Please call the roll.

Councilmember Scott Benson.

Councilmember Letitia Johnson, present.

Councilmember Denzel Anton McCampbell.

Councilmember Renata Miller.

Councilmember Gabriela Santiago Romero.

Present.

Councilmember Mary Waters.

Present.

Councilmember Angelo Bitfield Callaway.

Council President Pro Tem Call Me Young the second.

Here.

Council President James Tate.

Mr.

Chair, you have a corn present.

All right, excellent.

We'll wait for the president to be seated and we will continue from there.

Sorry, good to see you.

Thank you all for being here.

Apologies for my tired meeting back there.

All right, so what we're gonna do today, I don't have the agenda in front of me.

What we plan on doing having first is uh allowing uh CRC to uh well first I'm sorry, LPD.

LPD to kind of set the stage, you know, why we're here, uh, how we got to this point, what's to be expected in terms of the um discussion that we're gonna have today, and then we wanted the CRC to uh roll out you know um commentary summarize um the two reports that were provided to this body uh at the request of uh members.

Uh then we're gonna have members of the uh ED the Equitable Development.

I always say think the D stands for Detroit.

I always want for Detroit, right?

Um we have them there, they're gonna be here as well uh at the request of Member Johnson to provide some commentary because they've been digging into this and you know, task force are not designed just to sit around just talk to each other, it's really designed to move towards some type of action, whether it's policy uh and or fill in the blank.

And so we want to give them an opportunity to speak as well.

Um, and then we're gonna go to public comment uh to allow the public to uh provide uh commentary on what they heard.

Uh I believe we also have uh members of the administration who are going to be here as well uh to speak and provide just a bit of uh insight on where uh the administration stands on at least these two particular uh topics uh regarding tax reform.

So with that being said, um we're gonna make sure we have an opportunity for QA as well in between there, but that might as well get started now.

Mr.

Corley, thank you for uh setting us off.

Thank you, um council president Tate.

And before we go, I'm sorry if the clerk can know that we've been joined by member Miller.

Thank you so much, Ms.

Corley.

Afternoon.

Uh Council President Tate and the City Council members.

I'm Irv Corley of the Let's say the Policy Division, or LPD.

Thank you, thank you for having this committee of the whole meeting on two very important topics.

A local option admissions tax in Michigan cities, a local option sales tax policy for Detroit.

As a reminder, City Council approved a resolution on April the 22nd, 2025 authorizing the LPD to contract with the Citizens Research Council of Michigan or the CRC to complete studies on a local option admissions tax on sports and various entertainment activities and a local options sales tax policy.

I would like to introduce Mr.

Eric Lufer, President of the CRC, and his revenue associate, Miss Madou Anderson, who are here to provide summaries of their reports on these very important topics.

It is also important to note that the CRC reports are on these topics are on both LPD's website and CRC's website.

Um also Mr.

President, there's representatives here from the Michigan Municipal League that may want to offer some comments as well.

Um with that, Mr.

President, I would like to turn it over to the CRC representatives.

Thank you.

Thank you, Mr.

Corley.

Mr.

Lofer, floor is yours.

Hit that button in front of you.

There we go.

There you go.

We did a brief or we did a presentation during PED uh on these two items uh last term, as a matter of fact.

This is now taking it a lot further uh as we move forward.

Oh, one of them, yeah.

So I remember having that conversation.

We talked um PED, we talked about the economic development stuff, and I think with budget and finance, we talked about the admissions tax.

So this is our first time bringing the sales tax to you.

Awesome.

Uh Council President, Council members, thank you for having us.

Thank you for engaging us with this work.

It's um very important work and uh sets the stage for a conversation not only in Detroit but statewide on where the money's coming from.

Uh, real quick for those in the audience that don't know us, the Citizens Research Council is now a 110-year-old organization that started off as the Detroit Bureau of Governmental Research and grew into a statewide organization in the 1950s.

There's other public policy groups out there, what sets us apart the idea that we're a 501c not-for-profit organization.

We strive to be very independent and nonpartisan with everything we do.

Our goal is good government, and that's government that's economic efficient and accountable to the people of Michigan, the people of Detroit or whatever community we're addressing.

So a little bit of context as we start digging into this.

In the world of uh municipal finance, state finance, we often talk about a three-legged stool on how the money should be coming in.

Um balanced on property ownership as an economic activity, uh, income as an economic activity and consumption.

Um you can see from the pie chart, Detroit leans very heavily on the income.

That leg of the stool is is very long.

The property tax leg of the stool has been long and has shrunk and is starting to grow again, but um doesn't really provide much balance, and the consumption side is negligible.

We would call the utility users excise tax uh a consumption tax, but uh it is so small as to be negligible.

I recognize here and in future slides, you do get state revenue sharing from the state sales tax, which is consumption.

Um we recognize that, but the overall issue for Michigan in general and for Detroit is that we have a municipal finance system that doesn't recognize the economic activity going on in different communities, and the system doesn't allow individual communities to craft a revenue structure that suits their economies.

Um when we think about Mackinac City, when we think about the communities on the west coast with a lot of tourism, a sales tax would suit them very well.

When we think about downriver communities and a lot of industry income taxes would suit them very well.

Michigan has put all of its chips in and has started to pull a few back, but has put all of its chips in on the property tax.

We are a very high property tax state, and um we think that's to the detriment of the state.

There are some constitutional tax limitations that benefit the taxpayers, but um it's somewhat to the detriment of the local governments.

Only 24 cities are levying a city income tax.

Um it's available to all cities, so Detroit's using it and is benefiting from it much more than most of the other communities.

Umly a few types of consumption taxes are available to local governments.

The hotel motel taxes, the rental car taxes are available to select counties and that utility users tax.

But unlike most other states, there's not a sales tax or any other major consumption type tax.

Again, I point to the state revenue sharing.

That was intentionally, it's a whole different lecture of why we have revenue sharing and taking it from the sales tax.

Um Michigan, since the turn of the century, has pulled back on statutory revenue sharing and pushed in the chips more on uh constitutional revenue sharing.

That's to the detriment of communities like Detroit.

And so as long as the state's gonna continue to act the way it is through its budgeting uh processes, and it has its own problems to solve, but um the argument is if the state's not going to live up to the obligations it made with revenue sharing, then there's even need more need to look at local option taxes such as the such as the sales tax.

So we're here today to talk about both the sales and use tax.

We'll just call it the sales tax for the most part going forward, and an emissions tax.

And just as a table setting, the sales tax is generally levied on any purchase of tangible goods in the state.

We have a companion use tax that's levied on the use storage or lease of certain types of property in the Constitution since the 1960s has exempted the consumption, the purchase of prescription drugs for human use or food for not for not food not for immediate consumption, so restaurant meals versus grocery stores.

We're also going to talk about the admissions tax.

This is a excise tax on the price of admissions to sporting events, cultural events, entertainment events.

It's up to you and the legislative service bureau up in Lansing how you define that exactly.

Other communities you'll hear it referred to as an entertainment tax, an amusement ticket tax, things like that.

My bullet at the end, both the city, both these taxes allow the city to export part of the tax burden to suburbanites coming in, visitors coming from other places for the services you're providing them, but we want to recognize it also falls on Detroiters who are also some of the most taxed people in America.

So let's dig into the sales and use tax.

Good afternoon, President Tate, members of the committee.

So let me give you first kind of just an overview of sales taxes across the country.

Nearly three-quarters of the states in the country allow uh allow a levy of a local governments to levy sales taxes.

The four states who do not are Delaware, New Hampshire, Oregon, and Montana.

Alaska only allows local taxes.

So there's a there was a a lot of experience around the country and local sales taxes.

There was a major change in sales tax administration in 2018, and it's worth mentioning here.

And what happened is that sales uh states could now tax retailers based on their um economic position in this in the state versus a geo geographical location.

And it's important because it's it's affected sales tax administration uh moving forward.

One of the things that it did is that um it brought together businesses, the National Council of State Legislatures, and the National Governors Association to sort of simplify sales tax collection.

And they came up with a streamlined sales tax agreement.

In that agreement, that means, and in Michigan became a member of that agreement in 2004, and that allows the state to collect sales taxes from online transactions in a streamlined way, and for businesses to submit taxes more easily.

There are important provisions in that agreement, and in order to retain memberships in that agreement, there are certain things, and that is the sales tax has to be administered at the state level, not at the local level at the state level.

There are states that do not participate because they have local administration of local sales taxes.

There has to be uniformity in the sales tax base and the sales tax rate.

The rate can be different.

And that's something that we probably don't want to give that up.

So as we at the research council looked at the estimation of how much sales taxes could raise locally in Detroit, um, we made some estimates, and I want to add some caution here, is these estimates are very hard to make.

So there's you know there's no connection there.

So we really had to estimate, so I want to caution you on that.

So we looked at a couple different methods, and the method that we came up is we used a proxy for how much households would spend on sales taxable goods.

Understanding what Eric said earlier, which is that there is no there is an exemption for prescription drugs, many other exemptions, and also if food for not for immediate consumption, that is your groceries and things that you know take out, something like that, um, should not be taxed.

Um we estimated, and this is an estimate that hopefully uh does capture some of the outside expenditures that come into Detroit, that a Detroit that a Detroit household would spend about 284 dollars a year on in sales taxes, that's how much they would pay.

I will garner that I don't know how much sales taxes I pay in a year.

I bet each of you probably don't, because it's a you pay it, you pay it incrementally, it's not like the property tax where you pay it, you know, twice a year, and you know exactly how much you're paying.

So with that, I'll give it over back to Eric and he can talk about admissions taxes.

So the number that uh we estimate for the Detroit sales tax would be about $72 million a year.

Um you think back to that pie chart at the beginning, um, that pales in comparison to the income tax or um the casino wagering taxes.

Um so that the sales tax would attempt to broadly capture all consumption activity.

The admissions tax more specifically aims to capture a narrow set of activities in the state, um, in the city.

We found that 34 different states have some sort of a tax on admissions, amusement, entertainment, what however they define it.

Some of these do it with a excise tax that it's sort of what we're describing for Detroit.

Many of them just have their sales tax, and when you buy uh a football game ticket or a baseball is just part of the tax base.

So the city benefits, the state benefits, um, but it's hard to parcel that out, it's just part of the system.

Uh we also found that there are some states and some cities that have have defined entertainment very broadly.

So if you buy a movie ticket, if you're going to the arcade, if you're online, either you know, streaming or watching Netflix or something like that, there's a tax on that.

We didn't define that it that way for Detroit.

We were really just focused on the activities that bring visitors, bring people from the neighborhoods downtown.

Um and I would say every major city, I it's 34 states, but Idaho doesn't do it, right?

There's not a lot of football or or baseball activity going on in Idaho.

Um so when you said 34 states, and then you start looking at where are the major cities in America, they check that box.

Anyone that you would consider a peer city for Detroit is doing this already.

One of the questions I had when we um released the paper was well, will the entertainment venues look for someplace else to go?

Well, okay, go to Cleveland and you'll pay their tax.

Go to Chicago, you'll pay their tax.

Go to Cincinnati, you'll pay their tax.

You're not going to avoid this in any major city.

