Marquette City Commission votes to raise millage rate

MARQUETTE, Mich. (WLUC) - The City of Marquette has faced a budget shortfall that has been building steadily for nearly a decade.

At a special Marquette City Commission meeting on Tuesday, the city decided to raise its millage rate to bring in more revenue. A millage rate is the city’s way of determining how much you pay in property taxes.

“Those of us who are on the commission have been spending a lot of time worrying about this issue for a year now,” City of Marquette Commissioner Sally Davis said at Tuesday’s meeting. “It has kept us up at night and it is not something that we take lightly.”

Davis and other city commissioners are faced with what City of Marquette Manager Karen Kovacs said is a “drastic situation.”

According to Kovacs, the city would likely go insolvent in 2.5 years if it did not bring in more revenue. Additionally, Kovacs added that it is possible the city would drop below its minimum fund balance in 18 months and spend all of its fund balance in 4 to 5 years if revenues don’t increase. Kovacs said the deficit has decreased since last year, but added that the city is still way behind.

“In Aug. 2021 we first identified that there was going to be a significant deficit and at that point, it was around $6 million that staff had identified and we have been able to whittle it down to about a $2 million deficit,” Kovacs said. “That means that revenues are not covering operating costs, so there is a significant need in order to address that.”

The city’s millage rate was last changed in 2010 when it was decreased to its current rate of 14.9225 mills. The proposed increase is 2.6731 mills. This proposal stems from the city’s $2 million budget deficit. According to City of Marquette Clerk Kyle Whitney, this has been caused in part by big taxpayers leaving the city

“As the commission has discussed several times in previous months, the city is facing a revenue shortfall as large, tax-paying entities have left city tax rolls in recent years,” Whitney said.

The City of Marquette is only allowed to collect tax revenue from property taxes under Michigan law.

“We are limited to collecting property taxes, income taxes, which would require voter approval, various other millages and user fees as revenue,” Kovacs emphasized. “We really do not have many options to generate more revenue.”

The city cannot collect revenue from sales tax, motor fuel tax, motor vehicle license tax, alcohol tax, tobacco tax or public utility sales tax. Because of this, the city commission voted unanimously to raise the millage rate. This means that property taxes will go up according to the taxable value of the property you own.

“You can look up your own taxable value either on your tax bill, your assessment notice or you can go onto our website,” Kovacs said. “We have instructions on how to calculate your taxable value on our dedicated millage webpage.”

City of Marquette Commissioner Evan Bonsall said the decision to increase the city’s millage was the toughest he has had to make since taking office in 2019. However, Bonsall added many city services would have to be cut if property taxes were not increased.

“If people have an alternative I would love to hear it, but realistically the alternative is deciding which city services you want to cross out and you would have to cross out probably most of them,” Bonsall said.

Tax collections based on the new millage rate of 17.5956 begin on July 1. Summer property taxes are due Sept. 14, with a final deadline of Feb. 28. Kovacs added that she expects increased property taxes to bring an additional $1.5 million annually.

City of Marquette Commissioner Jessica Hanley added that she would look to decrease Marquette’s millage rate as soon as it covers the city’s budget deficit.

“I will do everything in my power to make sure we reduce the millage rate when we vote to do so in the years to come,” Hanley said. “You can hold me to that.”

Kovacs said she encourages all who are worried they will not be able to afford their new property taxes to reach out to the city to discuss alternative payment methods.

“We are here to help, we are here to listen and we are willing to have that conversation with anyone,” Kovacs said. “The number one thing is really that we want to preserve the essential services that we are providing and unfortunately that does mean that we need revenue to cover those.”