Ann Arbor Area Community News
Dear 3rd Ward Resident-
As the City Council prepares the City budget for fiscal year 2005-2006 (which begins July 1, 2006), I have published a series of messages regarding the budget process. In prior budget messages, I outlined the background regarding the City budget, the steps the Council has taken in recent years to cut costs, and the reasons why we continue to face a structural budget deficit. In this e-mail, I will outline some specific proposals for the 2005-2006 budget.
Property taxes: As I outlined in a prior budget message, only about one-third of our property taxes are paid to the City. The majority of our property taxes are paid to other governments, including the State of Michigan, Washtenaw County, Ann Arbor Public Schools, Washtenaw Intermediate School District, and Ann Arbor District Library. Each year, the taxable value of property in Ann Arbor increases due to inflation and new development. The increase in taxable value, however, must be partially offset by a reduction in the City’s property tax millage rate. This process is required by the Headlee amendment to the State Constitution, and is known as a “Headlee rollback.” Because of the Headlee rollback, the City’s total property tax millage rate for 2005-2006 will likely be less than the current millage rate. In other words, Ann Arbor property taxpayers will receive a cut in their property tax rate.
Special millage to pay for removal of ash trees:
Unfortunately, just as the City’s property tax rate falls, the City faces a variety of major capital expenses, including the emerald ash borer problem. As you may know, the emerald ash borer is an insect that has infested ash trees throughout southern Michigan. Infested ash trees become a major safety hazard as their branches decay and fall on people and property. The City must pay to remove thousands of dead ash trees on City-owned land. It will likely cost the City several million dollars to remove these trees. To pay for this removal, City administrators propose asking voters to approve a short-term (3-7 years) special property tax millage. The amount of the millage has not been determined, but will likely be between 0.2 and 0.4 mills. For example, a 0.25 special millage, if approved by voters, would cost $37.50/year for the owner of a home worth $300,000. This special property tax millage â€“ like all property taxes â€“ would be deductible on your federal income tax return.
DDA parking agreement:
The Downtown Development Authority (DDA) currently pays the City $109,000 in annual rent for City-owned parking spaces in parking garages, surface parking lots, and street meters. The DDA recently reviewed its parking system finances and determined that the $109,000 rent was too low. In February, I worked with Councilman Chris Easthope (D-5th Ward) to negotiate a new rental agreement with the DDA. Under the new agreement, the rent paid by the DDA to the City will increase from $109,000/year to $1,000,000/year. Furthermore, the DDA recognized that the City faces a structural budget deficit, and thus they voted unanimously to allow the City to take advances on these rent payments over the next five years. This infusion of cash will allow the City to weather the current financial storm while we continue the re-organization of City government and work with the labor unions that represent 85% of the City’s employees to achieve long-term cost savings.
City managers continued implementing the reorganization of City government. This process will result in significant financial savings that will not affect programs enjoyed by City residents. For example:
Cuts that were avoided
Many of the budget cuts that were proposed earlier in the year will not be implemented, including:
The City Council is scheduled to vote on the 2005-2006 budget on May 16, 2005. I am pleased that we avoided more draconian cuts to the Budget. Nonetheless, the City faces a structural budget deficit that will require further cuts in future years.
Please e-mail me at Lgreden AT ci.ann-arbor.mi.us if you have comments or questions about the proposed budget. – Leigh Greden, Ann Arbor City Council (3rd Ward)
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