By the Numbers
The MT interview with Lisa Howze
Published: July 24, 2013
… So, how do we go about generating more revenue in the city of Detroit? We know that we’re maxed out on our taxes, we can’t legally tax [Detroit residents] any more. So where do you go? It means you gotta expand the tax base. More people have to be working. But beyond that, we have an opportunity where there’s money being left on the table every day, every quarter, every year, in the city of Detroit, because there are residents who live in the city who are employed outside of the city, but those employers don’t withhold local income taxes.
MT: The city tax?
Howze:There are 22 municipalities throughout the state of Michigan that levy a local tax. If the employers don’t withhold those taxes, then it’s left to the employee to be responsible for reporting those taxes at the end of the year. And because the systems in the city of Detroit are so messed up, it will never detect it; if it does, it’s years later.
MT: What you’re saying is it’s incumbent upon residents who live in the city, but work in the suburbs, to pay their pro rata portion of the city tax from each paycheck?
Howze:The state law that governs this is the city income tax ordinance. Residents [who both live and work in the city] pay the full complement of the tax, and in the city of Detroit that rate right now is 2.4 percent. If you are a non-resident who works in the city of Detroit, the tax rate is 1.2 percent; so it’s 50 percent of whatever the residential rate is.
What’s happening is if those employers outside of the city aren’t doing the withholdings, then those are revenues the city does not have the ability to enjoy.
MT:But aren’t most people paid through professional payroll companies whose job is to make sure there is compliance on taxation?
Howze:Companies are withholding state taxes and federal taxes all the time. When it comes to the city of Detroit, unfortunately, there’s this contempt or disdain for providing additional resources that all parties know could assist the city of Detroit.
And partly, let’s just play the [Devil’s] advocate, in terms of managing the resources, and making sure that they are going toward their intended purpose, again, public safety is an opportunity that we have to reinvest in, whether it’s more equipment for our police officers, putting more officers on the street, buying better vehicles — these tax dollars could go toward that.
But when you have malfeasance … it causes some who manage the purse strings in this state to say, “Whoa, hold up. We don’t want to support a system that has demonstrated the ability to do right by the taxpayers of the city of Detroit, so let’s hold up.”
What I’m saying is that when I take office, I’m coming in as a steward of the taxpayers’ dollars, so the state of Michigan can trust me to be able to do that. And that’s really what it’s about – restoring trust and integrity.
At the end of the day, everyone has said, the governor has said, members of the state legislature have said: As goes Detroit, so goes the state of Michigan. So you cannot to continue to starve your child and expect to have a strong family. We all have to be moving in the right direction. And so that’s the direction that I want to move in.
MT:What role do you foresee city government having with regard to the emergency manager’s office?
Howze: You can’t resolve the city’s problems from 1,500 feet away, or 1,000 feet away, and say, “well we’ve got to get rid of him!” The way you get rid of [the Emergency Manager] is you get rid of the problem that caused him to be here in the first place. And so that’s again why I say I’m pushing solutions, not lawsuits. The lawsuits have been filed, the Supreme Court has been issued briefs; you have attorneys who are working on that.
So, if he is removed as a result of those efforts, great. But in serving the entirety of Detroit’s residents, I have an obligation to meet those primary concerns. One, that’s public safety; two, how am I going to feed my family and keep a roof over my head? So, that’s jobs. Three, how do I make sure that I’m getting my basic city services? Trash pickup, parks and recreation for my kids; these are the things that real Detroiters think about.
Because at the end of the day, when they go home, I hope and pray that Kevyn Orr is not on their mind. In other words, if he is, then we’ve ceded more power to him than the law would naturally allow.
MT: As Gov. Snyder appointed Orr, it seems reasonable to state that he wouldn’t be here otherwise; it’s not like he campaigned for the job.
Howze:I remember being in the legislature, meeting with the governor and my other colleagues. Of course we all fought against the emergency manager law; [the city was] at that critical point when the financial review had been ordered. There were members within city [government], including the current mayor and council members who said we could solve the problem ourselves.
And they did begin to walk down that path with labor, which had given so many concessions and offered a workable agreement, but then the mayor never presented it to council for ratification.
And so we’re going to continue to pursue this from the state’s position. If that process had been allowed to go forth and to move forward, where you had buy-in from labor and the administration or management, we’d probably be in a much better position than we are today.
We’ve lost a lot of time … with these financial reviews that came to the same conclusion. We’re in debt, we’re short on cash and we have a deficit. So what’s the vision that’s going to push us beyond the point that we are?
What are the policies that can be enacted from the state’s standpoint that could assist local municipalities like the city of Detroit. What controls can you put in place to make sure the dollars are going toward what you intended it to go toward?
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