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East Lansing city council hopes to reintroduce income tax

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EAST LANSING, Mich. (WLNS) – A controversial income tax proposal that failed in last year’s election could be working its way back on the ballot for a second time around as East Lansing continues to look for ways to climb out of a financial crisis.

Last November, East Lansing voters rejected an income tax proposal that would have generated around $5-million dollars for the city on an annual basis.

The tax would’ve required East Lansing residents to pay 1 percent of their income to the city, while non-residents would pay a half percent.

The East Lansing city council strongly supported the tax hike saying it was the best way to bring in additional revenue the city desperately needs.

Perhaps one of the biggest critics of the plan was Michigan State University arguing the tax would hurt university employees, many of whom aren’t even residents of East Lansing.

So why are city officials looking for a second chance?

The answer is somewhat simple…East Lansing is swimming in millions of dollars of debt and it needs to find a solution to help pay the bills.

6 News checked in with Mayor Mark Meadows to get an update on if the city planning on re-introducing the same income tax proposal that was rejected by voters last year.

He says this is a new and improved income tax proposal that has different language than the one that failed.

Now whether it will get put on this year’s ballot is still unclear, but East Lansing city council members are hoping to make a decision on Monday night.

Mayor Meadows says one of the big reasons why voters turned down the income tax proposal in 201 was because they didn’t trust city officials to spend the money appropriately, but Meadows says this is a new year, new proposal and one he hopes voters will be in favor of.

“It’s substantially different in the sense that it’s 1 percent and a half percent but its only for a period of years and it can only be spent for infrastructure, police and fire protection and to pay down the unfunded liability for pensions,” said Meadows.

Now that the city council would have rules on how they could spend the money from the tax, he’s hoping it might be better received.

“This is a great way for us to approach it if the public supports it and if they don’t then it’s back to the drawing board,” Meadows stated.

But that wasn’t the only issue last time around. One of the biggest opponents of the proposal was Michigan State University.

But now with new leadership, Mayor Meadows and the council have already taken steps to address any of its concerns.

“We did raise the issue with MSU and indicated to the new president that if we were going to start the negotiations over, I’d like to do that now rather than have us put something on the ballot like we did last time and then begin the conversation,” said Meadows.

When asked why the city council is working to push this proposal a second time around, Mayor Meadows says it boils down to two things:

  1. The city needs money to address its debt problem,
  2. This solution would not only fix it, but benefit the city in more ways than one.

“It would accomplish the objectives of the financial health team which were to invest more money in infrastructure, protect the public’s interest in police and fire protection, and to pay down that unfunded pension liability,” said Meadows.

The rejected income tax proposal was tied to a reduction in property taxes which is something voters actually liked about the proposal.

Mayor Meadows says that component will also be included in this new plan.

If it garners enough support from East Lansing city council members on Monday night, it will go back on the ballot this November.

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