You can see here, this is just a sampling of some of those cities that includes the other cities that have all four major sports within their city.

Others will do it in the suburbs, like you know, we used to have the lions out in Pontiac, and but now they're all downtown.

The other cities that have all the sports downtown, some of our other communities of nearby Pittsburgh and places like that.

You see the taxes range from three to ten percent, the revenues coming in in the area of 10 million to 40 million dollars.

Um, and you can also the the far right column.

Some of the communities have been doing this for a long time, and others uh it's more recent.

Why would you want to think about doing this?

Um Detroit's really well situated that it has a number of entertainment venues that are pulling people from different communities, some from far away from some from the immediate suburbs.

Um, and the tax like this would shift some of the burden to those people coming into your city, benefiting from the public safety, the infrastructure, the um different services that you do to make them feel safe and welcome in your city, and it would allow the city to recoup some of the your costs so that when the next time you have the NCAA tournaments, hopefully a Super Bowl again, um, Taylor Swift coming back.

Um there's there's an opportunity to recoup some of that cost.

Um unlike the sales tax, this would be an excise tax, and and we can engage lawyers to really define the difference.

But there is a legality, uh a legal difference there, and for the most part, the the main thing you need to know: a sales tax is going to go into the general fund, just like your income property, casino wagering taxes.

Um, an excise tax is generally levied to fund a specific purpose.

Um the admissions, these tickets in Michigan are not subject to the sales tax.

So we talk about this a little bit in the paper and and some other places.

One route is to come up with your own tax and get state legislative authorization to do this.

Another one would be just the lobby, let's start taxing those in the state sales tax, and then you would benefit from the increased state revenue sharing with that increased consumption that's subject to the tax.

Um we went through and and brainstormed, like what exactly, and I'm not going to go through all these, but it's a long list of the types of activities that happen in the city, the different venues, the number of events going on.

I'm sure you working with the police department and and others always what are going on in each of these venues, what do you need to be aware of?

How are you welcoming them and making the people feel safe?

Um, so that's a long list, but there's other things that could be on that list that we think you should probably want to exclude from the tax base.

Um private and public educational institutions.

Do you really want to tax high school?

You know, people going to high school football games or are the school play or things like that going on?

Probably not.

Uh, likewise, there's 501c3 not-for-profit organizations, and I would differentiate the things that they're staging versus the venues that they're in.

So I think the opera is a 501c3.

If they're doing you know, staging an opera, um, probably don't want to tax that, but they use that opera house for other purposes that maybe um should be subject to the tax.

There could be or are maybe government events that are ticketed events.

You're not gonna levy a tax when the government's when you yourself are are staging the the event.

Um, I couldn't think of things, but you want to rule that out at the outset, right?

That's not in your interest.

Um you probably want to have a minimum of the ticket price.

And in doing this, you would say we're not trying to capture the cover charge at the local bar.

We're you know, there's some should be some threshold and price that you're going for, and probably also in the size of the venue.

Um we use 400 attendees based on what's uh Columbus did.

Um it's a it's a number, you could pick your own number.

Um, doing something like that, you're probably not going to capture like the Redford Theater or something like that.

Um depends on how you define it.

So we broke it down trying to estimate the potential revenue based on sporting events, and here we had the opportunity to go back and look at the last year of gate receipts for the different teams.

We just focused on the four major ones.

Um how much revenue was coming in, and then if if a tax were in place for those um teams, what would it have generated?

I do that recognizing that the pistons a couple years ago see anywhere you want, because that was pretty barren.

Now it's a now it's a tougher ticket to find and and if the tax were in place this year, it'd probably be a higher number.

And you could play that out, not lines of you know always sell out, but then we uh for the non-sports events, it was a little more difficult.

They were a little closer to the vest on what their numbers were.

So we were able to look at the size of the venues, how many events going on in an average year, and and ballpark the numbers.

So again, thinking back to what our peer cities did, a tax between three and ten percent based on those methodologies would raise between 14 and 47 million dollars.

I would round up if you went for the 10, probably around 50 million dollars, um, given where our sports teams are now.

Um, recognize in and me saying that there's going to be fluctuation.

Unfortunately, our teams are good sometimes and bad sometimes, and when they're bad, you're gonna suffer with your revenues.

Um as you think about this in city council, we have some criteria that we use to evaluate taxes generally.

Let me just walk through those and then we'll think about each of those taxes.

So we think about the issue of equity, and that's broken down to horizontal equity and vertical equity.

Horizontal equity, are we all are you treating all taxpayers equally?

Vertical equity is a question of different income levels.

Is the tax regressive?

Is it proportional?

Is it progressive?

We think about neutrality.

Can the tax be levied at a rate that doesn't change economic behavior?

Doesn't change economic behavior for the businesses where they choose to locate, doesn't change economic behavior for the consumer and choosing where they choose to buy their goods, whether it's the sales tax or coming to a sporting event or whatever downtown.

We think about balance, and that goes back to that three-legged stool.

Um, are you capturing different types of economic activity and not putting too much of a burden on anyone?

We think about administrative efficiency, and there's different aspects of that.

So the businesses would be the ones collecting the tax.

You don't want to create such a burden that they're impositioned and put off by the idea that you're doing this.

We think about it for the tax collector.

Um, and for the sales tax, it's the state, um, the the business is reporting to the state.

In the case of the admissions tax, um, either the venue or the wholesale or the the outlet selling it, and then for the consumer themselves, what um what are the efficiency in and paying that?

We think about the legislative process and the legalities.

Could these taxes be implemented?

What are the hurdles you have to clear to do that?

And then the question for you ultimately is the adequacy of revenue, given what we've just reported for each of them.

So let me start off sort of working backwards, talk about the admissions tax.

Um, the horizontal equity is there.

If you're buying a seat on the 50-yard line of the lions game, you're gonna pay the same.

Um if you're buying, you know, the upper deck, you're paying less, but it's all proportional.

Taxpayers are treated equally.

Um the vertical equity, it tends to be regressive, but recognize in saying this, we're taking what's often an expensive ticket and making it more expensive.

So, you know, could you afford that concert ticket to begin with?

Could you afford that 50-yard line ticket to begin with?

Um, could you afford a few more percent on top of that?

Uh the neutrality, we had the uh fortune that most other cities are doing this, and some of it have implemented it recently.

We are able to look at those other cities, and we found no evidence that it affected attendance at events, it didn't seem to affect the availability of events.

Um entertainers weren't skipping those cities because they had the the tax.

It's hard to really say that, but for um, but for the tax, would they have been there?

Um it didn't appear to affect where the venues are located.

Um in terms of the balance, we talked a little bit that improving taxing consumption would improve the balance generally, and for the administrative efficiency, it's easy for the consumer.

You're paying one price, whether you're paying Ticketmaster Live Nation or buying the ticket at the venue, it's just added in, you don't have to figure out what's the extra amount.

Uh there would be some burden for the ticket sellers, but recognize because almost every other city is doing this already.

If ticket masters selling in Cleveland, they're already putting it on.

If they're selling it in Chicago, they're putting it on.

This is just flipping that switch for Detroit.

We're just going to add that in.

Um then the for the tax collector, the city itself, we would assume that the finance office would need some personnel to track revenues, some sort of audit.

Are you getting the money that you're deserved because of the tax?

So a little bit of cost on that end, but um probably negligible in the big picture.

So Eric gave you a lot of the principles to evaluate tax policy, and I I want to re-emphasize how important that is because you can adjust the structure of a tax to address some of these issues, and also look at the tax administration costs because that can be overwhelming sometimes in with certain taxes.

So looking at the um the various evaluation uh areas for sales and use taxes.

If we look at equity, it's horizontally equitable because you pay the same rate on the same item that you buy.

On vertical equity, a sales tax is generally regarded regressive.

Uh there are things that you can do within the sales tax structure to make them less regressive, and we have done that in Michigan by making uh prescription drugs and food that's eaten from a grocery store as non-taxable, and there are many other exemptions within the tax code.

There are some that believe that it's sometimes it can be a little bit progressive in some cases where there are higher incomes paying more of their income on sales tax revenue or sales taxes because they're purchasing more.

So, you know, there's there's some things you can do within the tax code to kind of balance that out.

Um it's neutral, uh, it affects um businesses, retail outlets, hotels, and retailers the same.

Um, however, if one area is higher taxed than another, you might have businesses and individuals choosing to locate somewhere else or purchase somewhere else.

Um it does does improve the balance as well here because you're now adding consumption taxes to your to your balance of of revenues.

On administrative efficiency, it's very simple to understand.

You know, you can teach a um fourth grader what a sales tax is.

I've done that to my kids, you know, they would have to use their allowance and pay their sales tax.

Um it's not too burdensome for sales taxers for retailers to collect, they're already doing it, so this is an additional amount.

For the city looking at levying a local sales tax, if you remain in the sales tax streamlined sales tax agreement, you would have less of an administrative role in that area.

So that is a positive.

Now let's walk through the steps of how you could actually authorize and it and adopt a new local tax.

And they are slightly different for an admissions tax and a uh local sales tax or another tax that you might pursue.

And the first thing is to address two specific laws.

One is the constitution, which allows local governments to tax, and the second is a public act adopted in 1964 that says, but you need a statute to adopt any tax that is not not a property tax.

So that's very important to understand.

If you choose an admissions tax, you wouldn't have to adopt you would still have to adopt a statutory law at the state level.

So let me oops.

There we go.

Okay, sorry.

Um so let me go through the local sales tax first, because that is probably the most um difficult to do.

The first thing is you have to clarify some ambiguity in this in the constitution.

We have a limit of six percent sales tax rate in the constitution.

It doesn't say whether that's the limit on the state sales tax or the local sales tax.

Uh you also have to clarify that a local sales tax should be permitted.

Because that is also not clear.

And then finally, you have to also, I would say you don't have to, but you should also define how the revenues are allocated.

So currently the of the four percent sales tax that is levied, 15% is shared with local units of government on a per capita basis, and that's the constitutional revenue sharing, which you all are aware of.

So once you've successfully amended the Constitution, you now have to get the state legislature to adopt what in Michigan is often used as a uniform act that it like you have the City Income Tax Act, very similar.

So it's the uniform act for a sales tax, a local sales tax that would have to be adopted.

You also then, as council, would need to adopt your own ordinance as well.

After all of those steps, you will have to go to your local voters and have them approve a local sales tax.

So it is a pretty heady process.

It is long, it will not address immediate budget issues, but it will do some long-term durable tax reform in the future.

So put that away.

So then the question is what to do with the money if you get through all those uh hurdles and you get to the point that you're ready to levy a tax.

Again, the sales tax would be a general tax, it would flow into the general fund.

Uh you're about to engage in your budget process.

This will be just one more source of revenue to allocate there.

Um part of it could be for property tax relief.

That's that's a budgetary decision you could make.

Uh the admissions tax, as we said, would be an excise tax, and looking at what other places and brainstorming a little bit about Detroit's needs.

Um several communities dedicated to public safety.

The purpose is to make people feel safe while they're in and around the stadium in and around downtown.

Um so that would work to that end.

Some communities dedicated to recreation, so you're sort of paying it forward.

