Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Income Tax topic
No spam. Unsubscribe anytime.
East Lansing treasurer summarizes income-tax revenue, compliance work and pension gains
Summary
City Treasurer Andrea Smith told City Council that East Lansingresidents pay a 1% income tax and nonresidents pay 0.5%; revenue has risen since 2020 and the tax has helped raise the citypension funding level, but some allocation and timing details remain complex.
City Treasurer Andrea Smith told the East Lansing City Council on March 18 that the cityincome tax, approved by voters in February (effective Jan. 1, 2024), charges residents 1% and nonresidents 0.5% and sunsets on Dec. 31, 2030.
Smith said the tax revenue is split by ballot language into 60% for unfunded pension liabilities, 20% for public safety and 20% for infrastructure, and that the amounts available to those purposes depend on annual reconciliations after the city reimburses its general fund for a 5-mill property tax reduction. "East Lansing residents pay a 1% tax. Non residents pay a half percent," Smith said.
Smith reviewed revenue trends since the tax began, noting a low initial half fiscal year then a steady increase; she described special compliance work using state "tapes" (files from the state showing filers who have not filed the city return) and a plan to hire an income-tax assistant focused on compliance and customer service. She said the city mailed roughly 2,003 letters for one tax year and nearly 5,000 letters across combined years to encourage filings, and had mailed about 1,700 letters for tax year 2022 at the time of the presentation.
Smith said the income tax has materially helped pension funding. "The state of Michigan came out with a regulation, which is Public Act 202 that requires us to be 60% funded," she told council, and said East Lansingwas previously about 49.16% funded before the tax; the figure rose after the tax and after receiving a state pension grant in fiscal 2024. Smith said a total of 819 employees participate in the city's pension program and that 295 were active employees who will receive pensions when they retire.
Council members pressed for clarifications about the timing and the resident/nonresident splits. Council member Altman asked for clearer slide titles when figures are forecasts versus actuals and for a way to reconcile withholding versus filer-reported revenue; Smith explained the difference is because withholding shows up in fiscal revenue but the resident/nonresident breakdown requires an individual filer return. Council member Watson asked who set the 60-20-20 breakdown; Smith said the allocations were placed on the ballot and that voters approved them.
Smith and councilors also discussed operational steps the city is taking to boost electronic filing and compliance; Smith said nearly 3,000 people had filed online in the current filing season and the city was preparing to interview for an income-tax assistant.
Why it matters: Council members said the income tax funds affect the city's general budget, public safety, infrastructure projects and pension solvency, and they asked staff for clearer public communications on how withholding, filer timing and fiscal-year accounting affect the numbers residents see in budget documents.
