|
A Time To Decide:
Veronica Horn & Deborah Kimble
By
Robert E. Martin
With
the vote on Saginaw's Tax Cap coming up May 3rd,
it seems appropriate to set the divisiveness that has characterized those
in favor & opposed to the measures into the background and discuss these
viewpoints in a broader context.
Both those opposed
and in favor of the measures share one thing in common: each side cares
profoundly about the future of Saginaw; otherwise they would have hitched
their wagon to the horse cart years ago.
With that being said
I sat down with Veronica Horn from the Saginaw Chamber of
Commerce and former Saginaw City Manager Deborah Kimble to
debate the controversy & merits behind the move to lift the caps.
Review: Let's begin by having each of you state the
case for why the tax cap needs to be removed and the public safety measure
put into place.
Horn: If you want things to happen in the city you've got to be
willing to pay for services. If we ever want to change the balance from
lower to higher income groups living in the city, we have to do something
to attract higher income people.
First you have to
change the downward spiral of the economic condition of the city, because
that's what drives the fiscal solvency problems of Saginaw. If we continue
to drive ourselves down because we can't provide services or have an
unsafe surrounding, it will only continue to place a larger burden on
people who can't afford to pay for those services.
Review: Which is what is happening right now.
Horn: Right. The only way to turn that around is to bring in
higher income people and the only way to do that is to provide services
that make people feel safer.
Kimble: The newest housing developments in Saginaw are from
Habitat for Humanity and low income housing opportunities, and there
is nothing wrong with that; but if the only thing we can attract is low
income groups that proportionally use up more services than higher income
groups and do not necessarily pay a proportionate cost because their
incomes don't generate it, the question becomes how do we help the city by
changing the economic condition of the city and attracting higher income
groups.
It's not a blame game.
Review: But it is a blame game because there is a
reason we got into this financial mess. You can blame the tax cap for all
the city's woes, but I blame poor judgment on the part of city leaders
that for close to two decades now have squandered resources on
ill-conceived projects.
I blame antiquated
entitlement programs & contracts that have lost step with reality. And I
blame past administrations for adjusting their cost-of-living increases
without actuarial approval so they can retire in a sunny climate while I
am placed in a position where I have to consider selling my house. And I
like my house.
So to my mind, what
we have is a revolution in the making, because the birds have finally come
home to roost.
Besides, I don't
feel less safe than I did 20 years ago in the City. And given the
economic realities of today, it seems we need to adopt more of a
metropolitan approach to providing services rather than asking people in
the city to shell out more money.
Horn:
But people on fixed incomes can apply for tax abatements, so they won't
notice any increase from lifting the tax caps. And people at or below the
poverty level can also apply for these waivers. Plus, with both measures
passing, some of the lower income groups get an exemption on their filing
and will actually get money back from the government.
Review: What type of program is this? I'm certainly not
aware of it. Plus I can see how it might affect tenants, but don't see
how it helps landlords out at all - they would still absorb the increase.
Horn: That's true, this would apply only to homesteads; but
its' better than having insurance costs skyrocket, which will affect
landlords even more adversely.
Kimble: My home is my only asset and I can't afford to continue to
witness my asset decline in value. It's hard to sell a house in the city
right now because it's a buyers market and interest rates are so low, but
if we don't have a police or fire force, who's going to buy our houses? My
replaceable value is $300,000 on my home and I paid $100,000. That's a
huge gap. And if these don't pass, homeowners insurance will skyrocket.
Horn: If you can't assure that the streets are plowed or a cop is
there or a fireman is available when you need one, we're in big trouble.
Our whole argument for this is pay now or pay later. I spoke with three
different insurance companies that said every area is weighted by the
ability to protect its residents. If insurance costs skyrocket you cannot
write them off. If we stabilize the city we can hire more police and fire
to protect our assets.
Review: But how can you ask residents of the city for
more money when City Hall cannot even account for the money it's been
receiving. The city audit isn't even complete because departments are so
behind in balancing their books.
Kimble: The problem with completing the audit is a lack of
employees. We can't hire any additional so they are trying to go back 10
years on an audit on top of doing their regular jobs. Employees are not
taking lunch hours. Diane Herman in the Clerk's office is working
14-hour days.