You're going to a lions game to come up with the money to fund the POW sports or or whatever.

Um there's a fund that uh the visitors bureau uses to try to attract major sporting events.

You could use this to cede that fund, and that would be self uh self-generating.

You put the fund in, you pulled, you know, an NCA tournament game, people come from all over America, they pay the tax, now you have more revenue to attract the next thing.

Um but ultimately we've heard several uh council members and certainly now Mayor Sheffield talk about the goal of property tax relief.

Um you just held the the revenue estimating conference uh for the current fiscal year projections are 172 million dollars of property tax revenue coming in with the 19.952 mil levy.

That works out to about 8.7 million dollars per mill.

So simple division taking each of those revenue estimates, dividing it by 8.7 at the at a 5 percent admissions tax, um 23 million dollars, you would be able to cut the property tax by about 2.7 mils.

Um if you went to the 10 percent, about 5 and a half mils.

If our number is right for about 72 million dollars of sales tax revenue, about eight mils.

So um important and significant, certainly for for property owners, for business owners, property uh taxpayers in the city.

Um with a with the total millage, even eight mills is not gonna put you on par with many of your surrounding communities or certainly outstate.

Important but not going to fix so let me uh finish there.

Um sort of in conclusion, we think the sales tax might be worth looking at, but for the amount of revenue, the all those steps you have to go through marginal benefit to the city, and I mean it's ultimately your decision.

Um the emissions tax on the other hand, Detroit's one of the few places that doesn't tax admissions.

Uh you would be capturing activity that um from visitors coming in, notwithstanding Detroiters go to these uh events as well.

Um the revenue isn't great, but could be helpful.

And that concludes your report.

Thank you so much.

I'm gonna go, uh Madam Clerk, if you can please know that we've been joined by Member McCampbell as well.

Thank you so much.

We're gonna go around for a round of questions.

Um for colleagues, if you have any questions for CRC on the report out.

See Member Johnson, followed by Member Miller.

Member Johnson.

Thank you, Mr.

Chair.

Um, thank you for the um the work.

Uh thank you for coming here to summarize the work as well.

Um I you did answer a couple of questions that I had.

Um, but I do have two additional questions.

One, when you talked about the estimate of the 1% um sales tax.

Could you share like which industries you focused on?

If how did we come up with the approximately $72 million that it would generate?

Did you focus on any particular industries?

Help me to understand that.

Sure, it was difficult.

Um, and unfortunately, the time that we were doing this analysis, the uh federal government shut down all their databases.

But regardless, we looked at um the household spending on retail, retail goods.

Um we looked at it from a consumer expenditure side, not so much from what uh a business would sell.

Does that make sense?

It does.

Makes it a little bit more difficult for hearing about this.

Um the other question I wanted to ask, um, because it was indicated that the admissions tax would be an excise tax.

Um then the thought would be because of the various um items that have to be achieved to implement a sales tax, if it could be an excise tax as opposed to a sales tax, and then focused on a particular industry, and I won't call any one of them so that no one gets phone calls about it.

Uh, the the the law is you if anything looks like a sales tax by any nature, it will be called a sales tax.

So you're you have to be really careful legally about what you consider an excise tax.

And as Eric said, an excise tax is usually on a particular activity.

For example, uh, we consider tobacco taxes or cigarette taxes and excise tax.

Is that only if I buy that product way at tax, and then that money goes towards most of the time, most all of it, to uh smoking cessation programs.

So it's a it's a you know, I buy this, I get some benefit from that tax.

Now, an excise tax still requires a uniform act by the state because it's not a property tax.

So you still have to go through everything but the constitutional amendment.

You would still have to, it would still be need to be a ballot initiative voted on by the residents as well.

Yes.

Okay.

Um, and so when you look across urban cities, major cities, are they do they typically have a sales tax versus an excise tax that we all see when we have traveled when we go out to eat?

Yeah, there are across the country, many cities have different taxes, and because their constitutions are different, it's like not easy to summarize.

But I'll give you one example.

Um in Colorado, which is a very significantly uh home rule state, you can go across the street and you will have different sales taxes, like one for I don't know, you know, theaters in that district, or you know, so it'll be one percent here, three percent there.

If you've ever visited Denver and you've looked at a purchase, there's there's several taxes.

So Colorado is not part of the streamlined sales tax agreement, but because they all collect their local taxes, but for an excise tax, um you still have to go through all those all those steps because of our constitution and what it requires.

Okay.

Yeah, our early slide showed 37 states authorize these local uh option sales taxes.

So many of the cities, many major cities that you would consider peers of Detroit are gonna have some sort of a tax.

Now, whether that's levied by the city itself or the county in which the city resides, again, that you know we could go through city by city and and parse that out.

But um I tried to make the point earlier on the neutrality.

People are gonna venue shop based on the extra cost, right?

It's can I get a coupon to buy something cheaper here?

If I go here, I'm not gonna pay a tax.

Um so the broader the geography, the less the ability to venue shop.

Um so often it's done at the county level, not exclusively.

Certainly, there are city sales taxes, but we'll find many of them are counting.

Yeah, for example, in Indiana, they have a local sales tax, but that's levied by the state on behalf of locals.

Okay.

Really complicated.

Yeah, thank you.

Yeah, I I feel like I need to do additional research now.

Anytime you have questions, please call.

I I appreciate that.

Um I will say, as it was indicated, many of us were trying to help identify ways to provide some relief from our property tax millage, um, the millage rate and the uh property taxes that we um deal with and see on a regular basis.

Uh, and so we'll certainly continue to have some conversations about this to see if there's you know something that we're able to do how we decide to move forward.

Uh, but certainly do appreciate all of your work and the efforts that you put in as well as LPD.

Thank you.

Thank you, Mr.

Chair.

Thank you, Member Johnson, and Member Miller.

You said there were 24 cities that has the local tax, and we have 273 cities in the state of Michigan.

It's a really no number for me to even consider thinking about it, honestly, if it's such a good thing.

So that is a big number.

But I will say this, and what our residents don't know because they've asked about it, we it's been a conversation.

This has to go on a statewide ballot, right?

Is that correct?

Sales tax.

Yes, so the entire state will vote on whether Detroit levies this local tax against themselves.

But most of the people that come to all these sporting events that that you mentioned are out of Detroit.

A lot of more suburbs, suburbanites, they come to Detroit because all of our entertainment is here and the events is here.

What's the likelihood of someone that comes here regularly with season tickets to actually levy a tax against themselves?

So council member, may I clarify that a little bit?

So when you amend the constitution, you won't necessarily say a sales tax for Detroit.

You will say generally we want to raise the sales tax rate, and there might be a provision there that local sales tax could be levied, which would allow Traverse City, Grand Rapids, and other cities in the in the state to I understand that, but really that's just plain phone words, tag what words we're saying.

We understand what you're saying.

We want to admit it for our own purpose.

I mean, so many times when we have it on the ballot, it'll say A, but it really mean B.

I didn't mean B, but it really means A.

No, I say we're doing that.

We're saying that honestly, do you think people will come here that have season tickets will levy a tax against themselves?

Or the likelihood of helping Detroiters.

So I'm it's just a little way for me.

And so I have to ask the question because is there any other cities even considering this?

Uh so I researched the University of Michigan has done some survey work, and um they find that the appetite for a local option sales tax is not strong among the communities.

Um, but there are places in the state um regional transit authorities and other regional entities that have been asking for a local sales tax option for many years.

Um so I think most cities when you when you look at a map of Michigan and most of the cities are are little dots compared to Detroit that takes up a lot of geography.

So uh for Manistee to think about a local option sales tax, you know, so the answer is on what end?

The answer is no.

Right.

It's okay, the answer is no, right?

I just want to make sure.

Thank you.

Could I just add something?

So if you're raising the sales tax one percent, you have the opportunity of deciding where that money will go.

So it's not just like one thing or the other, you can design and structure a tax so that it might help transit, it might help those things, and so then you get buy-in from other communities, and you also increase the the you improve your revenue diversity for lots of cities, not just not just the city of Detroit, but others thank you.

Member Santiago Romero, followed by Member McCampbell.

Thank you, Mr.

President.

Um I want to share that I support the idea of giving us more tools and more resources to garner to garner more revenue to uh relieve um the stress for Detroiters.

I also understand that if other cities like Grand Rapids are Lancing, that there would be benefits.

Um so I I'm I'm I'm in supports, I believe we can do hard things.

Um and just want to share in my mind, it's not just this, it's this and uh we have so many preemptions um in the state of Michigan.

Uh Detroiters, if we can't afford to pay, we should give them more money.

We can't set a minimum wage here in the city of Detroit.

So as we're having these conversations, I want us to all think about all the limitations that we have as a as as a local city and the need to give us more tools and more power to make more decisions, and not just to benefit Detroit, I think this would benefit many cities across the states.

So I'm very grateful for your work.

I I'm grateful to be a part of the EDTI for us to be able to continue to have these conversations because we are very limited.

And then I think Detroit, we are in a place where we should be given more opportunities to self-govern and to decide how we how we move forward.

Um so I'm grateful, I'm excited.

I believe we can do hard things.

I know this will not be easy, um, but I do believe it'll benefit other cities as well in the state of Michigan.

Um so uh we are committed to continuing to have these conversations and to also work our office is working with unions um with with labor workers that are at our stadiums that you know we gave tax money for who are getting paid very little, who are who are working multiple jobs.

So for me, it's not just this conversation, it's this and all of the other tools and power that we need to receive to help Detroit and to help our city.

Um so that is it for me.

Thank you, thank you, Mr.

President.

Thank you so much.

And I know that uh Mr.

Corley, you invited the Michigan Municipal League to uh join as well.

It may be this uh there's an opportunity to come on up uh for representatives in case there's any questions that you can provide any additional color to member Miller's uh point earlier.

You know, are there any other cities that are out here uh trying in any capacity to uh you can take that seat over there, yeah.

Uh is there any municipality uh in the state of Michigan that's trying to identify any type of uh taxing for their residents that could increase their revenues and it again doesn't have to be these, uh, but and you hit that button in front of you before you speak.

Um it doesn't have to be these two that are before us, but in any capacity whatsoever.

And I know you all do uh you work with municipalities throughout the state of Michigan, and you would have some of that information in addition to uh the CRC.

So please introduce yourself for the record and you may be.

Um I would say every community in Michigan is looking for more revenue and would like more diversified revenue.

I think loud and clear from the presentation that um we are way over reliant in the state on property tax.

Um and as communities we are, there are those few that were mentioned 24 that actually have sales tax, which becomes a larger contingent of things.

Um but overall it is a it is a system that works that it doesn't work.

Uh when I hear people say it run government like a business, I don't know a business person around that if they're if their revenues and expenditures looked like yours do as a city wouldn't close the doors and go find something else to do.

I mean what we're doing is sort of Herculean to keep things going as they are, and that's in big cities and small towns.

Um the from a from a overall standpoint, I would say there's not a um there's not anything as bubbled up uh as in terms of I can tell you that 90 percent of cities want to do this.

We hear a lot from those cities that have uh major facilities, like we were talking about the admissions work uh that Eric and his team had done.

