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Council consults with attorney about supplementing revenue

By Ralph Echtinaw

Thinking about raising money for public safety, road work and public transportation, city council heard from a municipal finance specialist Tuesday.

Steve Mann of the Detroit law firm Miller Canfield spoke to city council without charging a fee, as his appearance is considered an initial consultation.

Council asked Mann if a 2-mill special assessment for public safety enacted in 2017 and renewed annually since can be made permanent by a vote of the people.

Mann said no. Voters can approve a special assessment district but not the millage rate or its duration. Those would be up to council to determine.

Furthermore, council would have to terminate the existing special assessment district for police and fire before asking voters to approve the same thing. That would leave the city without the money that the existing 2-mill levy generates and run the risk that voters would reject a new special assessment district.

“If they say no, then you’re probably stuck for a year without a special assessment levy,” Mann replied. “After a period of time you could probably come back and re-establish it yourself on the board’s initiative, although that probably wouldn’t politically be taken too well.”

Other options

The city already gets revenue from 13.1376 mills, which was originally 15 mills but has been eroded over the years by the Headlee Amendment to the state constitution.

The amendment says that a city’s millage levy must be reduced when the value of its taxable property increases by more than the rate of inflation. The idea is to make a city’s millage revenue stay constant as the assessed value of its taxable property grows.

Mann said council could ask voters to re-establish a 15 mill levy on property taxes. It’s called a Headlee override and could potentially be on March 2020 presidential primary ballot. The downside is that future Headlee rollbacks would erode the increase, albeit it gradually.

Council could also ask voters to approve a charter amendment that would raise the millage as high as 20, the maximum state law allows.

In this case, council could specify a “specific purpose” for the additional millage levy (such as police and fire) and put a duration on it or “leave it open ended which would be in perpetuity,” Mann said.

One downside of charter amendments, Mann said, is that they take 45 days longer to put together than alternative methods of raising revenue because they must be reviewed and approved by state government. They are also subject to Headlee rollbacks and will likely shrink over time.

Selling bonds

Mann said council could ask voters to approve the sale of bonds for a specific project (such as road work) that would be repaid with a temporary millage. The advantage here is that the bond payment millage would not be subject to Headlee rollbacks.

Mann noted that he recently put together a $45 million road work project for the city of Ferndale that is funded by the sale of bonds that are repaid with a millage.

Councilman Tom Reed asked Mann what the best course of action is.

“If you don’t have a revenue stream in place right now and you need to go to the voters for a revenue stream, asking them to approve a bond issue is the best way to go,” Mann said. “Because it gets you that debt millage that you can pay, and it’s not affected by Headlee.”

Conversely, if council asks voters for a charter amendment to pay for road work (or anything else) it will be subject to Headlee rollbacks. “When you go to issue your bond you’re kind of guessing on what this millage will bring in over the next 10 or 15 years,” Mann said. “And if you’re wrong, you may need to supplement that debt service from other funds.”

Council took no action on the issue Tuesday, but City Manager Kurt Giles said it will likely be discussed again. “We have been holding a special goal-setting session in the fall,” he said via email. “This year’s workshop hasn’t been scheduled yet, but I expect that will be a good time to discuss this in more detail.”

The “earliest realistic opportunity” that a bond issue for roads could be put on the ballot is probably November 2020, Giles said. “I see it as being a very important matter but not necessarily urgent. With that being said, of course we will follow the direction from city council.”

Who’s running?

Four St. Louis residents have turned in petitions with a sufficient number of signatures to be on the ballot in November for election to city council.

They are Bill Leonard, 73, Don Dean, 70, Roger Collison, 69, and this reporter, 60.

The four of us will compete to fill two city council seats that are open because council members Jerry Church and Melissa Allen are not seeking re-election.

Mayor James C. Kelly is on the ballot, too, but running unopposed.

All candidates are invited to write an article for the Sentinel to introduce themselves to voters.

Attendance

There were no absences on the council. Council candidates Leonard and this reporter were present. Roger Collison and Donald Dean were not.

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Categories: Uncategorized

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