Talk of a possible Saginaw property tax increase may emerge as soon as this summer. This would happen by seeking voter approval to remove two 1979 tax caps. To begin, two main points:
- This would involve a far, far lower fraction of a sum than last year’s Board of Education 7-mill plan for new and renovated city schools, including a unified high school. The City Hall sum likely would be closer to 0.7 mill, or one-tenth the school increase. Instead of Benjamins, $10 bills.
- The background info will be far more age-old and complex than for the school millage, even though we are talking dimes versus dollars.
So why even bother? Because we should know. Besides, it can’t be more complicated than the NFL player draft or Real Housewives or the lottery or the various complexities that many of us willfully endure.
We started these articles last winter on the principle that an informed citizen is the best citizen. So here we go.
Begin with Reagan
To learn why we may see a local tax hike soon, we are required to travel all the way back to the late 1970s, when Ronald Reagan still was governor of California. He was somehow known as a positive Mr. Sunshine, but at the same time he preached a negative: “Government is not the solution to our problems, government IS the problem.” And so on.
When he started his run for president, in addition to speaking of “states rights” and other anti-civil rights code language, Reagan also started a huge tax-cut movement, with Proposition 13 in his home state. Copycats emerged across the nation. In Michigan, we had the Headlee Amendment, which was even more severe than Reagan’s Prop 13. And here at home, Saginaw United Taxpayers and the Tax Caps.
Basic strategy in the Reagan Anti-Tax Revolution was to use cost-of-living as a hedge. In Saginaw, this involved “capping” annual property tax revenue at $3.83 million, frozen at the 1979 level, and the individual rate at 7.5 mills, forced even slightly lower with yearly inflation.
But let us not allow facts and details to confuse us. Saginaw, unlike the federal government, is locked to a strict no-deficit limit. This is fine with fiscal conservatives, at least until they wind up with fewer cops and more potholes and so on.
Saginaw has had these Tax Caps for 42 years. Some consequences:
- Overall, we have about 400 city employees, down from more than 1,000 back then.
- Our police force is 60 officers, down from the 1979 count of more than 200, with reliance on state troopers more than ever.
- We have 39 firefighters, down from 140, and with the closing of Hess Station, one-quarter of town lacks its own immediate response.
- We don’t even have city recreation any more, which had produced activities for all ages and hundreds of job for teens.
- We are required to pay separate for our trash pickup.
- We also have a separate transit tax.
- Our Civic Center would be gone without a shift to a county millage.
- We needed federal money to begin demolishing a backlog of abandoned, vacant houses.
Leaders opposed, not the people
The Tax Caps have been opposed by virtually every civic leader since 1979. Henry Marsh, Stu Francke, Ruben Daniels, Paul Wendler, Pamela Leckie, Frank Andersen, Henry Nickleberry, Gil Guevara, Sister Ardeth Platte, Joe Stephens, Minnie Rosales, Larry Crawford, Foster Gibbs, Wilmer Ham, Dick Garber, Carol Cottrell, Greg Branch, Joyce Seals, Dennis Browning, an endless list.
In misery over the Tax Caps, former City Manager Tom Dalton once sarcastically quoted the comic and filmmaker Woody Allen: “We have a choice between permanent, dire misery on one hand, or total destruction on the other. God help us to make the right decision.”
Some of those leaders now are deceased. So are the duo who led the local version of the anti-government Reagan Revolution, Dr. Walter Averill III and attorney Al Schmid, who persuaded a majority of citizens to vote against all those other leaders.
Is this sounding more like a litany of the past than a concern of the present? It might be, if not for Saginaw’s immediate past mayor, Floyd Kloc.
Ever since his election to the City Council in 2011, Kloc quietly but consistently hammered at the Tax Caps and kept them alive. He stepped it up a notch as mayor for the prior two years. His outlook comes from his long-time role pre-millennium role in the city attorney’s office, from seeing the aftermath of the severe limits on revenue. This may be old news, he asserts, but it’s still the reason the city’s financial health and overall programming remain stuck in the mud.
All the various Tax Caps gadgets details may prove overwhelming, but not to Floyd Kloc. He can argue the evils endlessly, with the latest from his written notes, to his pocket calculator, teamed with his attorney’s mastery of the ordinance. His main frustration is when anti-taxers lie and deceive, for example, describing a property tax statement as a “city tax” when 85 percent is for other purposes, mainly for schools and countywide operations.
To start, due to rollover inflation, a 1979 dollar bill is worth only 27 cents nowadays, although our immediate past mayor nails it down with more specifics:
“The dollar,” Kloc writes, “had an average inflation rate of 3.13% per year between 1979 and today, producing a cumulative price increase of 264.84%, so a dollar today is only worth 27% of a dollar in 1979.”
Pfew! Next stop, calculus? We need all the facts and we need transparency, but simplicity also is in order.
Future questions
Floyd Kloc and myself agree that the Tax Caps have seriously harmed Saginaw with ridiculous rules that prevent inflation adjustments. It’s like if the minimum wage were stuck in granite at $1 an hour, or a Social Security check at $100 a month. We also agree that Saginaw needs to get rid of these Tax Caps monsters.
But we disagree on some details.
- My view is that while Saginaw’s scenario is extremely severe, we are not “living on a 1979 income.” We’ve dodged some of the Tax Caps impact with a 1989 city income tax increase, a 2005 police/fire 7.5-mill special assessment that doubles the “capped” millage rate, and a $210 trash collection fee. Kloc responds that the Tax Caps have cost the city budget at least a combined $55 million over the past four decades, far beyond repair from the patchworks that I outline.
- The former mayor states, “When the City’s four seasons of recreation programs available to kids to keep them off the streets were eliminated, the Civitan was closed, and our parks were no longer maintained, when the police and fire departments were decimated by personnel cuts, the increase in crime was both predictable and a huge incentive to abandon city housing and businesses.” I don’t blame the Tax Caps for all that, or see rescinding them as a path to a turnaround in those areas. Bottom line, as he further reflects, the former mayor pretty much says the same. The Generous Motors years are long gone.
- Finally, Floyd Kloc has insisted that the Tax Caps travesty needs to be put back on the ballot, but that everyday citizens should take the lead, instead of relying on their elected leaders. I definitely disagree here. Council members are elected to lead
Now that he’s an everyday citizen himself, Mr. Kloc is sort of hedging a bit, saying that the potential referendum originators should not only be everyday citizens, but everyday citizens who don’t so happen to be former mayors. Still, he aims to at least raise the Tax Caps with leaders of Saginaw’s civic groups and neighborhood associations.
“That is, if covid ever allows them to begin meeting regularly again,” he adds with a tinge of frustration.
This means a tax proposal would be up to Kloc’s successors, featuring Mayor Brenda Moore and a City Council comprised of mostly newer members, along with City Manager Tim Morales and a veteran administration.
And if “Tax Caps” return to the local political jargon in the months ahead, well, you heard it here first.