Um so there's people looking at that.

There's a lot of resort towns are looking at resort fees and those types of things.

There are some communities that talk sales tax and some that that look at at different items.

So it is a hot topic, always has been a hot topic, uh, but it sort of is staying at that topic standpoint.

Um the political realities are, and I would remind you when you get back to your office, check your news uh because the speaker of the house today admitted in in Lansing announced uh a proposal to massively cut the property tax in the state.

Um and I I saw a paragraph on it, so don't ask me what's in it.

I'm finding out about it a little bit before you are.

Um but from a political standpoint, that's a very real aspect of things too.

So um, but I I think if the question is, would your uh uh would your brethren and sister in is that a word?

Uh in in other cities be interested in this conversation and sitting down?

A hundred percent.

Um we we'd love to make that happen if it's something you guys would like to take around.

So that is why I asked that question, because there's strength in numbers.

It's one thing if it's just Detroit or even the perception that it's Detroit, but uh knowing that there are other municipalities, again, we may not be able to get exactly what we're talking about here.

Um, but you know, as member Santiago Romero said we can do hard things, right?

Uh and we can do a lot of hard things collectively together.

Um it makes it a little easier.

No question.

No question.

And just the last point on that I would say is making the case is important.

Because there are all kinds of groups out there that got their eyes, for example, on an extra penny of sales tax.

Um the schools would be in line, uh, the universities would be in line, the community colleges, transportation has been mentioned.

There's a whole lot of folks out there that would line up at the gate if if and when that got going politically.

Uh so it's always important to make the case on behalf of the work that you do and those in the community do and in the other communities around the state.

So that's that's vitally important between here and wherever there winds up being.

Appreciate that.

A member McCampbell.

Thank you, Mr.

President.

Um, and thank you all for being here.

Thanks for all the work that goes into this, especially when the federal government has shut down a lot of data points that you need.

Uh I yeah, I would just say first that you know, as we have gone through, I've been here for six weeks now, um, but in every meeting, we've heard from folks that of residents needing things um needing more services, more things for us to do.

We've also seen uh um on budget financial audit, the the realities that we have here with revenue.

So I think I that's why I appreciate this conversation because we're gonna have to do we're going to have to do something to serve our residents on in this.

And uh as my colleague said, um, you know, we had a conversation around revenue sharing in a way that uh it's not coming down to the municipalities in the way that it should.

So that is action that needs to be taken on the state level.

Um we've we've heard about preemption in a way that tools that other cities across the country have and addressing the needs of their residents that we don't have here in the city of Detroit.

And as we hear um additional tools for revenue, so um I think we have to constantly have a conversation on a lot of that and um and take action on that.

I did have a question on uh the the SSUTA, the administrative requirements on the local option sales tax.

You mentioned that there would have to be you um uniformity there with that.

So if we were to implement a local option sales tax, what would have to happen to ensure that the state stayed in that agreement?

You would have to adopt this the the sales tax base would have to be the same for both the state sales tax and a local sales tax.

Okay.

So in and meaning the exemptions and such would have to be the same for us as it is on the state level?

Well, if you had an exemption, it would have to apply to everyone in the state.

Okay.

Got you.

Okay, that's helpful to know.

Thank you on that.

And just to clarify, so on between so the admissions tax would not have to go before a statewide vote, only a citywide vote, but it will have to go before the legislature to be passed, correct?

But a local option sales tax would be the constitutional amendment and the statewide vote.

Yes.

Okay.

Just wanted to um clarify on that.

And then so you know, across the country we've heard of uh progressive ideas on things such as a CEO pay gap tax, a wealth tax, a luxury real estate tax.

I know we have mechanisms in which so property taxes, of course, uh, if you have a higher um uh a more expensive home, you're gonna pay a higher property tax than just the the mill the mills that are on there.

But if we were to if there is a conversation about those type of taxes, those would also take uh act of the legislature as well.

Am I correct in that?

Yeah, the thing to understand um Detroit was the first city to levy an income tax in 1961, and there wasn't a law state law saying you could do it.

That pissed a few people off.

And so the constitution came together, the constitutional convention, and they said we want our local governments to have home rule.

We want you to be able to create your own community culture, and if you want to do different types of taxes, go do them.

And the ink wasn't even dry in the new constitution, the legislature said let's tap the brakes on this.

You only do another tax if we say you can do another tax.

And they've been very sparse in their permission.

There's very few local option taxes in mission compared to other states.

Thank you.

Yes, this legislature.

Okay.

For our friends from the MML, uh, as I spoke on and the conversation around revenue sharing and and such an um preemption, similar to the questions about more revenue, like municipalities that are looking for more revenue.

Is there a large appetite to tackle um the it the problems that exist with revenue sharing and also preemption as well?

There's a softball for you.

Yes.

Yeah, it is a huge issue because not only are you getting less revenue and your hands are being tied in terms of where you can get revenue from locally, uh, you're getting more responsibility for providing services and you're getting less opportunity to provide input into what you choose to do and not do.

Um right now to uh to change how we we uh or to preempt locals from being able to do anything from or a lot of the work uh around housing um that would potentially have you sort of chasing different development patterns uh chasing behind that with infrastructure dollars and everything else, independent of any plan you had to do something with.

So uh and then of course no revenue on the back end of it.

So those types of things have been around for a while.

Um, Eric talked about the 1960s.

We can go with revenue sharing goes back to 1930s, I think, or 1920s, uh where you guys had all the taxing authority at the time and the state didn't, and they came together and said, okay, let's let's uh centralize this and we'll share the proceeds statewide, and that worked until 2000 when the when budgets got tight and the state realized through sort of a bit of a loophole that it can say one thing in law, but from an approach appropriation standpoint, that's a yearly annual animal, if you will.

So they can do anything they want from an annual appropriation, so that so you wind up with with huge massive cuts, uh billions of dollars to this community and uh two and three times that statewide from when it comes to the rest of the the community.

So those are huge issues, and and I think you know, I applaud you for the work that you're doing for the great work that CRC did and is doing uh because we need to diversify this stream.

Uh it just you can't continue to bleed a single rock uh as a way of doing things, and it's also why we run into problems with TIFS and everything else, because everybody can only do one thing, and so you keep going there.

And um, and so you know it's it's something we we've got to look at.

I recall being in South Carolina, which might be the reddest state in the country, and a group I was down there to my my colleague with my job in South Carolina invited me down to uh to be a judge on some municipal programs or throughout the state, the best programs in the state, and this group came before me, and they said we're using our one percent sales tax to do X, Y, and Z, and it was countywide, and they were building a uh entertainment center and they were doing housing rehab and they were doing some water and sewer, and they were creating industrial.

I mean, all this different stuff going on all throughout the county, uh, which happens every seven years, and then every and then you go to the people and say, here's our plan, here's the 20 things we're gonna do with this, and it passes overwhelmingly, and they were so proud of this.

I'm like, you're allowed to do this?

I mean, I just couldn't figure it out.

It didn't make sense to me.

And I mean, you see those types of things all over the country.

We continue to push that.

Um, but as I started my cop my my my remarks with, um, there's at least one very important person in Lansing thinks we got to go the complete opposite direction right now.

So there's a political reality of this stuff as well.

For sure.

Yeah, there was there was quite a bit of news in that article.

Uh I will uh I to that point.

I think there's gonna be a lot of conversations about our state government this year.

I will I I'd say this a lot to residents um and residents that may not even be in the city of Detroit.

As we're talking about the needs of our local communities, we definitely have to have those conversations with our state legislators as well, and those are sure and to echo the the president's comments.

Uh it starts in rooms like this.

So for sure.

Let's know we can help.

Thank you.

Thank you, Mr.

Chair.

Thank you.

Member Callaway.

Thank you so much.

Um Mr.

Chair and good afternoon, everyone.

Um I just want to make sure I understand what you said earlier.

Um I've been advocating for, I call it admission fee, uh, because people don't want uh to be taxed.

I'm one of those people.

Um so I don't know if we could call it a fee, but we still know it's a tax.

Um and I'll make sure you get my um my statement that I issued back in September of 2025 regarding um the subject matter today.

Did you say um that in order to have a sales tax, it would have to be an amendment to the constitution, but not so for an excise tax.

That's correct.

Okay.

So through the chair, so for the sales tax, any revenue generated from a sales tax would have to go into the general fund.

Or specified where it should go.

But it has is a general expenditure.

It's not you would probably appropriate it.

But you might be able, if you had a uniform act, and I'm getting cutting the weeds here, but if you had a uniform act that specified if a local sales tax was levied, it could be used for these purposes, it would go in the general fund and you could appropriate it that way.

So there are many steps to the process where you could design something that would be beneficial.

Okay.

And then I also hear you say for the excise tax, you would have to identify a specific purpose or activity for that.

Would that also require a constant uh amendment to the constitution to levy an excise tax for a specific purpose or activity?

No.

No.

So through the chair, would it be easier or more expedient if an excise tax was discussed versus a sales tax that would require a constitutional amendment?

The the idea of taking out the need for a constitutional amendment greatly expedites the process.

You still have to convince a majority up in Lansing that this is a good idea.

Um, but that's not 10 million people in the state or however many voters we have.

You're just convincing that legislative body that this would be beneficial and and helping.

Because I've been working the largest city for about a year with my legislators, and they're they're um they're supportive.

Um Senator Um Mallory McMahon, um Regina Weiss is our state rep.

She has they're very supportive.

Um through the chair, in January, a new 24% excise tax was levied on the wholesale transfer of of adult use recreational cannabis.

That went into effect across the state.

It said this tax was in this tax was enacted as a part of a comprehensive road funding tax act.

So those funds are coming through an act.

How does that happen?

Because now from that is just for roads and bridges.

How does an act um get established?

Is that statewide?

Because a lot of people objected to that, even folks who represent the state.

So how did that happen?

How did that not come before the people?

And that's 24 percent increase in taxes on those transfers.

That was a legislative, a state legislative statutory tax act.

Um, and that is because the state regulates cannabis sales.

Okay.

Mr.

Chair, if we could just to clarify a few things.

So in 1978, we had what we call the Headley Amendment.

It's uh named after Richard Headley, who was the spearhead of the whole thing, and it was about tax limitation at the state and local level, and one of those provisions requires for any local government to increase the rate of taxation or impose a new tax, a vote of the people.

But it's very clear that only applies to local governments.

So the state can uh increase, create a new tax, do whatever it is, and your voice is vote the bums out if you don't like what they're doing.

Um but it doesn't require a vote of the people.

Um you started off saying, you know, could this be a fee?

Uh we have in Michigan the benefit for what it's worth that this question has been asked.

The idea that we have to vote on some things, not others, uh, led to a lawsuit uh it's called Bolt versus City of Lansing.

And the state Supreme Court clearly laid out what is a fee and what is a tax.

I shouldn't say clearly because we still litigate this, but um so a fee is anything that serves a regulatory purpose.

Anything um so you know, if you're putting in water and sewer lines, you're charging that household for it, but it's in relation to the work being done to put in those water and sewer lines.

The fee must be proportional to the cost.

So this is not a revenue-raising mechanism.

