GR commissioners to consider tax increase
David Czurak

Grand Rapids city commissioners will meet in a special session Tuesday evening, Feb. 16, to decide whether to add a request to hike the city’s income tax rates to the May 4 ballot.

The proposal they will discuss could raise the tax for city residents from 1.3 percent to 1.5 percent, and from 0.65 percent to 0.75 percent for those who work in Grand Rapids but live outside the city. An approved increase would sunset after five years, start on July 1, and then the rates would return to the current levels.

City Manager Greg Sundstrom said a successful election would give the city another $7 million in tax revenue. But he was quick to add that a ratified tax increase would only dent the $27.4 million deficit the city’s general fund faces for 2011, and more work would be needed to come close to balancing the budget.

“I want to be clear a successful ballot proposal will not solve our problems, but it will provide us time,” he said. “This tax increase would by itself not make the city financially sustainable. These new revenues would maintain city services levels to permit the city to focus on transforming city service delivery.”

Sundstrom said the $7 million would go toward public safety and to provide a basic level of maintenance for the park system. An approved income tax would result in a 15.4 percent increase for residents and non-residents alike.

“I’m not trying to scare you or the citizens, but the city’s financial state is grave,” he said.

Should commissioners approve of going to the electorate, Grand Rapids would join Kentwood and Wyoming on the ballot. Kentwood and Wyoming already have millage requests before their voters; both are for funding police and fire protection.

Kentwood is asking for a 2 mills increase to the city’s property tax, while Wyoming is seeking a hike of 1.25 mills for five years. Successful proposals would raise $4 million a year for Kentwood and $2.6 million annually in Wyoming.

“We can no longer operate city government as we have in the past and expect something different. We need to transform our city delivery model,” said Sundstrom, who outlined an eight-point plan for a transformation that would take five years, the length of the tax hike...

“We know what we must change. We know how to change. But we need time to change,” said Sundstrom.

In addition to setting the date for the income tax discussion, city commissioners also scheduled a public hearing on Feb. 23 to consider a tax exemption for Grand Rapids Spring and Stamping. The local manufacturer wants to buy a used 1,000-ton press, along with a laser scanner, for a total of $940,250. 

“By installing this press, GR Spring and Stamping will be able to bid on and perform work more competitively. The addition of this press will allow for adding four new jobs at an average wage of $16.80 per hour, including benefits, and contribute toward maintaining the current work force of 98 employees,” said Kara Wood, city economic development director.

The abated personal-property taxes would total $5,646 a year, with the city’s share of that amount at $1,987, if the city and state approves the company’s request. An exemption can be for as long as 12 years.

Commissioners also set March 23 as the date to hear a request from Christman Capital Investment Group to amend a brownfield plan for the former Federal Building at 148 Ionia Ave. NW. Christman wants to renovate the structure for Ferris State University and Kendall College of Art & Design. The cost of the work has been estimated at $28.5 million, with part of the project to be financed through the private sector version of the American Recovery and Reinvestment Act bonds. The bonds are expected to be valued at $24 million.