The Second Time Around: City of East Lansing Again Proposes an Income Tax for Residents and Non-Residents

East Lansing voters will again vote whether to implement a city income tax on the August 7, 2018, primary ballot.

Back in June 2017, the East Lansing City Council voted to put a measure on the November 2017 ballot that would tax city residents 1% of their income and non-residents who work in the city 0.5%. The proposal was voted on by East Lansing residents in November 2017 and was defeated.

On the same November 2017 ballot was a second proposal to lower East Lansing property taxes from roughly 17.5 mills to a new maximum of 13 mills. That measure prevailed in November 2017 but was never enacted because the income tax proposal failed. If the August 2018 income tax proposal is adopted, it will trigger implementation of the previously adopted property tax reduction.

After much deliberation and community input, the 1% and 0.5% income tax proposal is once again being put to the voters on August 7, 2018, but this time with some slight modifications:

1. The current proposal is a City Charter amendment meaning it cannot be changed without another vote of the people. 
2. The tax would be time-limited to 12 years.
3. Funding generated by the income tax would be dedicated for specific purposes: 20% to police and fire protection, 20% to infrastructure, and 60% to supplemental payments for unfunded pension liabilities for retired City employees. 

If adopted by the voters, the city income tax would generate $10 million in revenue. The city would then rebate roughly $5 million in property taxes, leaving a net revenue of $5 million for the city.

While there was much negotiation between MSU and the City of East Lansing regarding the November 2017 proposed city income tax, it is clear that MSU is not interested in similar talks regarding the August 7, 2018, ballot proposal.

The same arguments put forward by some in opposition of the previously proposed income tax remain relevant for this August 2018 iteration: some assert this is a result of city mismanagement and others are concerned that enactment of the November 2017 property tax rebate proposal is a functional give back to the wealthiest and largest property owners within the city limits.

While the proposed city income tax would impact anyone living and/or working in East Lansing, the income tax proposal will be decided only by registered East Lansing voters on August 7, 2018. As always, we encourage every member to make their voice heard at the voting booth.