The 20 year Regional Transit Authority, 1.2 mil property tax plan is on the ballot in four Southeastern Michigan counties, on November 8th. The public doesn’t seem to realize that this property tax will be imposed on all four counties, even if one or more of the counties reject it. A big change from past millage requests specifically designed to shove this tax down anti tax Macomb County’s throat. Michigan’s tax-and-spend establishment really wants this tax to pass.

The RTA master plan is $ 1.22 billion in new fare revenue, $ 3.1 to $ 3.3 billion in new property taxes, and $ 1.7 billion in new Federal & State subsidies. A grand total of $ 6 billion, more or less. Let’s say that the relatively modest increase in vehicle revenue miles provided by the RTA master plan – 32% – doubles their ridership. That $ 6 billion cost, divided by 78,327 new passengers, equals $ 76,602 per passenger over the 20 year period. You could buy every one of those 78,327 new riders a new car and pay for their fuel and insurance as well.  Instead, RTA will treat them to the urban mass transit experience.

Urban buses and other mass transit vehicles have a special ambiance with their diverse ridership and high level of maintenance. This experience is enhanced by the faint aroma of pepper spray, plus the full array of odors you would encounter in a hospital emergency room during an overwhelming disaster – except for disinfectant.  Bus scheduling allows those too poor to visit a casino or play online slots at Wizard Slots the opportunity to gamble daily on punctuality at their workplaces.

Why riders are unwilling to pay 20% of the cost of mass transit, and why mass transit funding has to be extracted from taxpayers using the threat of foreclosure.  On top of this, mass transit advocates have to raid road funding and vehicle registration fees to deliver their ‘service’.  No free market economics here, despite strong support from the Chamber of Commerce types.

The Citizens Research Council of Michigan just released their Memorandum 1143 on the RTA millage request. CRC is an establishment outfit which never met a tax increase they couldn’t enthusiastically support, but their accounting & legal analyses are sound.

The gist of the CRC Memorandum is that the RTA is great way to increase mass transit spending by 50%, but it will further increase the very high property taxes in Southeastern Michigan and this could trigger a tax revolt:

The tax burden on property owners in Southeast Michigan is already generally higher than those paid by property owners outstate. Additional property taxes will only increase an already high tax burden. Property taxes vary significantly within the four county region, from a low of 20.9855 mills on homestead properties in Washtenaw County’s Freedom Township, to a high of 119.4440 mills in non-homestead properties in the City of Ecorse in Wayne County.

This will be a drag on Southeastern Michigan home prices because house sales prices are actually a function of their monthly payments.  Why mortgage interest rates play such a dominant role in house prices. Renters think someone else will pay their RTA tax, but landlords will shatter this delusion by increasing their rents.  Sadly, few renters benefit from this retrospective education.  Why the RTA millage is on a Presidential ballot.  Michigan’s tax-and-spend elites know their natural constituency well.

Not mentioned by CRC is the fact that much of the RTA millage will be spent to offset declines in actual mass transit spending from other current revenue sources due to underfunded pensions and promised OPEBs. SMART’s pension and OPEB’s were about $ 220 million underwater in 2014. So the actual transit spending increase in SE Michigan will be something in the vicinity of 10% per year.

CRC suspect that if the RTA millage passes, there will be a subsequent tax revolt against the pseudo voluntary SMART millage and all the other transit taxes already assessed against property:

Transit funding in Southeast Michigan may suffer in the long-run because policymakers chose to layer the RTA tax on top of other transit funding sources and existing bureaucracies. In the short-term, local governments still retain the ability to opt out of the SMART millage, as 54 Oakland and Wayne communities have already done. In the long-term, existing millages for transit services are limited in duration and must be submitted to the voters for renewal at some point in the future. The layered approach to funding provides multiple opportunities for voters to decide against double taxation for transit services.

The potential reluctance of voters in an individual community or across a transit system to not subject themselves to double taxation for transit services may create holes in the system in the future.

Certainly, the antitax Republicans who passed PA 387 of 2012 will fix this minor oversight in the immediate future.  Their future campaign funding from the Detroit Regional Chamber depends upon it.

Here is CRC’s own summary of their RTA Memorandum:

Citizens Research Council Memorandum 1143
The Regional Transit Authority Millage Request
Memorandum 1143, October 2016

November Proposal
On November 8, voters in Oakland, Wayne, Washtenaw, and Macomb Counties will vote on a proposal that would empower the recently created Regional Transit Authority of Southeast Michigan (RTA) to levy a new 1.2 mill tax (one mill is equal to a dollar of tax for every $1,000 of taxable value) that would generate $3.16 billion over the course of 20 years. Unlike past regional millage requests, this question does not rely on approval from each county individually. The four-county region will vote on this millage request as a single entity. For the first year (2017), the tax would generate $161 million.

It is expected that the $3.16 billion that would be generated from this tax over 20 years would be used to leverage an additional $1.6 billion of funding from state and federal funds for capital projects. The $4.7 million would be used to support a Master Plan for regional transportation projects in Southeast Michigan.

The RTA was formed in 2012 under the authority of Public Act 387 to facilitate cooperation through a Regional Master Plan among the major mass transportation providers of Southeast Michigan: The Detroit Department of Transportation (DDoT), Ann Arbor Area Transportation Authority (AAATA), Suburban Mobility Authority for Regional Transit (SMART), and Detroit Transportation Corporation (People Mover). The RTA currently facilitates state and federal funding to transportation providers, but, absent this millage request, does not have a permanent, ongoing source of income or the authority to levy other types of taxes.

Rather than replacing the operating budgets of existing transportation authorities, RTA tax revenues will be used to supplement and coordinate existing spending, increase service provision, and engage in significant capital improvements to create a cross-county system of rapid transit. Elements of this system include bus rapid transit, regional rail connecting Ann Arbor to Detroit, corridor prioritization, cross-county connectors, transportation to and from the Detroit Metropolitan Wayne County Airport, updates to paratransit services, and improved local transportation. The Detroit M-1 Q-Line would also be absorbed into the RTA in 2024.

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