November 27, 2014

AuGres council unhappy with possible revenue cuts

By Kevin Bunch
Staff Writer | news@arenacindependent.com
Follow me on Twitter

Posted

AuGRES — A personal property tax reform proposal working through the state legislature led to the AuGres City Council expressing their displeasure during a visit from State Rep. Joel Johnson, R-Clare.

The proposal would scrap the tax, which is levied on businesses for equipment and machinery. Since the tax is used by local government entities and schools, City Manager Pat Killingbeck said its loss could have a drastic effect on city services unless the funds are replaced in some other way.

Johnson said the committee working on the proposal is looking at ways to make up the revenue, and he said so far it has found 81 percent of the money.

“We are trying to get rid of it, but we understand we can’t just pull the rug out without replacing it,” Johnson said.

However, Killingbeck said it would still be a sizable cut in revenue for the city even with that 81 percent included.

By her calculations, AuGres would see a 7-percent reduction in its yearly revenues, roughly $46,000. Furthermore, Arenac County would lose about 6.3 percent, or $283,000, she said. Both figures factor in the 81 percent in replacement funding.

AuGres Mayor LaVern Dittenber appeared skeptical of Johnson’s assertion the funding would be covered, citing the state revenue sharing as an example of money being lost to local governments. He said the funds were originally collected as a sales tax for local governments until the state decided to pool it all and divvy it out. Originally, Dittenber added, it was sold to voters with the promise that all of the funds collected would go back to the municipalities.

“Somewhere they took the money in and were reluctant to give it back,” Dittenber said. “It was diverted to the state level and the smaller entities were left holding the bag.”

Johnson said he did not want to leave smaller governmental units in the lurch, and pointed out that Gov. Rick Snyder proposed increasing the constitutionally mandated state revenue sharing by 2 percent.

In addition, he said Snyder proposed an additional 7-percent increase for fulfilling as-yet unannounced “best practices,” something the AuGres council was wary of.

Killingbeck pointed out the city already consolidates many services, to the extent that fulfilling additional requirements for the current fiscal year’s best practices funding did not earn the city any notable savings.

Dittenber said he did not believe the city had gotten credit for consolidation efforts it had been doing already, something Johnson said he would look into further. He said his understanding was that the city should have gotten credit for it.

Johnson said he was also pushing to equalize the funding schools receive through Proposal A, which was a selling point for the constitutional amendment when it passed in 1994. Johnson pointed out the schools in his district received about $6,846 per pupil per year in state foundation allowance funding, while schools elsewhere in the state receive about $8,000.

Johnson is proposing increasing the amount received for districts receiving less while decreasing the amount going to the districts receiving more money, over the course of three years. He believed that would provide enough time for those districts losing funding to adjust their budgets.

Councilman Keith Edmonds criticized Proposal A, saying that overall the funds collected by the state being used for schools are less than they should be.

“When are my kids going to stop suffering due to cuts at the state level?” Edmonds said. “The state should give back to the schools like it’s supposed to.”

Share

Copyright © 2014, Sunrise Publishing. Powered by: Creative Circle Advertising Solutions, Inc.