It's stupid to say
the City did everything right over the past 20 years, but it's not going
to get any better by cutting our funds. Show me 9 people in this whole
country that you feel have total integrity and would put on city council.
It could be Bill Gates or Donald Trump - those people would
say we couldn't run this business without these tax caps gone.
Review: Still, the City of
Saginaw has nine
different health plans. Why isn't something being done to consolidate
this?
Kimble:
That's not true. We used to have nine health plans and now we have two. I
negotiated with the unions to reduce the number of plans and insurance
burden by $1.5 million dollars, so now we only have two plans.
Everybody talks
about how employees aren't doing anything or making concessions, but they
have. The current employees took the biggest hit.
Review: But the city does have the latitude to negotiate
retirement & disability packages that don't bankrupt the city. Police &
fire personnel are paid by the citizens, and in tough times when middle
class people are having trouble making ends meet, it doesn't make sense to
allow early retirements with overtime factored into pension plans that
allow a 50 year old cop to retire at $50,000 per year. I know of a
situation in the township where an officer is on disability and receiving
$900 per month, which is what most people get on Social Security; yet in
the city in a similar instance an officer is receiving a disability plan
four to five times that amount.
Kimble: I'm not saying it isn't possible to receive that much,
but I'm not aware of it.
Review: But the larger issue is why should the middle
class & people on fixed incomes that are footing the bill be penalized in
the city because the townships don't want regional government? I think
we need to get them all to the table and end the duplication of services
that exist.
Horn: I agree, but the first challenge is in getting them all
to the table. We tried through the Crime Prevention Council and
held discussions about shared resources. They wouldn't even talk about it.
It's the politicians & upper management that are fighting it. They say
'Why have one department when they'll spend all their time patrolling the
city?' Then another said 'Why should I pay for a police department when I
have the Sheriff covering it'?
People living in the
city actually pay for police in Kochville Township, so why should
Kochville be exempt from paying? Those are all good arguments. We pay a
county millage in the city and its reverse discrimination when it comes to
economic justice because nobody wants to give up their turf.
Kimble: Still, other literature out there says that metropolitan
forces are not the way to go and that competition between departments
increases efficiency and use of funds.
The problem with the
City of Saginaw is that we have these incredible legacy costs in the form
of pensions that townships & villages don't have to handle yet. They
aren't paying for 851 retired employees because of the age of their
governmental units.
The fact is that the
City of Saginaw is the oldest unit of government in Saginaw County, and
the Township isn't facing those costs yet because they haven't been around
that long. Birch Run didn't have police forever because they had no
population, but as people moved out and demanded services, they started
providing them.
Plus nobody knew in
the 1960s and 1970's that health costs would go from $250.00 per year to
$1,000 per month.
It's real easy to
place the blame for what's happening today, but when those things were
negotiated the people negotiating them all moved out of the city.
Review: That's true. Pension systems were the downfall
of all the Roman, French, and British Empires. But I still maintain it
isn't fair to allow that economic burden to perpetuate itself on the backs
of the middle class. The county took over its share of the burden on the
Civic
Center and now the Event Center is thriving. Crisis often forces change
and if the tax cap isn't lifted, it might force the county to the table
when the city's problems become part of their own.
Plus what you've
been telling me thus far only underscores the need to possibly break the
system apart and start over by rebuilding it in a manner that reflects
current reality, not 'turfs' or whatever status quo the townships & city
wish to pursue.
Kimble:
Look how many people have lost their lives because we haven't had proper
public safety in the city. It's easy to say that things haven't been
managed right, but I go back 10 to 15 years and hold the people that moved
out of the city equally responsible. Who's left to govern? You all moved
out, so don't take pot shots at people sticking around that decided to do
their best.
There have been some prior benefit packages that occurred because of
mismanagement years ago that were out of line, but they've been corrected.
Everybody points to the problems, but not how to correct them.
Horn: Trust me, we checked into every possible scenario should
these caps not be lifted through an ad hoc committee that looked at all
the alternatives. They researched it and there is no good scenario.
