Novi City Council Agrees to Lower Tax Rate

Novi City Council voted to lower the tax rate for residents next year by asking the city staff to lower the millage rate for the drain revenue fund in the 2012-13 budget. The new tax rate will not be official until the council passes the city budget, which is expected to be done as early as May 7.

The council agreed in a vote of 7-0 to lower the overall millage rate from the long-standing 10.5416 mills to 10.2 mills, which is estimated to save taxpayers nearly $1 million.

This will be done by cutting the drain revenue fund millage in half from 0.6851 to approximately 0.34. The drain fund is used to manage the regional storm water system and to protect wetlands and natural resources and is a separate fund from the general fund.

The drain fund has nearly $3.7 million in its fund balance at the end of this fiscal year. Without a change in millage, it would have $4.7 at the end of the 2012-13 year.

Council debated at a special budget meeting Saturday whether the millage should be changed or to try to remain a consistent level for taxpayers and to keep in accordance with the council's past policy.

"We've been using this drain fund as kind of a buffer to go up and down and all around on the 10.5416. I don't think there's any doubt that we have a substantial amount of money in that fund," said Mayor Pro-Tem David Staudt. "I don't think it's necessary that we continue. This has been largely done so that we maintained a consistent rate for as much as anything PR purposes."

City Manager Clay Pearson said the city could be OK financially by not levying the millage up to the full 10.5416. The millage rate could still be levied back up if the city decides it needs the money for any unforeseen dire circumstances in the future.

Council discussed the possibility of lowering the millage even further, but decided on 10.2 to remain a fairly consistent tax level.

One of the city's bonds would be paid off next year, so the millage rate would drop down by 0.3 next year anyway. The Council may also propose at its next budget meeting to raise the municipal street fund millage from 0.719 to 1.5 mills, which would have to be approved by voters.

"I think to have multiple changes is, number one, difficult to explain, and also not good policy on our part of really keeping a level millage rate for the residents to understand," said Council member Terry Margolis. "If we are thinking of asking them to look at a road fund millage increase next year, I think that dropping the millage slightly, raising it up again, I think it's a huge mistake. I think it will generate very difficult questions, very difficult to understand."

Margolis later agreed to the less-drastic lowering of the tax level to 10.2 because it would keep the tax level fairly consistent even with the road millage increase.

The council next meets to discuss the entire city budget on Wednesday, May 2 at 7 p.m., and the public is welcome to share their comments.