Tax hike merited in Sterling Heights

Sterling Heights administrators will ask the City Council later this month to approve a 1.9-mill property tax increase. Given the city's financial condition and eroding property values, the request is reasonable -- and prudent -- if Sterling Heights wants to retain core services that will attract and retain businesses and residents.

Falling property values and cuts in state revenue sharing are squeezing cities across Michigan, including the state's fourth largest city. This community of 130,000 has lost $26 million in revenue sharing since 2002 and $23 million in property taxes. Over the last three years, residential assessments have dropped a third.

The proposed rate increase would recover only about 40% of the property tax revenue Sterling Heights has lost in the last three years. It would cost the owner of a typical $150,000 home about $143 a year. But given the city's falling assessments, most homeowners would still see a decrease in property taxes, averaging roughly $190.

Up to now, Sterling Heights has protected core services like police, fire and public works, while eliminating 75 positions, negotiating shared-service agreements, approving user fees for nonresidents, and cutting benefits, overtime, library hours and recreation programs. Without a 1.9-mill property tax increase, however, the city will have to cut another $9.46 million, amounting to 120 positions, or 20% of police and other departments.

Because the proposed tax-rate increase is less than the city is legally allowed to levy, it requires no vote of the people. Since 1988, the council has reduced the millage rate by 20%. Sterling Heights residents enjoy one of the state's lowest property tax rates. Even with the proposed increase, the city would still rank near the bottom.

City Manager Mark Vanderpool and Finance Director Brian Baker vow to continue looking for ways to cut, including more shared services. With property values falling, however, Sterling Heights must increase its tax rate now if it wants to continue providing a safe, first-class community.