Construction, Government, and Travel & Tourism

GR votes May 6 on income tax for street repair

Specifics are coming Feb. 11 on how the money would be spent.

January 31, 2014
| By Pete Daly |
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When this brutal winter ends, Grand Rapids city streets may be in a classic state of disrepair, and if the city voters still see reminders of that May 6, it may encourage “yes” votes at the special election that day.

The special election approved by the City Council would extend the city income tax increase voters approved in 2010 to a new end date of 2030, and it would also amend the city charter to make the city responsible for sidewalk construction, repair and maintenance, instead of the adjacent property owners.

City Manager Greg Sundstrom said a continuation of the income tax increase is estimated to raise almost $10 million a year. He told the Business Journal last week the plan is for it to provide roughly $1.6 million for sidewalks and roughly $8.3 million for street reconstruction and repair.

On Feb. 11, the City Commission will consider two documents: one is the spending guidelines for those tax revenues and the other is answers to frequently asked questions the city may get if the voters approve the ballot questions May 6.

The spending guidelines are “the promises that we make to voters about how we will spend the money, who will make the decisions, how we will report back to citizens how every dollar was spent … That kind of thing,” said Sundstrom.

Last year a city task force studying the cost of repairing the streets estimated that in 2014, roughly $3.4 million could be available from the city’s share of the state’s gasoline and diesel tax revenue, and another $3 million might be captured from grants through the state.

The Sustainable Streets Task Force estimated $22 million is needed each year to maintain 70 percent of the city’s streets, sidewalks and public rights-of-way in good or fair condition. The group concluded in its report, however, that only 8 percent of the 588 miles of streets are in good condition, and 60 percent are in poor shape — with that number hitting 87 percent by 2019 without any new investment by the city.

In his January State of the City address, Grand Rapids Mayor George Heartwell focused on high priority capital spending facing the city — and “the mother of them all,” he said, is funding for the streets and sidewalks in disrepair.

Noting that fractured, pot-holed streets hurt business and increase the cost of driving in the city due to vehicle damage, Heartwell said the city’s investment has been $3.4 million a year, matched with another $3 million in transportation grants.

The Michigan gas tax revenues “have fallen precipitously over the past decade and are now just enough” to generate matching grants for the city, said Heartwell.

Because the state legislature does not seem likely to approve an increase in the state gas tax, “we have to take matters into our own hands,” he added. 

In 2010, voters approved a five-year increase of the city income tax rates, to 1.5 percent on corporations and residents and 0.75 percent on non-residents who work in Grand Rapids. The tax rate had been 1.3 percent for residents and corporations, and 0.65 percent for non-residents.

Set to expire at the end of June 2015, the increase yields additional funds that are earmarked for staffing on the city police and fire departments. So if the vote is “yes” in May, the tax rates will continue for another 15 years after July 1, 2015, but that revenue would be going to streets and sidewalks.

The section of the City Charter that puts the burden on the abutting property owners to build, maintain and repair sidewalks dates back to 1918. The proposed charter change facing voters May 6 would state that if voters approved the continued income tax increase to 2030, the 1918 requirement “shall be of no force or effect.”

Holding the special election in May, rather than waiting for the November election, will cost the city an estimated additional $75,000 to $80,000, according to the city clerk’s office.

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