You can't per se have fees as a means of enhancing the general fund and doing police and fire or whatever.

This is to fund that service that's being provided.

And it's voluntary in nature.

You may choose to consume that service.

Um but you choose not to, and then you don't have to pay the fee.

The other side, the tax is for raising revenue for the government.

It is levied to the benefit of the general public, and it's compulsory in nature.

You can't escape if you purchase something through a sales tax if you earn income in the city, if you choose to go to uh you know a big league game if that admissions tax is in place.

You have to pay that.

And and through the chair, lastly, um Member Callaway, yeah.

Okay, yeah, I'm sorry.

Yes, ma'am.

You asked a question, and I I want to make sure I your understanding of this is clear.

Um we uh at the state level we have tax acts, sales tax, gasoline, whatever.

The legislature can amend those acts to add and subtract from the tax base, and those do not require a vote of the people.

So for example, you could take a um you know, a gas tax and add, oh, we're gonna tax uh this is not a good example, but air you're gonna put in tires because it's a it's a transportation mode or something like that.

So you can change the tax base statutorily at the state level.

Okay.

And then lastly, thank you so much for that clarification.

Um I know now, um, and this may not have anything to do with the conversation that we're having here now, but I know um routinely DTE um is raising their rates, and right now they're charging folks $2.99 to pay their bills online or use a credit card.

How does that work?

Because they routinely, to me, those are taxes.

Anytime you are um adding to what I'm already paying you, DTE is able to do that.

How are they able to get they're calling it a rate, but it really is a tax.

I I don't it's not a tax, it's tax.

Yeah, I understand.

But um I suspect, and I don't know, but they went through the rate making process that at the public service commission, which regulates them.

And a cost of doing business is a charge card fee, a transaction fee, and you'll see that everywhere now.

Yeah, that you know, restaurant they're just that's another way of them saying if you want to help us afford what we do, we're gonna attack on this the extra costs we used to absorb under credit card transactions.

We're now going to add that, but you have the choice of paying by cash or by transaction.

And then lastly, that would be our argument to come to the city and enjoy all these um amenities and our sports arenas we have every sport now practically.

That fee could be attached to that ticket based on the argument you just made.

If you want to come here, this is what you know is going to be required because we have to clean up, we have to provide public health and safety, we have to um provide EMS, we have to provide everything, water, electricity, and we get nothing in return.

Our businesses, surrounding businesses do, but the city directly does not.

So um, you know, I think you've just described what an excise tax is.

And I'm totally in support of the excise tax.

Um thank you so much.

Thank you, Mr.

Chair.

Thank you.

Thank you.

Uh pro tem you.

Thank you, Mr.

President.

Uh good to see everybody here.

Mr.

Luber, uh, I just want to say when I was in Lance and uh I was able to do my job so effectively because of what you did at CISAS Research Council, and you have a quote that said that the right to talk about government's responsibility to know what you're talking about.

And I've literally posted that, read that constantly, and uh listened to your podcast on this too, by the way.

So thank you.

I appreciate that.

Um, I just wanted to ask you just the the first question I wanted to ask you is primarily about the issue of um the tax base, because from my understanding, and I'm gonna say something, just correct me if I'm wrong here.

When we are uh amending this, we are amending this one where the locals will be able to collect this tax.

This will not be something that will go through the state process or the state revenue sharing process.

This will be something where the locals will issue this, levy this tax, and they will be able to collect the funds directly.

Is that correct?

Are we talking about both these taxes or yeah, yeah, ex I tax and the local sales tax?

Yeah, we're talking one the state would collect on your behalf, the admissions tax you would collect yourself, but this would be a local tax for Detroit purpose.

Well, what I'm saying is that would that process still go through the revenue sharing process would still go through the constitution, or just it would just they would collect it for us and then remit it directly to the locality, right?

Just like they do with the income tax number.

Right.

That's I just want to make sure I got that clear.

And then I also wanted to ask you, um you said something earlier about the fact that the base has to be the same.

But what we tax what they tax the state has to be the same as what they tax locally.

For the sales tax.

For the sales tax.

Is the if we're part of this streamlined sales tax agreement.

Well, I'll just get ready to ask.

Like, is one is this was that constitutional?

And secondly, if we were to expand it, would we be violation of the streamlined sales tax use agreement?

I just want to know we in violation of that.

So is is is it constitutionally based or is it statutory based, or is it just because we don't want to violate that agreement?

No, our the state's participation in the streamlined sales tax agreement was statutorily based.

Okay.

But if you violate that agreement, the um governing board of that the sales tax, the streamlined sales tax agreement would say you cannot do this, which means then you have difficulty dealing with um being able to collect that revenue.

Also, also if we violate that or we were if we or initially wasn't no longer a part of that, the cost for us to collect that tax would increase, wouldn't it?

As us not being part of that.

If you did it yourself, yes.

Right.

That's what I'm saying.

Yeah.

So I I I I I just want to make sure about that.

And also, um, I also want to make sure when you're talking about the um expansion of when we when we amend this local sales tax agreement, are we also amending uh Article 9, Section 8, which uh of the Constitution, which will allow us to be able, if we so chose to, the localities to tax food, and we're talking about taxes.

We're not talking about like pre-packaged food.

Like we're not talking about like taxing hot Cheetos, we're talking about taxing things like stakes and things of that nature.

If we so chose to, could we then tax that?

Could we then also tax prescription drugs?

If we so chose to tax prescription drugs, we have to tax them across the board, you know, like you said horizontally, or could we choose which prescription drugs we want to tax and not?

I'll give you an example.

So, like for instance, let's say I want to tax fentanyl, or if I want to tax opioids because of the medical burden that is put on the cities economically on our EMS services, we want to buy more Narcan, we want to buy more things, be able to address that.

Would we be able to have the power to be able to do that if we voted to amend the local sales tax?

You got a couple things going on there.

Yeah.

Um the first is the constitution just implies what the actual maximum rate will be and how it can be levied.

Okay.

Then we have the sales tax act, which says what is what can be taxed and what is exempt.

Okay.

But let me go back.

The Constitution through an amendment in the 70s said you cannot tax food for not for immediate consumption.

Right.

And prescription drugs.

Right.

So the Act, the statutory act adopted 1963, I think.

Yeah.

For the sales tax.

Yeah.

Um that has all the different exemptions that are in there.

The agreement, the legislature said, Michigan, you will we agree we should be part of this agreement.

Right.

That agreement is governed by a voluntary um voluntary participation and a governing board that defines certain items and things like that.

But if but it doesn't dictate what a state base should be.

So you could amend the state tax base, which has to be the same as the local base, if you want to be part of the agreement.

Okay.

You see that?

Yeah.

Yeah, no, I don't see what you're saying.

It's like you could, but if you if you if so, like for instance, I I'm just saying, I just want to know just not what we should, what we should, but what we could do.

I because for my understanding, this is what I'm thinking.

I'm thinking, if we were to, because you have to amend a couple of sections of the constitution, I would assume, for a local sales tax.

And I would think one of those things would be be the levy limit, which we have, we would have to be able to I would think be able to repeal that.

So the locals could be able to decide when they want to levy, you know, the sales tax.

Also, the terms of the percentage, we would be able to decide locally through a local election, not through state elections anymore.

If we want to increase the percentage.

Talking about revenue sharing, excuse me.

No, no, I'm talking about the I'm talking about the tax.

Because right now, for my understanding, it's a it's a one percent sales tax, right?

That we're that that that we're already.

So let's say we come back, the city comes back and says I want to increase that two percent or three percent.

That would go through local government.

We or we have to go through the state process again in order to do that.

Uniform state law would say you may levy a tax up to this limit.

Okay.

So um for it, for instance, the home rule uh cities act says you may levy the property tax up to 20 mils.

Right.

But you're at 19.9 You could theoretically, you know, very marginally increase that without going back to the legislature.

If you wanted to go to 30 mills, you would have to go up there and and begin.

Okay, could we have some extra taxing authority?

So we will have full car blanche here.

It's not like if we vote for this, it's like you know, I want to raise this to two, I want to raise this to five percent.

You know, I and let's say for instance, you know, like you said, uh streamers entertainment.

So I want to tax Amazon, I want tax Netflix.

You forgive me, I'm not trying to sound creepy here, but let's say I want to like also tax adult entertainment here, because that's considered some people.

So I want to be able to tax that as well.

And I want to levy all that, and I want to expand the base, and I want to raise the the percentage so I can have more money coming in.

That would be limited.

As long as you amend the constitution to allow for that.

So you would say not six percent, maybe nine percent.

So it has to be a maximum.

So it has to be there has to be a maximum.

It has to be a has to be a maximum, a rate maximum in the constitution.

It doesn't have to be, I should say.

Right.

You're amending it.

You can do whatever you want.

Yeah, that's what I thought.

That so that's the less that's more of a language discussion than it is the actual extremely important.

Okay, yeah, because that's what I was thinking.

Like, if you're gonna do this, go car blanche.

Um I also wanted to ask you, um, has was there ever uh income inequality um measurement or metric to this as well.

I mean, I I know that there's an index called the Genie Index, which measures income inequality.

I just want to know we're raising this because even though we're talking about people that have disposable income, sales taxes generally are a regressive way of raising money.

Hurts people who are poorest the most.

I would just like to know that we do like a genie analysis of this at all to measure income inequality negative positive.

Do we do uh impact at all study on terms of how this would affect poor people impovering in the city of Detroit or across the state in general?

Was that something that was part of that?

That was beyond the scope of our report.

Yeah, that's what I thought.

We're trying to figure out um could you do it?

How much would it raise what are the issues to think about?

Certainly there's wide amount of literature established in the regressivity or or the proportional nature of the tax.

We didn't get into that.

And and I assume you didn't get into the economic aspect of this too, with the cut with the with the economy grow, the economy contract if we were to levy this at all.

Uh no, that was the other scope.

Okay.

Uh thank you.

Always a pleasure.

Appreciate you.

Thank you.

Thank you, Mr.

President.

I'm done.

Thank you.

Colleagues, any additional questions for the uh citizens research council or Michigan Municipal League, while they're here.

Um not then we will move on with our next group of presenters.

Thank you very much.

Say none.

Thank you so much.

Thank you for your work, your effort.

Uh, and be on the lookout for a phone calls.

Because they're coming.

They're definitely coming.

We're now like for the um members of the equitable development task force to join us at the table, please.

So I know we have the chair and vice chair as well.

Member.

I know they did a uh gave us a bit of a um uh some feedback on uh what they want us to do, and they want us to get lost.

They want us to get lost, and they'll tell you what get lost means uh as they come up to the table.

Do you have a uh you said some slides?

Did you I think we're queuing up your slides as well.

I mean, you get ready uh before you present, please introduce yourself for the record, and the floor is yours, sir.

And uh before we go, uh madam chair, would you like to uh kind of intro it all?

Yes, ma'am.

I think you're the uh chair.

Okay, I don't know.

She ain't never skipped.

Learned that a long time ago.

Thank you, Mr.

Chair.

Um so yes, members Santiago Romero and I co-chair the equitable development task force.

