After hearing complaints from residents, and voicing concerns of their own, the members of the Ludington City Council on Monday decided not to vote on imposing an additional 1 percent tax administration fee on all property tax bills.
Councilor Les Johnson, who motioned for the council to discuss the matter rather than vote on the proposed fee resolution, said the time isn’t right for the city to enact the fee.
“At this time, I don’t feel we should collect this 1 percent on our property taxes,” Johnson said.
But since the tax administration fee is listed on the summer 2019 tax bills that were mailed to property owners, anyone who has already paid the fee will receive a credit for that fee amount on their winter property tax bills. Anyone who has not paid the administration fee is not required to do so and will not receive a tax credit for it.
The fee would have charged taxpayers an additional 1-percent of the total amount on their summer and winter property tax bills.
A tax administration fee would be intended to offset the city’s expenses in collecting taxes. Michigan created the law in 1982 to give local municipalities the option of imposing the fee. During the decades since, all of the other local municipalities in Mason County chose to charge the fee, but the City of Ludington has not.
Councilor Brandy Miller said that just because many other municipalities have imposed the fee, that doesn’t mean Ludington should.
Miller said the city had factored into its budget that it would receive about $37,000 in revenue from the fee. She said that after considering the matter in the finance committee, she doesn’t think the city budget needs that money.
“I don’t think it’s necessary,” Miller said. “It feels like a money grab, and I’d rather wait until we’re at a point where we need it.
“I am certainly not in favor of it at this time,” she said. “While I think in the future it may become a necessary revenue for the city … it needs to be done properly. People need to be prepared.”
In order to legally enact the tax administration fee, the governing body of a municipality must first pass a resolution or ordinance stating that it will impose the fee, according to the Michigan General Property Tax Act.
Although the fee was listed on the summer tax bills this year, the city council never passed the resolution required by state law.
Councilor Dave Bourgette said that the city government “dropped the ball” regarding never passing the fee resolution.
“The proper channels weren’t followed,” he said. “In my opinion, I don’t think this is something we can approve. It’s not a matter of right or wrong. It wasn’t done properly, and so I feel we can’t vote on this at this time.”
City Attorney Richard Wilson told the council it didn’t do anything illegal. He said that if the council so chooses, it can pass the resolution to enact the fee anytime before the summer property tax bills are due, which is Oct. 9.
Councilor Cheri Rozell said that when she learned of the proposed fee from a resident, she felt “caught off-guard.”
“I feel like we don’t have a whole lot of information about this, and maybe we need to go back and revisit it,” she said. “Another thing we do need to be conscious of is we do have a lot of people on a fixed budget. And we have increased the water bills, and we did approve at least one tax increase with the police pensions, which was totally necessary. And our citizens have been so gracious in renewing our mills and the school (bond) … and that’s a big burden on people.
“And here’s another thing we’re asking them to pay, and I don’t think it’s appropriate right now to ask the citizens to pay that right now,” Rozell said.
Councilor Angela Serna said that the proposed fee would be a “tax on a tax,” since it would pay for collecting taxes, and she said the city taxes people enough already.
Councilor Joe Lenius noted that the proposed fee would pay for more than just the city’s postage expense of mailing the tax bills. The fee would also fund the city’s legal expenses for tax appeals, which it has to handle for all of the 14 other entities the city also collects taxes for, and for which Ludington isn’t reimbursed. He said there’s one tax appeal case that’s already cost the city $30,000.
But Lenius also agreed the council needs to discuss the fee more in committee and explain to citizens what the money would be used for.
Councilor Kathy Winczewski said she had too many questions to answer from residents about the fee and the city’s plans for the money in order for her to vote on the matter Monday.
Collecting the fee would result in an estimated annual additional revenue for the city of $127,150, City Manager Mitch Foster stated in a memo to the council. He said that the additional funds would allow the city to use more of its tax dollars for operations, including improving city services and infrastructure. Foster also noted that the revenue from the fee was already factored into the 2019 budget prepared by former Interim City Manager Steve Brock.
During the public comment periods at the beginning and end of the meeting, the council heard from taxpayers concerned about the proposed fee. At the close of the meeting, several of them voiced their approval of the council’s decision not to impose the fee.
“I would like to thank you for listening to the citizens and for admitting the mistake. That’s a first step in involving citizens,” said resident Dianne Seelhoff, who also thanked Foster for his apologetic words regarding the fee resolution process.
DDA TIF PLAN
The council set a public hearing for 6 p.m., Monday, Sept. 23, to consider renewing an amended and restated tax increment financing (TIF) plan for the Ludington Downtown Development Authority (DDA).
If approved for renewal, the plan will continue to help fund many of the DDA’s projects within Ludington’s downtown — such as public infrastructure improvements, activities, events and marketing — for the next 45 years.
Community Development Director Heather Tykoski explained in a memo to council what a TIF plan is and said it does not increase taxes.
“(TIF) is a procedure that allows municipalities to ‘capture’ the additional, or incremental, taxes from property as it increases in value. Property owners continue to pay taxes as usual, but a portion of the money is diverted to pay for development activities that have a public benefit,” Tykoski stated.
The DDA would collect 12 percent of the available tax increment revenue, according to the proposed TIF plan.
The TIF plan was first created in 1984, and it has been renewed and revised four times during the decades since. If approved, the plan will continue until its expiration year of 2064.
The council on Monday also established a development area citizens’ council and appointed nine downtown residents to serve on it.
The city is required by state law to establish a citizens’ council of at least nine members, if the development area for the TIF plan has more than 100 residents. The citizens’ council is supposed to be comprised of members of the development area in order for them to review the proposed TIF plan and offer input.
Tykoski said that the DDA’s existing development area citizens’ council was initially engaged in the review process in June, however the city council had not yet passed a resolution to officially establish the development area citizens’ council until Monday.
ALSO ON MONDAY
The council approved an ordinance change to require buskers — street musicians and entertainers — to register with the city clerk and to have city approval regarding when and where to perform.