Econ Development Tax Increase Postponed

The handling of a proposal to increase a tax for economic/agricultural development drew criticism from some Washtenaw County commissioners, ultimately leading to a postponement of the item that was discussed at the county board meeting on Sept. 19, 2012.

The millage for economic development and agriculture is authorized under the state’s Act 88, and has been levied by the board since 2009. That year, it was levied at 0.04 mills. It was raised to 0.043 in 2010 and 0.05 in 2011. Because the Michigan statute that authorizes this millage predates the state’s Headlee Amendment, the board can levy it without a voter referendum.

On Sept. 5, it had been given initial approval by commissioners on a 7-to-3 vote, with dissent from Alicia Ping, Wes Prater, and Dan Smith. Ronnie Peterson was absent. The board also set a public hearing on the tax for Sept. 19. At the Sept. 5 meeting, board chair Conan Smith had floated the possibility of increasing the Act 88 levy to 0.06 mills. He also suggested giving the office of community and economic development (OCED) the authority for distributing the millage funds. However, he did not make a formal resolution at that point, and the board gave initial approval for the 0.05 mills.

The agenda for the Sept. 19 meeting indicated that the public hearing would be on the proposed 0.05 mills. Several people who benefit from the millage revenues, either directly or indirectly, addressed the board and encouraged commissioners to continue providing support. None of the speakers mentioned specifically the amount to be levied.

Later in the Sept. 19 meeting when the item came up for discussion, Smith proposed an amendment to replace the original resolution with a new version that increased the tax to 0.06 mills. (Some copies of the resolution that were circulated had 0.07 mills as the proposed amount.)

The original 0.05 mills would cost homeowners $5 for each $100,000 of their home’s taxable value. It had been expected to raise about $693,095. The millage proceeds were to be allocated to the following local entities in 2013, with generally the same amounts that the groups received this year: Ann Arbor SPARK ($200,000), SPARK East ($50,000), the county’s dept. of community & economic development ($140, 331), Eastern Leaders Group ($100,000), promotion of heritage tourism ($65,264), Food System Economic Partnership (FSEP – $15,000), Washtenaw 4-H ($82,500), Washtenaw County 4-H Youth Show ($15,000), and MSU Extension, to support economic development in the local food system ($15,000).

Under Smith’s amended resolution, the rate of 0.06 mills would raise about $838,578 and cost $6 for each $100,000 of a home’s taxable value. He proposed the same funding allocations as cited above, with the additional millage proceeds to be allocated this way: (1) $50,000 to the Detroit Region Aerotropolis; and (2) any remaining balance to the office of community & economic development, for activities related to those authorized by Act 88.

Ronnie Peterson objected to the process, calling it a gray area that might be legal, but was not moral. Specifically, he noted that the initial vote and public hearing had been based on the 0.05 mills, only to have the board raise the rate at the end of the process. Dan Smith pointed out that the increase amounted to a 20% hike.

Conan Smith replied that the board was not required by law to hold a public hearing on this tax, and that he had openly proposed the possible increase two weeks ago, and had distributed a proposal in writing at the board’s Sept. 6 working session. [See Chronicle coverage: "County Tax Hike for Economic Development?"]

After additional debate, the board voted 8-3 to postpone action on the item until its Oct. 3 meeting. Voting against postponement were Conan Smith, Leah Gunn and Rolland Sizemore Jr. The board also voted 7-4 to hold another public hearing about the possible increase to 0.06 mills. Voting against a hearing were Conan Smith, Dan Smith, Rob Turner and Leah Gunn.

A second public hearing will take place on Oct. 3, followed by consideration of the original resolution and Smith’s amendment.

This brief was filed from the boardroom in the county administration building, 220 N. Main in Ann Arbor. A more detailed report will follow: [link]