Tax increase only part of the story

Analysis:

The article was a preview of Mayor George Heartwell’s State of the City address, where the focus this year was on economic sustainability. The speech focused on several points to improve the local economy, not just raising taxes, such as increasing government efficiency, reduction of municipal services, providing more tax abatements for businesses and creating sustainable industrial parks. None of these elements were discussed in the Press article until the very end of the story on page 2, in the last two paragraphs. Framing the issue as one primarily about taxes was clearly designed to get people’s attention, but why didn’t the Press provide any substantive coverage of the other economic policies that the Mayor was planning on sharing at the State of the City? How does it serve citizens by not providing an adequate representation of local government policy?

Story:

Mayor: GR needs tax hike
By Jim Harger

GRAND RAPIDS — Mayor George Heartwell was to use today’s “State of the City” speech to call for an increase in city taxes.

Unless the state government restores revenue-sharing funds it cut in recent years, Heartwell said the city needs to look at a tax increase or face more drastic cuts in police, fire and recreational services.

The city has cut $64 million in spending in the past four years and will have to cut another $80 million in the next five years, Heartwell said. The next city budget will require cuts of about $8.5 million, he said.

“Everyone who loves this city has been saddened to see the quality of municipal services decline,” Heartwell planned to tell audience members this morning during a breakfast speech at DeVos Place.

“I will not stand by and watch our city decline for want of investment in public services and infrastructure.”
Although Heartwell has floated trial balloons in recent months suggesting he might support a tax increase, today’s speech was to be his strongest call yet for raising taxes.

Any increase in the city’s income tax or property tax must be approved by voters. Heartwell said Friday he doesn’t know if he has the votes on the City Commission to put the question on the ballot later this year. Heartwell also said he has not decided if he will pursue a property tax increase or an increase in the city’s income tax.

Raising the city’s income tax from 1.3 percent to the state limit of 1.5 percent would raise about $8.5 million a year, he said. Non-residents employed in the city would see their rates increase from .65 percent to .75 percent.
Grand Rapids is among a handful of West Michigan cities with such a levy. Walker has a 1 percent tax on residents and a 0.5 percent tax on non-resident workers. Other West Michigan cities with income taxes include Big Rapids, Ionia, Muskegon, Muskegon Heights and Battle Creek.

Heartwell said a 2-mill increase in city property taxes also would raise $8.5 million a year. The city currently generates about $20 million a year for its general fund from property taxes.

A restoration of state revenue sharing funds could forestall the need for a local tax increase, Heartwell said. “But it’s not highly probable at this time,” he added.

Heartwell said he will build the case for a tax increase by convincing citizens the city is operating as efficiently as possible. He said the city already has made strides through its “Administrative Lean Program.” The city will have to make further cuts in its health care and pension programs, he said.

Heartwell tried to strike a positive note in his speech, saying there were signs the region’s manufacturing economy is beginning to regain strength. He also touted West Michigan’s emerging health-care and biomedical sector. Although he did not provide specifics, Heartwell said he wanted to create tax incentives to encourage the development of knowledge-based companies.

He also called for the redevelopment of two soon-to-be vacant industrial complexes as “eco-industrial parks,” in which sustainable business practices and “green” principles would be rewarded with tax breaks.