Um Toy New Reeves is here representing the taxation committee of the equitable development task force, and there has been a fair amount of discussion within the taxation committee um that actually encouraged and supported um and requested the study to be done for us to evaluate uh the impact that it would have on the city.

And I believe he has some questions as well for the Citizens Research Council.

Or we'll get we'll get to that later.

I know that he's doing a presentation before the task force next week as well.

Thank you, Mr.

Chair.

And make sure your microphone is turned on, Mr.

Reeves.

Hello.

Hello.

Is it Audible?

Okay, thank you very much.

First, I want to thank uh council president for allowing us to have this opportunity to speak, and council members as well for taking your time out to come and join us here.

We are meeting with CRC next week, so we're gonna have those questions uh you know in a in a separate meeting.

Um and as council president mentioned today, um I think it's time for Michigan to get lost.

So um a little bit about myself, my name is Toy New Reeves.

Uh I'm a lifelong East Ider, D5, grew up in D5, Mac and Chrysler, I live in D4.

Uh Jefferson Chalmers, perhaps the two best districts in the city of Detroit, perhaps.

Um I'm a PhD candidate at the uh in economics at the University of Michigan.

Uh my fields are in macroeconomic policy, international trade and finance, and my research currently is in public finance, tax policy, and of course lost.

That's how I got caught up into this discussion.

Um, as mentioned, I'm an equitable development task force, chaired by councilmember Johnson's, Councilmember Santiago Romero, and I believe Councilmember McCampbell's also gonna be joining us as well, and the taxation subcommittee.

Um so over the past um three years or so, uh we've been having discussions and interacted with colleagues at the CRC, of course, SEMCOG, Michigan Municipal League, the uh Office of the Chief Financial Officer, um, city, city, city and state treasury, as well as looked at officials across the state.

And uh I'm just gonna keep this a little bit more high-level since um uh Madou and Eric had the opportunity to give give you all the hardcore um you know stuff.

I'm gonna give you guys a little bit more of a high-level discussion here.

Um so what we have found is that there's bipartisan interest, I would say, in a and get it in a lost local option sales tax in Michigan.

What I mean by that is um even for our colleagues at the ADTF, we have people like some of you may know uh Theo uh Theo Pride and Alejandro on uh at the Detroit um action.

As soon as I mentioned the word uh sales tax, they told me Toyonu, if you even think about it, we're gonna kill it.

But at the same time, we had open discussions, and I think that this is what this um this uh effort has been has demonstrated that it's time for for a heartfelt discussion to better understand what this policy can do, better understand um its limitations and and some of its assets as well.

When we have those discussions across uh the board, we see a lot of positive support.

And I'm gonna keep this discussion a little bit more about the macroeconomic policy issues here.

And what I mean by that is that Michigan is GDP equals that of Thailand, the 30th ranked country in the in the world, and Detroit, Metropolitan Detroit covers more than 50 percent of that GDP.

So local governments today operate much like macroeconomies, and they face lots of local, state, local, state, national, and global uh shocks that happened to them.

And the Lost offers um an indispensable policy tool to help stabilize local economies in response to these economic shocks.

Um they represent a modernization of a very outmoded tax system, allowing the state as a whole to collect more tax revenue uh in a way that reduces the impact on Michigan residents and businesses as well.

Um I think um, as mentioned earlier, over 80% of sales tax states, I mean states that have sales taxes, um, have uh local options and they have over 50 years of experience with local option sales taxes, which gives the state of Michigan a leg up on being able to leverage some of that understanding.

So in 2008, we all remember that the housing market crashed, property values plummeted, and property tax revenue shrank.

Um the state ended up prioritizing balancing its budget over sales tax revenue sharing with local governments, and subsequent to that, Detroit entered to bankruptcy.

City workers lost their pensions, police fire, first responders lost their benefits, city lost assets such as Bell Al, the War Department, and residents haven't forgotten about that.

But the important part here is that that was almost 20 years ago.

And if that exact same economic shot hit the city of Detroit this afternoon, we will be then in the exact same predicament that we were almost 20 years ago.

So this crisis didn't hit just Detroit.

And so the research that we that I have uh personally shows that in 2008 and 2009, over 422 counties across the country, that's over 13 percent of counties raised their local um option sales taxes in response to felt falling uh tax revenue.

Um that's over that's more than 40 percent the average that we saw in those in those same years.

If Detroit had the same option, we would have likely have had an opportunity to avoid receivership.

And as mentioned before, federal and state governments they don't have the the design to respond to local disruptions like this.

They have to worry about the national issues, but local governments are designed for that purpose, and accordingly, we have to have the tools enabled that will enable local governments to be able to respond as necessary.

But during the COVID recession, you actually saw the exact opposite.

They used tax holidays in order to cut sales taxes in order to stimulate economic recovery after there had been such a long term of uh of economic slumps.

Um this year we know that, I'm sorry, this last November we had SNEP benefits that were cut and they're gonna be threatened again uh coming up this November, and we all know the state level is gonna be very um very deep federal and uh state federal and state budget cuts on the horizon.

The city has to have a diverse range of policy tools to provide economic security for its residents.

So why are laws so popular?

We mentioned that 80% of states have them who have sales taxes.

Um there was a time, like to give us analogy, there's a time long ago when there's only one television in the household.

I remember those days, I don't know if you guys do or not.

Uh while nostalgic, everyone had to had to agree what to watch and when to watch and everything else, which meant that in my household, fighting over remote control almost incessantly.

A one-size fits-all, a one-size fits-all state sales tax suffers from the exact same problem.

Um, all municipalities have to agree what the tax rate should be, who should pay it, how it should be how the money should be spent.

This is impractical across the wide range of municipalities in our state with differing different spending needs, legislative priorities, and fiscal structures.

Yet, without statewide consensus, our sales taxes haven't changed since 19 uh 96, a time when gasoline was less than 99 cents a gallon.

As a result, all of this economic and fiscal pressures is gonna be um borne by our by our property taxes and borne by local residents as well.

Today with modern technology, there's no need for fighting anymore, everyone has its own device.

And in the same way, uh modern technology in that same way is is lost for a tax policy.

Um Traverse City, Alcona, Birmingham, Detroit all have different needs, as we mentioned before.

A local option sales tax allows each each of them to agree to disagree on what's best and to choose for itself uh according to their local needs and concerns.

As an example, Chicago can sustain a combined sales tax rate that exceeds 10%, sometimes 11%, 12% depending on what you're shopping and where you shop, without driving away customers, while other uh municipalities in Illinois wouldn't be able to do such a thing.

A state sales tax rate at the same level would be impracticable, but at the same time, without a loss, Chicago, uh both Chicago and the state of Illinois would uh would lose tens of millions of dollars per month.

Um the second reason why uh loss are so popular with states is the is the efficiency.

Now, to better understand efficiency, when consumers change their purchasing purchasing decisions to avoid taxes, everyone loses.

And this is what we call inefficiency and taxation.

Customers buy fewer products, businesses will sell less products as well, and the government can't collect taxes on products that are that are not being sold.

If you think back to the last time you went on vacation, chances are you don't remember what the sales tax rate was at that place.

Vacation and business travelers don't decide their destinations based on sales tax rates, and once they go there to on vacation or on business trips, they're not bargain hunting, they're not shopping for lower prices.

So this means that they're far less price sensitive and will not uh change purchasing decisions to avoid higher tax rates.

This makes loss ultra efficient as they can be designed to uh to target certain uh vacation and business traveler destinations and products as well.

States use laws to shift the tax burden from residents to out-of-state visitors, increasing state revenue without negatively impacting residents and local businesses.

Now, the response is obviously gonna be well, this is gonna hurt our tourism industry.

Actually, we find the exact opposite.

The local option sales taxes seem to actually support tourism rather than hurt it.

Tax burdened residents are unlikely to approve further property tax increases to fund tourism, infrastructure that they never use.

And here in Detroit, we've been talking for a long time about better transit from DTW to uh to downtown, but residents in Detroit don't need it.

Um without the necessary infrastructure improvements, however, it's the tourism industry that suffers and becomes uncompetitive with other first destinations.

Tourists, however, don't mind paying a little bit more for this better infrastructure.

And so loss represent that represents the transaction between local governments and tourism and taking residents out of the equation.

If you force residents to have to always approve of it, they're gonna say no.

But if you allow to uh if you allow uh local governments to be able to tax tourism directly, they can get a lot more infrastructure, uh a lot more funding for infrastructure improvements.

And so just a little bit of uh a little bit of a background, some some specific studies on law.

So states like Florida and Washington State, um, they use lots, they use loss to completely eliminate their income taxes.

Those states don't have any income taxes at all.

Georgia is one state that has used loss uh successfully to lower its property taxes, and I'll give you a brief example here.

Um Chatham County, Georgia, home of Savannah, Georgia, um, it raised five point 1.5 billion dollars, it's a billion with a B in the first 20 years of its local option sales tax.

That's equivalent to the 70 million dollars that uh the CRC is estimating right now per year, but it had doesn't have any uh you know event venues or grand prix or anything else like that, and it's still able to raise that much amount.

The most important aspect here is that 40% of that revenue, 40% of that revenue came from non-residents.

If it would have taken 12% increases in sales, I'm sorry, in property taxes to cover that same amount of revenue, and you can understand why voters uh in Georgia and Chapman County, Georgia have renewed their laws for the past 40 years, sometimes with as high as 80% approval ratings.

When you find a tax that residents are ha happy to impose, then you found a very good tax policy.

This is a quote from the Chapman County uh authorities here.

These funds have enabled more public improvements during a 20-year period than the sum total of public improvements during the past century.

And that comes back to the fact that we said before that residents are not going to approve uh property tax increases to fund um infrastructure uh programs.

And again, if you increase taxes and at the same time increase revenue, that means something you were doing, you some you were doing something wrong before.

So you shouldn't be able to raise taxes and also raise revenue unless you were not taxing properly in the first place.

Um again, I think that we've touched on this before across the different country um with the loss have been used to lower property taxes, income taxes.

Uh they also use it to fund um infrastructure products such as regional transit, regional water authorities, and regional energy as products as well.

These are things that we can think about doing, but again, it would take certain um commitments through Lansing to do those type of things as well.

Another case study, um NFL draft.

2023, Kansas City had the draft, generated 1.6 uh million, 160 million dollars in economic activity.

With a 3% loss that would come to some around $5 million in tax revenue for three days.

Detroit bested them with another fifth and increase over 50% that much, 213 million dollars.

Unfortunately, we collected zero dollars in local sales tax revenue.

We ended up paying for the local for that um for the NFL draft through not just the city of Detroit, but Michigan residents as a whole, higher income taxes and higher property taxes.

So loss is not just a benefit, the benefit loss is not gonna be limited to Detroit, and I think we should look this this talks about the need to have a broader conversation across the state.

So just looking, this is the thing that as an economist, I see in the newspaper, and I see that in a different way that other people may see it.

Just uh last August, over two thirds of Lavonia residents rejected 150 million dollar bond proposal that was going to be financed with property taxes for fire, police, and municipal services.

Again, compare that to look to the local option sales tax in Chatham that had 80% approval rating.

Last June, Holly officials were forced to raise property taxes because they had a half million dollar budget shortfall.

