There is another factor to point out here. Not voting for the 2 mill increase will, in relative terms, probably have zero impact on the relative advantage that Ann Arbor enjoys over Ypsilanti. In fact, if the Ypsi schools have to cut deeper, that would give a relative advantage to Ann Arbor. There seems to be this thinking that throwing money at the schools results in an automatic improvement in their value to the public. Maybe throwing money all the time simply encourages dysfunctional behaviors to arise; the schools never have to even ask let alone answer the tough questions that are inherent to funding priorities.

My position is that the value proposition is not there; vote this turkey down and let the WISD come back with a better proposal and we can have this discussion again. Taking money from people who are losing their homes and health care so people who want to keep theirs is not fair. If WISD wants to take money from the community, let’s make sure they will spend it well.

If you look at my post #4, you will see data for the average price of homes plus millage rates in Ann Arbor and Ypsilanti. Sure enough, Ypsilanti has a higher millage rate and lower average home values.

I believe there are two, contradictory forces at work; downward price pressure brought about by the increase in the millage rate and upward pressure brought about by the value of the services paid for with the new revenue. Since the proposed millage is only to keep existing services and due to the fact Ann Arbor is a donating $5 of $16 million dollars outside the city; I expect most of the effect will result in a reduction of home values in the long run. There should be a transient step increase in revenue to the AAPS; but in the long run, some of this increase will be given back due to the lowering of home values.

If some home buyer says, “I’m gonna buy a house at <= 75% of what the bank says I can buy…"; the same price lowering effect would work. Or, if someone says I will only spend 20% of my income; the price lowering effect would work.

Maybe you don’t look at how millage rates affect housing values, but the banks do. The amount of house you can afford, or the mortgage payment, is based on a percentage of your annual gross income (usually about 30%). The mortgage payment includes the property taxes; if the millage tax rate increases, less money is available to pay for the house. Less money to pay for the house means sellers have to lower their sale price. $2800 less on a $200,000 house is about 1.5% of the home value so it is hard to notice it on each transaction; you need to look at the affect across an entire community. Ypsi has a millage (average home value) rate of about 60 mills (120,000) and Ann Arbor’s is about 46 mills (178,000). Notice that the average home in Ypsi pays about $3600 while in Ann Arbor it is about $4100 per year.

If I see your point correctly, you’re saying increasing the tax rate shrinks the tax base. Growth of the tax base generates more taxes. I’m sure there’s some truth to that, but..

I for one didn’t look at the tax rate and ask the seller to adjust their price based on that consideration. I looked at the house, bought it based on the 3 factors that are usually cited as key to a property’s value: location, location, location (yes, a very old joke, but it’s longevity comes from truth). For me, the house being near relatives, in a good neighborhood with a great set of schools, and within walking/biking distance of downtown were key factors.

I have to wonder how many people start with the factors you’ve looked at in your comment–or when/to what degree those factors enter into negotiations. If those factors are secondary to the ones that shaped my decision about a house, then the millage seems likely to support the property values you look to as the bottom line basis for school funding.

Here are some other numbers you have not mentioned. A 2 mill increase on a $200,000 home ($100,000 assessed value) results in a $200/year increase in taxes. In order to compensate a buy of said $200,000 dollar home; the seller would need to reduce the selling price of the home by about $2800 (assuming 6% interest rate) to keep the payment the same after the tax hike as before. Any tax hike of the millage rate in this environment will probably result in a long term reduction in property values but will produce an increase in revenues in the short run. What sustains tax rates is household incomes. If household incomes are dropping, increases in the millage rate will result in reductions in home values in order to compensate. If household incomes are rising, housing values will go up along with rising millage revenue.

A letter from the state treasurer, Robert Kleine, sent to state budget director Bob Emerson states that the decision to cut funding stems from a revenue shortfall in the School Aid Fund. [.PDF of letter]

A second letter, sent from Emerson to state legislators, states that these cuts will be made unless the legislature comes up with additional revenues for the School Aid Fund within 30 days. [.PDF of letter]

With roughly 16,500 students, the Ann Arbor Public Schools would lose an additional $2.1 million if the new cuts take effect.