A2Politico: Ann Arbor Politics Grilled To Perfection

On February 2, 2010, the day I declared to run for mayor, AnnArbor.com posted this piece: “Roger Fraser tells Ann Arbor City Council to set aside politics to make budget decisions.” The City Administrator is quoted in the piece as saying to Mayor and Council: 

“I understand that these are politically difficult things to talk about,” Fraser said. “I understand that we have elections every year. I understand that six of you are up for election this year. But I also understand that we’ve got some major issues that need to be resolved in terms of our budget, and something’s got to give.”

Well, yes. Something’s got to give. Rather, someone’s got to give: the taxpayer. Roger Fraser is pushing to have Council members put a city income tax on the ballot. At the January 19, 2010 Budget Committee meeting, Fraser suggested to the members of the Committee, First Ward’s Sabra Briere, Fifth Ward’s Mike Anglin, Second Ward’s Stephen Rapundalo, Fourth Ward’s Marcia Higgins and Third Ward’s Christopher Taylor, that they had an obligation to float the question of a city income tax. 

The Mayor, in attendance, thus making the meeting a quorum, and subject to Open Meetings Act requirements, had this interesting tidbit to add. Whether the question was floated on the August primary ballot or on the November general election ballot would have little impact on how soon any city income tax could be implemented. Well, yes. That’s true. However, we know that in Ann Arbor, mayor and council races are decided in August, in the primary, not in the November general election. 

Former Third Ward council member Leigh Greden, who ran opposed, and Second Ward’s Stephen Rapundalo who ran unopposed, tempted the tax gods by coming out in favor of a city income tax during the 2009 primary season. This video comes from AnnArbor.com, and was shot before the August 4, 2009 primary. Note that Roger Fraser says there are 75,000 people who commute into Ann Arbor daily. On January 31, 2010, the Mayor was quoted in AnnArbor.com as saying, “…Ann Arbor has an estimated 70,000 daily commuters.” These numbers come from the July 2009 Plante Moran Income Tx Feasibility Study. In that study, on page 26, the authors document that there are 20,000 commuters who come to work at U of M. The study then concludes there are 54,000 additional people who commute into the City. There is, however, no source for where that number comes from. Furthermore, the study concludes between 2011 and 2015, Ann Arbor will add 4,000 jobs for people to commute to. Between 2006 and 2009, Ann Arbor added a total of 600 jobs. 

Roger Fraser estimates that a city income tax could “could raise $7.6 million a year in additional revenue for the city,” according to AnnArbor.com. Of course, there was a July 2009 study to support the idea of putting a city income tax to a vote. In that study by Plante & Moran, the authors write, “Using growth rate assumptions made by City personnel, we projected revenue that would be generated from the current property tax system over the next five years….The analysis has been developed using the best available information concerning financial and demographic trends and conditions. As mentioned above, each model was developed using certain key assumptions and should not be evaluated without a thorough understanding of those assumptions. The assumptions and the accompanying rationale are documented in later sections of this report….”

Here’s where we all need to sit up and pay very close attention: “All assumptions are the responsibility of the City of Ann Arbors’ management based on their best judgment at the time of the study. It is possible that the forecasted results may not be achieved because events and circumstances frequently do not occur as expected.”

In other words, Roger Fraser’s revenue estimate is not even an estimate. It’s a prognostication in the grand tradition of prognosticators. Plante and Moran predict that the assumptions of growth made by city staff, and on which the study is based, “frequently do not occur as predicted.”

If that doesn’t give you a cold grue, it should. The Plante and Moran study begins with a caveat that explains, quite clearly, that a city income tax is not the panacea for the budget woes of Ann Arbor. In fact, the move to a city income tax could end up providing Ann Arbor less revenue than the current property tax model. And there we’d be, still, facing the alternatives the City Administrator often presents to the people of Ann Arbor through City Council: freeze to death or burn to death. Sell parkland, raise taxes, cut services, or increase water and sewer fees.

Mayor Hieftje took himself off of the Budget Committee. Margie Teall stepped down, as well. However, their decision to try to distance themselves from the disaster that it the city’s fiscal situation is a day late and several million dollars short.

It’s quite clear that for the past several years, the Budget Committee on which they sat, and Council, simply followed the direction of the City Administrator and CFO without question and without performing the due diligence required. For instance, the City Charter mandates monthly statements be delivered to the Budget Committee that summarize the City’s financial position. They were never requested or delivered. Yet, the Mayor and his hand-picked Budget Committee crafted policy, recommended program and service cuts, and made recommendations for the expenditure of over $1.5 billion in tax dollars and fees over the past five years without ever knowing exactly how much money the City had in any given month.

Thanks to the urging of Third Ward’s Steve Kunselman, city staff will be producing monthly reports. According to the AnnArborchronicle.com, this is what long-time Budget Committee Chair, Fourth Ward’s Marcia Higgins, had to say when it was suggested that the monthly reports be delivered directly to all Council members. 

“In discussing how the monthly report should be disseminated, Roger Fraser suggested that it be sent directly to all councilmembers. However, Marcia Higgins (Ward 4) weighed in in favor of first having the budget committee review it before disseminating it to other councilmembers. She reasoned that the rest of the council might not understand what they were looking at, and that budget committee members would then be in a position to help others on council.”

Is it any wonder Roger Fraser is pushing, shoving and trying to drop-kick a city income tax? At this same meeting, he suggested that City Council survey voter attitudes – such as the survey conducted by AATA concerning that group’s fantasy of a county-wide millage. The City Administrator called allocating money for such a survey “due diligence.” 

Due diligence? I call it a waste of time and taxpayer money. Those are marketing surveys designed to find out how to best phrase the ballot question so that the voters will support the measure.

There are three steps that must be taken before we can ever entertain the notion of a city income tax: 

1.  As I wrote in an earlier entry (“The Politics of Cooking the Books: Ann Arbor as a French Restaurant”), total city revenues are up significantly since 2006. So are total expenses. It’s time to examine every possible opportunity for savings. Overhead is the place to begin. The cost of running City Hall has risen 35 percent since 2006. That is a rate of increase that far outpaces both inflation and the cost of living combined. Over-spending must be checked immediately. There is no moratorium, for instance, on meals out and travel for city staff, while at the same time those same staff bring scenarios to Council and the public to raise revenue by selling parkland and cutting services. 

2.  All City Council members must be given extensive training in reading and understanding financial statements. It’s no sin to be incapable of understanding a cash flow analysis, and such training would benefit not only the Council members, but the public they serve, as well. It is a sin to vote on the allocation of funds without having first examined and understood the financial situation of the City. All Council members have to know the right questions to ask in order to have the ability to oversee city staff in their use of the tax dollars given them. 

3.  It’s time for a Mayor who will send Ann Arbor City Administrator Roger Fraser, and CFO Tom Crawford back to sharpen their pencils and to prepare two scenarios: under the auspices of the first, they cut 10 percent of the city’s expenses. Under the second, they cut 20 percent of the city’s expenses.

There’s only one rule: not a single city service may be impacted adversely by the cuts.

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