Arbor Update

Ann Arbor Area Community News

McGovern takes issue with Prop A critics

25. May 2005 • Murph
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The role of the Headlee Amendment and Proposal A in Ann Arbor’s fiscal pressures has been a popular topic on this site. Ann Arbor News columnist Judy McGovern, however, won’t tolerate any criticism of Proposal A.

With state government struggling, virtually all counties, cities and townships are under financial pressure. As much as $1 billion in state-shared revenue was taken from municipalities in the last three state budgets. We get it.

The gnashing of teeth and moaning about the state’s Headlee Amendment and Proposal A?

That’s a different matter.

It implies that property owners should somehow be making up the difference or at least paying more than they do under those measures.

It also suggests that city officials don’t get it. Mayor John Hieftje and City Administrator Roger Fraser are lucky that a fairly small number of taxpayers are listening when – in community meetings, City Council presentations and even in budget documents – they lament the constraints that, from a different point of view, keep people from being taxed right out of their homes … or slow the process anyway.

Revenue from local property taxes has been growing a healthy 4 to 5 percent a year in Ann Arbor. That doesn’t make up for the lost state revenue, but it does seem like enough from one source.

McGovern then proceeds to apparently support the idea of new taxes – like “an entertainment or ticket tax” – in order to balance city budgets and prevent service cuts, just before criticizing Council for acting to slow the rate that Headlee pushes down property tax rates, calling the slower decrease a “boost” in the tax rate.

Presumably, all of these positions might exist together in a coherent understanding of local finances, and an awareness of the overall condition of Michigan’s cities, but this doesn’t seem to be such a column.

Previous AU discussion of Proposal A:
> 28 Feb 2005: Greden’s Second Budget Letter
> 17 May 2005: False dichotomy or brilliant ad campaign (Comment #67 and later.)

  1. She especially doesn’t seem to get the commercial vs. residential implications of Prop A that we’ve hashed over again and again here … i.e., commercial properties maintain their “cap” by selling the owning corporation rather than the property itself where residential property owners have no such luxury…
       —Scott T.    May. 25 '05 - 09:27PM    #
  2. Ooops. Looks like my comment got zapped. Or something…
    Is Larry K. gonna write her a letter?
       —js    May. 25 '05 - 09:56PM    #
  3. Scott,
    I thought that loophole was recently plugged. Wasn’t there some case recently where a company in Ann Arbor sold the holding company that owned a building, and the courts ruled that the property became uncapped?
       —tom    May. 26 '05 - 12:50PM    #
  4. No, I believe the Ann Arbor assessor decided that a corporate property was uncapped by a change in ownership higher up; last I heard, the appeal to the state is still pending. Most places don’t even bother to notice these things, let alone contest them.

    Moreover, any corporate ownership transaction can be structured to avoid transferring 50% in any calendar year, so the properties owned by that entity wouldn’t be subject to uncapping.
       —Larry Kestenbaum    May. 26 '05 - 01:57PM    #
  5. A further impact of Proposal A is that tenants pay four times the school tax rate as homeowners do. And that’s an immediate impact, as opposed to the gradual revenue squeeze referred to above.
       —Larry Kestenbaum    May. 26 '05 - 01:59PM    #
  6. Larry,


    I think this is not part of the Prop A calculus that I had heard before. Can you elaborate?
       —Murph    May. 26 '05 - 09:20PM    #
  7. Under Proposal A, homestead properties (i.e., homeowners) pay 6 mills to schools, whereas non-homestead (i.e., everything else including all rental housing) pays an additional 18 mills for a total of 24 mills, i.e., four times as much.

    The landlords don’t just eat that extra cost; tenants pay property taxes through their rents.

    This was yet another reason Proposal A should have been rejected. But even a lot of tenants I knew voted for it, or didn’t bother to vote.

    School district taxes are just one ingredient in the overall property tax bill, but even so, 18 mills ($900/year on a theoretical $100,000 house) is a pretty hefty penalty for not being able to afford homeownership.
       —Larry Kestenbaum    May. 27 '05 - 05:24PM    #
  8. I think I speak for everyone here who rents when I type: CRAP!

    Note the new Web site.
       —Dale    May. 27 '05 - 05:33PM    #
  9. My.

    Well, color me outraged.
       —Murph.    May. 27 '05 - 08:48PM    #
  10. So, Dale, are you trying to start a student lobbying group there, or a tenants’ union, or a neighborhood association (or a shadow neighborhood association), or what? I’m not quite clear what the goals are.
       —Murph.    May. 27 '05 - 08:53PM    #