County Increases Tax for Economic Development

After holding a public hearing on a tax increase to support agriculture and economic development, the Washtenaw County board of commissioners authorized the Act 88 tax at a rate of 0.06 mills, an increase from the current 0.05 mills.

The action occurred at the board’s Oct. 3, 2012 meeting. The vote on an amendment to increase the tax rate passed 6 to 5, with dissent from Ronnie Peterson, Alicia Ping, Wes Prater, Dan Smith and Rob Turner. The vote to levy the tax passed 8-3, with Ronnie Peterson, Wes Prater and Dan Smith voting against it.

The board was on track to approve the tax last month at the 0.05 mill rate. But after a public hearing, board chair Conan Smith proposed an amendment to raise the rate to 0.06 mills – an idea he’d informally floated at the board’s Sept. 5 meeting. Some commissioners objected to making a change after the public hearing, which led the board to postpone action until Oct. 3, when another public hearing was scheduled. Only two people spoke at that hearing, both in support of the tax.

Smith’s proposal also gives the office of community and economic development (OCED) the authority for distributing the millage funds.

The millage 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.

The rate of 0.06 mills would generate about $838,578 and cost $6 for each $100,000 of a home’s taxable value. It would generate about $145,483 more than the rate of 0.05 mills. The millage proceeds are 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).

The additional funds from the increase will be used for the Detroit Region Aerotropolis ($50,000), with any remaining balance – about $95,000 – be allocated to the office of community & economic development, for activities related to those authorized by Act 88. It’s likely that the amount would include additional staff for that office.

Those who opposed the tax increase cited several objections, including the timing of a tax increase while many taxpayers are struggling because of the economy. Peterson also felt that the Act 88 funds aren’t being used for their original purpose – to leverage matching dollars for economic development – and instead are being diverted to support county operations. ”It was never meant to be a piggy bank for county government,” he said.

Alicia Ping has in the past voted against the Act 88 tax, but supported it this time – though she voted against the amendment to increase the rate. She hoped commissioners would consider reallocating some funding for the western side of the county, pointing out that there are economic development needs there too, including a lack of decent Internet access.

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