Two years before, two years ago, uh City of Ann Arbor had a 25 million dollar budget shortfall, had to lay off uh a high number large number of uh teachers, um, which they ended up uh having to uh to rescale their entire um teaching staff over in the entire district across the entire district.

Uh Oakland County residents have always complained about regional transit through property taxes.

If we're able to, if we give them them the permission to collect sales taxes to do that, they would probably have a lot more support for regional transit.

Um there are other issues before um across as well, but I just want to highlight, as we mentioned before, um tourist industries such such as Mackinac, Travis City, and uh I'm sorry, um, retail outlets such as Novi, Dearborn, Troy, Oakland County, are all gonna benefit from having a local option sales tax as well.

So again, this highlights the need to have a broader discussion across our state.

Um I think our colleagues from the Michigan Municipal League raised this uh the issue today that the house leadership is currently looking at a proposal to eliminate um property taxes and to offset that by an increase in the statewide sales tax.

Um we think that this is actually an opportunity.

I don't think there's gonna be a challenge, this is actually an opportunity because the problem that the that they're that they're facing right now is the challenge that they're facing is how do you identify the the specific rate for the entire state that's going to be able to balance the budget and make it revenue neutral.

That's a very, very complex problem.

Um it's like attempting to try and set the statewide gasoline price to $2 a gallon and help that there's no shortages or surpluses anywhere in the state.

And if you just drive down Jefferson from Woodward to Altar Road, the gas prices change every quarter of a mile.

So you can imagine what that's going to look like.

Even if successful in the first year, the shocks to local economy and diverse uh revenue streams, maintaining statewide neutrality over even a short period of time is going to be um unsustainable over a few years.

A local option sales tax um strengthens the current proposal that they're that they have in Lansing right now, and it offers this flex the flexibility necessary to complete property tax reform in a way that's competitive, um fiscally stable, and offers local accountability.

Um I think that's something that our Republican colleagues have all always um uh championed was uh having um local uh local control over these type of issues as well.

Um as we know local governments are better are are more are better structured and better positioned to calibrate their revenue mix.

I also think that completely eliminating the sales tax may be undesirable in many cases.

Um why is that because property taxes and income tax sorry consumption taxes fluctuate in different uh in different cycles.

So the consumption is gonna f is gonna follow the business cycle with recession and boom, whereas property tax is gonna be much more stable, but they they offer little they offer much less growth over time.

So um it may be preferable to have a diverse set of revenue that can uh be that you can hedge against different types of shocks.

Um and f finally, border counties like Monroe can opt out of local option sales taxes.

So the Monroe is on the is on the Ohio border.

Across the border, they have a 5.75% uh local option sales tax.

If you raise the state sales tax to 7%, you're gonna see businesses in those border counties are gonna begin to suffer because residents are gonna are going to go shopping across the border for lower sales tax prices.

So it's important that we give the option for local for those border states and border counties to be able to opt out of a local out of a statewide sales tax that may be harmful to their local economies.

Um, some of the big takeaways from this again, local governments need support to catch up to the rest of the country and modernizing our tax policy tools.

We need better taxation tools to protect ourselves and secure economic future.

Lost is not simply about raising uh money for homecoming, okay?

It's about um empowering local governments with the flexibility to respond to local local needs and economic conditions.

Michigan can tailor a loss policy for its needs for the um from the diverse range of options that other states have already had, and more importantly, this step that the CRC has taken.

Um I don't I just want to again uh mention to our colleagues that the CRC many of you don't understand like what uh a monumental and colossal task it was to try and estimate this.

Um they did a fantastic job in doing so.

Um but I think that this um opens up um an opportunity for that statewide discussion, and I hope that uh city council and the city of Detroit will lead that discussion and take the leadership role in that as well.

So thank you all.

And now it's time to get lost.

Thank you.

All right, so we're gonna open up for uh some quick thank you for for the presentation.

Um very clear once again that the EDTF has been doing work, um, and it's not just a task force in name only.

So again, thank you.

Thank you, chairs as well for your efforts.

We are I just want to give a heads up.

We've got to be out of here because we have the city planning commission meeting at 5 p.m.

in this same committee of the whole.

So if I'm a little bit more uh brief, uh asking for folks to be a little bit more brief, it's because we've got to kind of speed this up to allow them to get in.

They gotta actually set up first as well.

Uh so we plan on being out of here no later than uh 4 45 if we can get out a little earlier than that to give them chance that'll be even better.

But any questions for Mr.

Reed or the EDTF, I see Member Miller.

No question.

Uh is a breath of fresh air to see you, 20 Louise.

Thank you, I am truly a fan of the East Side Summit.

You have truly blessed our district for many, many years.

Now I understand why you're not on the ballot.

I understand my hats go off to you.

Thank you so much.

I look forward to um I and thank you for the report.

I didn't know it was this extensive, but it was great to see you today.

Thank you so much.

All right.

Thank you.

Any further?

Seeing none, thank you so much, Mr.

Reed.

Thank you so much as well.

And we also want to open up for public comment.

If there's anyone from the public who would like to speak, please raise your hand now, in person and in online.

Going once, don't leave yet.

No, you're not.

I'm about to say don't leave.

Going once, going twice, going three times.

Collection of public comments have now concluded.

All right, so um, we're gonna go to public comments, but I had to make sure I open and close it uh officially.

We also have um members of the administration who's gonna join us.

Uh it's one thing to hear from council.

It's one thing to hear from our other agencies who are assisting us, but it's a whole other thing to hear from the administration.

Joining us today is uh the CFO, uh Tanya Sodermeyer, as well as the director of state governmental affairs.

We know him very well.

Sat at this table for four years on this side, though, what he's on there, uh that is uh member, former member, uh Fred Durhal, sir.

Thank you for joining us.

Please introduce yourself for the record and you know let us know where the administration stands on these particular items.

So uh good afternoon.

I'm Tanya Stodemyer, City CFO.

Good afternoon to this honorable body, Fred Durha, Director of State Governmental Affairs.

And I want to thank you guys for this opportunity to formally thank the CRC for their report.

I think it was very thorough.

You know, we've been reading over it for the past few months, and I think there's a lot of good information there.

And then I also want to make sure, and I'm probably not telling you anything you don't already know, but uh, you know, the uh Sheffield administration completely supports you know exploring any revenue opportunities that we have.

I think she uh was a champion when she was on this council in terms of making sure that that CRC uh contract was approved.

And I know like during her campaign, she's been talking about you know property tax reform and how do we diversify our revenue streams.

So I think this is just the start of a conversation that's going to be ongoing, and as uh member Santiago um Santiago Romero indicated, uh this is not gonna be easy.

It will be hard, but I think it will be worth it.

I mean, I think it's something that we can't ignore.

It's something that we have to explore, and it's gonna take a lot of effort on the city's part and working with you all as well in your cooperation.

So I think this is something that I'm confident that we're all on the same page as it relates to the city's revenues, and you know, we've always relied on you know manufacturing and our income taxes, but I think now that we are a destination, we need to start acting like we're a destination, and I think it makes sense for us to uh look at what these options are.

Thank you.

Uh Director Durha, I've got one.

Um so in your new capacity as well as with your uh experience in the past working in the state legislature.

What would you recommend um the first moves to be?

I mean, it sounds like we're all aligned at least in council and the administration uh in going in that direction, but we know there's a uh heavy lift again from the state side.

Yeah, uh and to you, Mr.

Chair, and and to my former colleagues and also the new council members.

Uh what I would say is is consistency is the key, uh, which is why uh Madam Mayor uh is exploring different options that are diverse.

Uh again, I think you heard from the CRC today that no matter uh what type of taxes you cut, uh obviously there has to be revenue behind that you have to generate.

Uh and you have to generate a significant amount of revenue uh that provides equitable relief for or relief for residents.

Uh the mayor is very focused on multiple uh approaches that we are looking at.

Uh, I can tell you from Lansing there are tons of ideas that are floating around, uh, even as mentioned today uh from the speaker.

Uh but uh again, we are focused on analyzing what is going to be best uh for the city of Detroit.

So as far as next steps uh are concerned, uh I think we have to move as one voice uh from our city uh to be able to achieve any equitable tax relief uh here in the city uh of Detroit.

Uh as mentioned when I was a member of the body on that side of the table, and also being a member of the state legislature, uh it is not an easy lift.

All of these options have to go uh through Lansing, and there are many different ideas as well as politics that come into play.

Uh but I am confident uh through some discussions uh that are flowing around right now that at least the subject is in lancing.

Uh so there is possibly uh uh a real opportunity for something to get done.

Uh but again we want to make sure coming from our city, it provides equitable relief uh for residents, and that is where the mayor stands right now.

Thank you.

Colleagues, any questions, comments, concerns?

Uh member Johnson.

Thank you, Mr.

Chair.

Through you to the CFO, um, I'm wondering if you have any sense of what the cost would be to go through this process.

Uh uh, through the chair, um I don't.

You know, I know that there'll probably be um some additional contractual expenses in terms of the there might be additional research that needs to be done.

Um, you know, making sure that you have all the resources that you need.

So there will be a cost involved, but I I haven't had a chance to quantify that.

Is and is that something that you are working on that you're looking to do?

Because I think that can help shape and inform the direction that we go into.

If you give me an opportunity to provide you with uh information on a later date, I can do that.

But right now, we haven't really factored in what that might look like.

You know, we've um had informal discussions as to you know how staffing might need to change if something like this was to occur, but in terms of getting us to that point, we do need to look at what those costs might be.

Thank you.

Thank you, Mr.

Chair.

Thank you.

Member Santiago Romero.

Thank you, Mr.

Chair.

Uh, through you just briefly want to offer up my support once more if you need me in Lansing.

Please, happy to be there.

We need to be there.

We not just our lobbyists, but as members, and I think really uh a big uh um point of today is we are leading this conversation as the biggest city in the states.

Um and um happy to talk to other council members across the state as well.

Um but if you need us, send us up there.

Happy to help.

Um, because I know this is gonna require multiple squeaky wheels.

Um so happy to be that.

Uh thank you, Mr.

President.

Thank you.

Through you, Mr.

President, to Member Santiago Romero.

Uh we are glad to hear that.

Uh as you know, uh, this mayor has taken a particular focus on bridging that gap between uh Detroit and Lansing.

Uh and so the mayor has already had the opportunity to speak with multiple legislators uh there.

Uh we are strengthening relationships and Lansing uh and we are sending that message that uh Detroit wants to have that great relationship, but also bring resources home uh to provide for our residents.

Uh and so uh the mayor has been steadfast.

That's why she sends me up there.

Uh uh and we will continue to do that work, but also reach out to you and kind of notify you of what's going on and happening in Lansing uh as things occur and and particularly on tax relief as those discussions become more fluent.

Thank you.

As as we talk about the realities of things, you know, this is an election year uh that's gonna affect Lansing in a major way.

Does that complicate things even more so?

In my head, it I believe so.

But again, asking from asking someone who has a little bit more experience in Lansing than myself.

Uh to you, Mr.

President, to be safe uh on what we're working on in Atlanc.

