Construction and Government

Trust an issue in GR’s pothole vote Tuesday

The chamber supports continued income tax increase for streets and sidewalks.

May 2, 2014
| By Pete Daly |
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What actually will happen with revenue from a proposed 15-year continued increase in the Grand Rapids income tax is an issue as both supporters and opponents prepare last-ditch campaign efforts for the city special election Tuesday.

Andy Johnston, vice president of government affairs at the Grand Rapids Area Chamber of Commerce, said the organization is “urging citizens to vote yes” because the city has made a commitment to also spend existing tax dollars on streets and sidewalks and made “a legal commitment” to an agreement that the tax increase “would only be spent on streets” and sidewalks, as spelled out on the ballot.

Michael Farage, a nightclub manager who is president of the Grand Rapids Taxpayers Association, told the Business Journal there are “hidden fees” entailed with the proposed tax increase. He suggests that improved sidewalks will lead to re-assessments of property and “they jack up your assessment. Not only do you pay for that (in higher property taxes) if you are an owner, but if you are a renter, your rent is going to go up.”

Farage, who said he is planning to start a business and is a frequent opponent of proposals endorsed by City Hall, said “the best way to stimulate our economy is to put money in people’s pockets to spend, not in government’s pocket.”

The first of two questions on the ballot would continue the current income tax rate of 1.5 percent on corporations and residents to 2030, as well as the current rate of 0.75 percent on non-residents.

The income tax rates were 1.3 percent on corporations and residents, and 0.65 percent on non-residents, but were increased to the current level by voters in 2010. The increase was temporary and is set to expire in 2015 if the voters do not renew it in the Tuesday election.

The second question would amend the city charter to relieve property owners of the financial responsibility for maintenance and reconstruction of their sidewalks.

Grand Rapids City Manager Greg Sundstrom said it is “a critical ballot question” that “could have a significant impact on the city’s ability to continue to transform our operations” and make management of city assets sustainable.

Mayor George Heartwell has led the push for the continued tax increase, stating that “our street network is in very bad condition,” with more than 60 percent of it rated poor.

“So the need is obvious,” said Heartwell. “I think the question voters need to consider is, do you trust your local government to be responsible for the funds that you give it?”

He said when the 2010 tax increase was approved, “we made promises and we have made good on all three of those promises.”

Heartwell said, in this case, there is what amounts to “a lock box” that the increased tax revenue would be put in if the ballot measure passes. There is a “very, very strong set of guidelines that dictate how the money would be spent,” with about 84 percent on street repair and 16 percent for sidewalks, “and none of it goes to anything else other than streets and sidewalks.”

“All of the money that voters approve will go to the purpose for which it is intended,” said Heartwell.

He added there will also be a citizens committee established “that will drive those investment decisions over the course of the next 15 years,” so how the tax increase is spent is “not just at the whim of the mayor” or city manager or city commission.

Johnston said repair of Grand Rapids streets is vital for business, residents and visitors.

“We’ve studied the issue,” he said. “We do not take any type of tax increase or extension lightly, but after reviewing and studying it, and getting a commitment for (city) general fund support for our streets from the city of Grand Rapids, we feel comfortable supporting this and asking our residents to vote yes on Tuesday.”

When the ballot proposal was introduced several months ago, supporters noted that, during the recession, the state of Michigan cut funds for state roads and also revenue sharing funds that could have gone to maintain city streets. The Legislature has given no indication it will restore that revenue sharing.

Johnston said the chamber wants voters to know “we still need the state to act, in order to fix our roads in Grand Rapids. This isn’t the complete solution.”

“We’re seeing positive signs” the state may help, said Johnston, but he repeated, “We need Lansing to step up, in addition to a yes vote on Tuesday.”

Farage was upbeat on the outcome of the election.

“I like where this is going,” he said, commenting on the amount of support he is seeing. He said he sees a trend in which people who have traditionally voted in favor of City Hall proposals are indicating they won’t this time.

Americans for Prosperity, a conservative nationwide political organization, has supported opposition to the Grand Rapids tax increase. Farage said he is “really glad they are in the fight because normally, it’s just myself” and a few other people. Americans for Prosperity is “doing their thing, but I’m not affiliated with the AFP whatsoever. I’ve never taken a dime from them.”

Americans for Prosperity, which is funded by Kansas billionaire brothers Charles and David Koch, has been running frequent ads on Michigan television stations criticizing U.S. Rep. Gary Peters, a Democrat, for his support of the Affordable Care Act. Peters is presumed to become the Democratic nominee for Michigan’s open U.S. Senate seat, with former Michigan Secretary of State Terri Lynn Land as the presumed Republican nominee.

Grand Rapids is not the only local government that has found itself in the crosshairs of the AFP. In Columbus, Ohio, there will also be a vote on Tuesday on a millage proposal that would fund the Columbus Zoo and Aquarium. The Columbus Dispatch reported in late April the AFP was sending out mailings urging Franklin County residents to vote no on the 1.25 mill property tax.

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