, because I think everybody understands that the county is not healthy if our urban core, if our city is not healthy.”

Statewide funding for roads helped to balance this year’s city budget. Commissioner David Anderson says if Michigan restored revenue sharing to previous levels the city might not need an income tax. But Anderson says Kalamazoo needs more revenue whether the state changes its policies or not.

“That is tied not to overspending, that’s not tied to having programs that are entirely unnecessary, and duplicate in the community. That is tied to the idea that for a city to thrive, it has to be able to invest in itself,” he says.

If the commission decides to pursue an income tax, it could appear on the ballot as early as November.
 

Sehvilla Mann joined WMUK’s news team in 2014 as a reporter on the local government and education beats. She covered those topics and more in eight years of reporting for the Station, before becoming news director in 2022.
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