Saginaw is unique
because of the tax caps, so by August if they stay in place we are out of
money. If we go to the state for a loan they operate like any business and
say 'have a nice day' because they won't lend money for operating costs
while a tax cap is in place, because we couldn't pay it back.
If you file
bankruptcy they say just because you don't want to pay your bills doesn't
mean you don't have to. Besides, receivership doesn't touch health care
for retirees because the State Constitution protects that.
You can't dissolve
the city because if you do Buena Vista would have the whole east side to
service plus they get all the tax revenues from manufacturing. If the
township absorbed the west side of the city, all they would inherit is
residential tax base and some Mom & Pop businesses. Do you think the
township wants to assume all that? How do you do it?
There's no easy way
out.
The way this campaign is working we're not focusing on a lot of finger
pointing. We could do it very easily, but we're focusing on the issue at
hand. What happens to the city if we don't pass these two measures? If we
don't, it's not a good scenario.
Review: There is something that nobody has touched upon,
and that is the fact that if any business outside of the city comes into
the city to do work, they have to pay income tax. Saginaw has the third
highest income tax in the State of Michigan and all these medical centers,
yet none of the doctors that perform operations there, or work there, or
have their offices out in the township, pay any city income tax. How can
you justify lifting the caps given that reality, especially when soaring
health care costs are what's driving this crisis?
Horn: Granted, that is an issue. And the Chamber of Commerce
is working with Dick Powell in the City to correct that. You're
right. That is a wrong that has to be righted and the Chamber is working
on it, but people are always looking for loopholes to get around taxes. If
somebody is looking to get around the law, they'll figure a way to do it.
At least if we lift
the tax cap we'll have adequate staff to catch stuff like that and
straighten out some of these legacy costs. But with less staff, how do you
keep on top of it? It's an impossible situation. Voting 'no' will only
make it worse.
Review: The major draw of the City is its affordability
in terms of starting up a business and the same is true with housing. If
it's no cheaper to start a business here than in the township, which one
is going to win out in the end?
Horn: Location is more a quality of life issue than what it
costs. Why would Frankenmuth continue to thrive? It's not strictly
because of German charm. Business costs and taxes are astronomical in
Frankenmuth. Success begets success. A town with no services has nothing
to offer.
Generations move to
different places. The older generation left the farms and went to the
cities for jobs, which is why cities like Saginaw and Detroit did so well.
Our generation is more mobile and the baby boomers decided they needed 2
acres and a trophy house, so they moved and ate up the farmlands. Now kids
today want the energy of the city, so if we build loft housing & provide
services, combined with decent schools, soon you'll get young people
moving into the city and bringing in young families. You can only do it
one piece at a time.
Kimble: It's crazy to think we're sitting in some oasis because we
have tax caps in place. If low taxes were such a drawing card, everybody
should be living in the city. Instead people keep leaving.
Review: This is a point that somebody brought to my
attention. Basically, the city is threatening to close the fire
departments on Gratiot & State streets should these measures not be
lifted, but why would anybody want to give more money to a city hierarchy
that would make such a stupid decision?
Why in the world
would you threaten the viability of your most solvent taxable assets?
Kimble:
Because there is more of a need for fire department service on the East
Side than the West Side. Besides, when it comes to fire protection the
first priority isn't protecting assets, it's about protecting peoples'
lives.
People are sick if
they think otherwise.
Review: All that you're saying may be true, but the fact
remains that the rich have experienced immense tax relief and hardly pay
any taxes, the poor get subsidized, and the burden keeps growing on the
middle and lower middle class, which is rapidly eroding. The Feds cut
revenue sharing to the state; the state cuts revenue sharing to the city,
and the city taxes the middle class. It's all an ugly downward spiral on
that end.
Kimble: That's true. Every municipality has lost revenue
sharing from the State. Kalamazoo is 3 years away from using up their
reserve fund and every core city in Michigan is at risk. We've lost
federal & state revenue sharing and are losing block grant funds with a
dwindling population.
What' you're saying
isn't inaccurate, but there is no easy answer for it. We're trying to
propose an answer.
It's about people
who can afford to pay taxes doing so in order to provide decent services
for people that can't afford to pay them, so in the end everybody comes
out a winner and the city starts to thrive again.
|
