City of Lowell Asks Voters to Consider Income Tax to Fund Road Repairs
First of Three Information Meetings Slated for Sept. 18
On Tuesday, Nov. 5, Lowell residents will be asked to consider a ballot proposal allowing the City to collect an income tax in order to repair roads and streets.
The Lowell City Council reviewed other options before approving a ballot proposal to collect income tax of 1% of adjusted gross income from residents and businesses and 0.5% of adjusted gross income from non-residents to repair and improve roads. The income tax would be collected for 15 years, beginning Jan. 1, 2020.
Retirement income for seniors, along with military pay, unemployment benefits, welfare relief, tax refunds and other types of income, would be exempt from the tax. Property owners exempt from paying income tax will see a significant reduction in their tax burden as the City plans to reduce property taxes.
If the income tax is passed by voters, the City will lower the property millage 5 mills from its current 15.7 mills to a do-not-exceed number of 10.7 mills over the 15-year life of the income tax.
“It’s no secret: street conditions in the City are at an all-time low,” said City Manager Mike Burns. “Yet current revenue does not support the significant investment needed to reverse this trend and improve our streets.
“We get regular calls and complaints from residents, business owners and visitors about how tough it is to drive through our community. The City researched a number of funding sources, but ultimately choose an income tax rather than a dedicated street millage. In most instances, we believe this will be a less costly way to raise the additional funds needed to fix Lowell roads.”
Of the approximately $1.2 million raised via an income tax, the City projects approximately $770,700 will be used for streets in the first year. The remaining amount will be used to fund administrative costs for the income tax and general fund expenditures that would have been paid for by the 5 mills.
Burns noted that 91 percent of all Lowell roads have a Pavement Surface Evaluation and Rating, or PASER, as fair or poor. This 10-point scale developed by the University of Wisconsin-Madison gives municipalities a visual “yardstick” to compare road quality.
Fixing streets is a one of the biggest expenses for Lowell. On average, it costs between a half-million to three-quarters of a million dollars to reconstruct one street of approximately seven blocks.
“If the income tax is not passed, roads and critical infrastructure within Lowell will continue to deteriorate,” Burns said. “This request is in line with other municipalities around the state. There are 24 cities in Michigan that collect an income tax. Lowell’s proposed rates are comparable to cities of similar size in our state.”
Currently, Lowell levies an annual property tax of 15.7 mills, generating approximately $1.6 million for the City general fund, which is used to provide municipal services. The proposed income tax would raise approximately $1.2 million in the first year. To generate a comparable amount for the first year street improvements would require the millage rate to be increased by an additional 7.6 mills for a total of 23.3 mills annually, which would affect all property owners.
The Lowell City Council reviewed other options to repair roads, including the elimination, closure or sale of some current programs and assets such as eliminating the police department, closing the Kent District Library branch and selling Lowell Light & Power.
“These measures would be short-term fixes that could have long-term consequences,” Burns said. “Lowell explored multiple funding options, but ultimately found the income tax was less costly for residents in most instances than a dedicated street millage.”
At the end of 2034, the income tax may be extended if approved by voters. If that doesn’t happen, the maximum real and personal property tax millage rates will return to the pre-charter amendment amount.
The City will be holding a series of informational meetings at Lowell City Hall to provide information regarding the ballot proposals on the following dates:
- Sept. 18, 6 p.m.
- Oct. 1, 10 a.m.
- Oct. 16, 6 p.m.
For more information on the ballot proposal, including a calculator that would allow residents to evaluate their personal tax impact, visit Lowell’s website, www.lowellmi.gov.
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