By: Benjamin J. Gohs, News Editor
East Jordan City Commissioner Tony Cutler wants to jump-start economic development in his sleepy little town, and he thinks an 11-percent reduction in property taxes is a good place to begin.
Cutler introduced a plan to abolish the city’s properties fund, sell the former fire department building and refund that money back to taxpayers during the Tuesday Feb. 7 regular East Jordan City Commission meeting.
“Our millage is definitely high,” Cutler said. “Right now we charge roughly 18.2 mills and we kind of break it up by charging 17.77 operating millage and .4448 for fire services – by law the most we can charge is 17.77, so there is going to be a point where we are overcharging and we have to reduce that.”
Cutler said the former fire/emergency services building could sell for roughly $60,000, and instead of putting that money into what is currently the city’s properties fund – a fund established in 1993 to allow the city to buy land and buildings for city use – and use it as a tax cut.
East Jordan City Commissioner Thomas Breakey said he is in favor of cutting taxes when it is possible, but said he’s not sure the town can afford to cut revenue by 11 percent.
“It’s nice to save some money, but I don’t particularly go for abolishing the property fund,” Breakey said. “And, I really don’t like doing away with half a mil for fire equipment – once you abolish that, what happens down the road when you need a piece of equipment?”
Breakey said he thinks Cutler has the city’s best intentions in mind, but disagrees with how he wants to save the taxpayers money.
“As far as cutting taxes I think we need to cut back on some of the spending the city’s doing,” he said. “I think we could trim the police department budget a considerable amount because there is no reason for a little town of 2,200 people to have a police budget of $400,000-plus.”
One of the disadvantages East Jordan has is its plummeting property values.
While Boyne City generates nearly $160,000 per mil levied on taxpayers, East Jordan only reaps around $58,000.
“If you charge higher taxes on a lower tax base you still have less revenue,” Cutler said. “We need to focus on activities that will turn home sales around, that will give people an incentive to buy homes and build businesses here.”
He added, “If we want to become competitive, then we’ve got to be making steps to move forward.”
East Jordan’s millage rate is 18.2401
Boyne City’s millage rate is 15.76
City of Charlevoix’s millage rate is 12.5
Property values by city according to Charlevoix County:
Boyne City: $196,888,016
East Jordan: $60,709,350.
“The tax cut may be difficult to accept, however, we can finance this investment by making some changes in the way we do business and using the sale of community assets,” Culter said in his proposal to the commission.
The city’s current tax revenue is $1,088,005. An anticipated 2% decline in taxable value would equal a total of $1,066,245. Reducing taxes by 11% will leave the city with $117,287 less in its coffers.
However, Cutler said revenue from new fire contacts of $31,666 plus $60,000 from sale of the old fire hall plus a $25,297 change from water billing would actually pay for the tax cut within approximately $300.
This will finance the first year of the tax cut, and if necessary, we could consider allocating the fund balance in the current “Properties Fund” to finance the second year,” Cutler said in his proposal. “This tax cut is a way to make cuts without disrupting city services and give back to the citizens of East Jordan as well as to begin making an investment in our future.”
He added, “We need to position ourselves to be more competitive so that we can grow and expand our city and our tax base to alleviate the high taxes and water bills in the long run.”
Cutler’s proposals have been tabled for further discussion during the city’s next regular meeting scheduled for 7 p.m. On Tuesday Feb. 21.