Uh I tell folks there are two parties in Lancing, uh, but we are focused on the city of Detroit.

Uh I think elections often, uh no matter bipartisan or otherwise, uh, come with a number of issues.

Uh but what I will say, uh we have heard dialogue and conversation from both sides of the aisle uh for some good ideas to provide uh tax relief here uh across the state.

Uh what that looks like for Detroit and which is what the mayor is really focused on.

We know we've got to have partners across the state, obviously, uh, but she wants to ensure that whatever plan it is, that it is equitable for Detroit residents.

All right.

Thank you.

Uh Pro Tim Young.

Thank you.

Uh good to see you, uh Dear Hall.

Good to see you.

So I was our uh chair.

I was sorry, I was I was so excited, Director Durah.

Good to see you, my man.

I'm sorry.

Um CFO, always a pleasure, see you.

Uh I I I just wanted to just ask you a couple things really quickly.

One, did you uh kind of the same questions that I asked um Mr.

Lufer earlier, but did you do uh racial analysis at all or an audit to see how this would impact people in terms of income inequality and in terms of poverty?

Yeah, uh through the chair to pro tem.

We haven't done that.

Was that just outside the scope of what this was, or did you figure that you wouldn't be necessarily impacted?

I think there might be an opportunity if necessary to amend the contract if we want them to explore other things as well.

Yeah, because I'm not trying to give people four or two or four.

I just wanted to make sure if there is an impact.

I've I've done my questions on my own research, and from what I from my understanding, there would be a slight impact in terms of income inequality in terms of power, because we are talking about a regressive tax here, and what I mean by that is people who are wealthier, it doesn't help them because they don't spend most of their money up front, which people who are poor, spend a lot of their money up front.

So this would hurt them in the um in the short term.

But I also wanted to ask the time I I'm not necessarily for or against this, but the tower could dem or condone.

But the timing of this, I just want to ask, do you think that now would be a good time to do that, or do you think it would be better if we had a more consistent task code and waited till we diversify the number of taxpayers that we have, meaning that we attract people of different incomes, whether wealthier, whether they're more middle class, as we are now growing for the first time in a long time.

I think that's the real issue in the city, one of the issue of City Detroit is that we have people who are either well to do or people who are extremely poor or or or or poor.

We don't really we have a middle class, it's not really where it needs to be or grown to the level that I think it should be for a major metropolitan area.

Did you think that now will be a good time for this?

Do you think do you foresee this impacting that growth at all?

So I can I can so speaking uh for myself, I think that this is gonna be such a heavy lift that we need to start the process now.

You know, I don't think we want to delay it.

Okay, and and um I also just wanted to ask do you do the and I'm probably gonna turn to vapor for saying this, but do you think that it would have been easier if we were just to uh and I'm not saying we do this, but if we just had parity with the corporate tax, do you think that we could achieve the same?

Because right now it's two percent for the um individual income tax two, it's it's 2.4% for individual individual income tax is two percent for corporate tax.

We say parity.

So 2.4% match across the board.

We raised that 71 million or that same amount of money.

I would say through you, Mr.

President, to uh to President Pro Tim Young.

Uh again, those are things that we're going to have to explore.

Yeah.

Uh to be able to get specific uh a specific fiscal analysis uh on a number of options.

Um what was presented today obviously was kick started or jump started last session.

Right.

Uh by council asking about local options sales tax.

Uh, but again, uh the mayor has indicated uh frequently she's open to a divide uh diverse number of options.

Uh and when those options are narrowed down, obviously, as CFO Stodemeyer has indicated, uh, that's kind of when we pursue and open it up and and and open those analyses that may have to be contractual uh to get that get that research or get that data.

Okay, does does that uh does that um explore or um seeking of taxes?

Does that include the land value tax or is that dead in the water?

Member Vice Chair Member Young 13% task for 97% of owners.

I mean, come on.

Almost said member vice chair.

I had yeah, yeah.

I slipped back.

Uh through you, uh Mr.

President to President Pro Tim.

Uh again, uh my statement is that the mayor is looking at all options table.

Uh we have not identified what specific uh options those are.

Um what she has said stated before in the past, though, she wants uh to be focused on two things.

One to ensure that it generates a significant amount of revenue here in the city of Detroit because whatever taxes we plan to cut, we have to backfield that.

Uh and the second thing is that it really provides cost savings uh for our residents.

Okay.

Thank you.

I'm I'm done, Mr.

Chair.

I'm sorry.

Uh yep.

Uh through the president to pro tem.

And I also want to add that if we make any changes to the city income tax act, that that also requires us to go through a lot of the same procedures that we have to as far as the state and the voters.

So I I think at some point we need to have a comprehensive plan so that you know if we need to go to the voters, we're going to the voters for everything that we think you know it makes sense for us to do right now.

If we need to change, you know, our ordinances, all of that, let's, you know, let's figure out how to do this at one time.

I think it'd be a little cheaper, but you know, just you know, just kind of really map this out and figure out you know what to do first.

Maybe we do something later, but it's it's just gotta be a process, and there's so many different steps to this that we gotta make sure it's synchronized.

Thank you.

All right.

Okay.

Thank you so much.

Uh um, before we wrap up, um, Member McCampill.

Thank you.

Um good afternoon.

Uh I have a question for Director Durha.

Uh on uh for the state, I know next week is the state of the state that the governor would get her address, but also she released her budget, um, executive budget as well.

Do in the interim or in the short term, do we have any indication on like the impact on revenue sharing or if there's any additional that has she that she has proposed to come to the city?

Um through you, Mr.

President, to Councilmember McCampbell of District 7.

Uh uh we have uh are beginning to analyze uh the governor's executive record, which she rolled out last Wednesday.

Uh there are a couple initiatives in there in regards to taxes, wagering tax, uh, and a few others uh that we'll provide information for.

Uh as far as revenue sharing, uh, I think the city of Detroit uh not just this administration, but any administration has always been focused on ensuring that we still receive our revenue sharing uh that is instrumental in funding uh our basic city services, police fire EMS and et cetera.

Uh but what we have seen in her executive recommendation from what I've seen already is that revenue sharing for our city and cities across the state particularly remain flat.

Uh so there have not been any cuts from what I've seen uh in uh her executive recommendation.

Uh and I will further say though, um the executive recommendation is the governor's recommendation.

Uh it has to go through the legislative process.

Uh and so uh we are very hopeful uh that our revenue sharing remains flat.

Uh and as always are very hopeful if there's an opportunity for an increase that that comes as well.

So uh I will state that uh to uh council member McCampbell.

Thank you so much.

Thank you, Mr.

Chair.

Thank you.

Thank you.

And thank both of you, uh Director Dor Hall as well as uh CFO Stadtermine, we really appreciate you joining us and providing additional commentary.

Thank you, Ms.

Thank you.

All right, we never shall now go to public comment.

I think I saw a hand in the committee of the whole.

We got one, Mr.

Foster.

We're gonna get that clock up.

So uh don't be mad at me, but I'm gonna give everyone one minute for public comment.

We're not making any decisions today.

This is all about discussion.

That's what you just heard.

So all of your questions, if you have any more, we got more questions as well.

So we're gonna give everyone one minute for public comment, and we're gonna get the clock up.

We're gonna start with Mr.

Foster and the committee of the whole, and I believe we have uh a few hands online as well.

All right.

All right, Mr.

Foster, the floor is yours, sir.

Thank you so much.

Thank you.

Um through the chair very briefly.

Um the Citizens Research Council was established in 1916, or the NAACP was established in 1909.

So to have a research council for the entire state of Michigan and to have such a disparity for over 100 years, um, cannot be validated.

Secondly, I want to say that during 1920 and 33, there was alcohol prohibition during the same time that we had the citizens research council.

Alcohol is one of the leading sales taxes here in our nation.

So we have to have people that's doing research that reflect majority of our community.

Thirdly, it's 88 cities in Michigan that are in poverty.

We're talking between 30 and 40 percent plus poverty here.

So when we talk about research, once again, the people that are researching have to be reflective or the citizens.

The purpose of taxes is our go to government, so government can provide services to the citizens here.

The citizens have not been given that across the state in certain denominations and certain races and certain things.

Thank you, Mr.

Foster.

Thank you.

We should now transition to our online callers.

Who is our first caller team?

Good afternoon, Consor President.

We have three online callers.

The first caller is William M.

Davis.

Mr.

William M.

Davis, the floor is yours.

You have one minute general public comment.

Uh good evening.

Can I be heard?

Yes, sir.

Okay, I I think that uh it probably would be best, at least initially to go with uh a tax on tickets, you know, like um excise tax or however you want to put it.

Uh ultimately the city may want to look at uh a one percent sales tax, but I think before you get to that point, we need to start taxing what I think is an easier goal, is and it wouldn't adversely affect most of the city residents.

And then when I go downtown, most of the people I see at baseball games and tiger games are people who don't live in the city.

So I don't think that would adversely affect Detroiters as much as the sales tax.

And ultimately, we may want a sales tax too.

But I think the first thing, the first fight of the apple should be a tax on tickets, you know, for the our stadiums, the other places you go, they already do that.

Thank you.

Thank you.

Next caller, please.

Next caller is owner pop up.

All right, caller, the floor is yours.

You have one minute.

General public comment.

Good afternoon to the chairman be heard.

Yes.

Uh absolutely not.

Um this uh property tax uh revenue hoax is always a hoax.

I've never seen a politician that didn't want to tax.

Um the utility use tax, it was 37.1 million dollars, and they used 21 million dollars of it to pay down bonds for the public light lighting authority that they violated the city charter uh mandate when they introduced uh one person to to the body when they were supposed to introduce all three.

Um the the sale tax is households, you would want to tax households.

Um this morning I heard a man say he had 40,000 in taxes, but because he was getting a tax abatement, his 40,000 was going down to 6,000, and that was going to be for 12 years, and that's out of the general fund.

If you want to if you want the general fund to grow, stop doing that.

Next caller, please.

And our last caller is Mia Paul.

All right, Mia Paul.

The floor is yours.

You have one minute general public comment.

Thanks for joining us.

Evening.

Um, so I just want to you know speak about uh the council member uh Miss Miller.

You know, she obviously knows that the community is not going to want to be taxed.

You know, I know it's a various taxes that are put on the table.

Um, but when you we we say no because we have not been served.

Um I live in district three, and that has been the seat that has been empty all afternoon uh there with you guys.

Um so it's a direct correlation uh with the emptiness of that seat as well as uh what services that has been rendered.

Um I know that we cannot um exclude district three from any taxes, but we should not be paying taxes for services that we're not getting.

I would rather us to explore the uh participatory budget.

I believe one million was initially um, I guess quoted, and that's not enough.

And also, if you do the participate participation, thank you so much.

If you would like to provide the rest of your comments to the body, you can place them, provide them to the clerk's office, and it will be placed on the public record.

All right, that takes us to the end of our public comments uh and end of the agenda.

Thank you all for joining us.

I know we're gonna um continue this conversation.

Anything you want to add before we wrap up, Mr.

Whittaker?

No, sir.

Okay.

Colleagues, is there a motion to adjourn?

See no objections that action shall be taken.

This meeting is adjourned.