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Kalamazoo Worries About Selling Its Soul

— November 22, 2016

Kalamazoo, a town in southwestern Michigan, is facing the same problem as a lot of American municipalities: a declining tax base that led to a budget deficit. Reduced revenue sharing from the State of Michigan, a law that prevents raising property taxes faster than the rate of inflation, and the inability to convince a stakeholder panel to agree to a city income tax meant looking at ways the city could tighten its belt. Cutting already meager services, laying off more city employees, and foregoing infrastructure repairs seemed like the only options, until the mayor of Kalamazoo had the idea to ask his wealthy friends to pass the hat.

Philanthropy isn’t an entirely foreign concept in Kalamazoo. Ten years ago, a group of private donors funded a program called the Kalamazoo Promise, which guarantees students who graduate from Kalamazoo public schools a four-year scholarship to Michigan public colleges and universities.  It resulted in increased graduation rates and helped more than 4,000 students attend college. Perhaps this was in mayor Bobby Hopewell’s mind when he asked banker William Johnston (whose wife, Ronda Stryker, has family ties to the Stryker medical device company) and Upjohn heir William Parfet to cover the city’s shortfall.

Together, the Williams agreed to provide more than $70 million to pad Kalamazoo’s budget. Some residents are excited about the foundation that this donation will fund. The money will be spent in part on lowering property taxes, in the hopes that this will attract other businesses to the area. (The offer to accept externalities that a business would like to offload in the pursuit of profits is a popular draw, and businesses have been known to hold out for sweeter deals by threatening to move elsewhere.)

However, not everybody in Kalamazoo is thrilled with the idea of taking the money. Commissioner Shannon Sykes, who voted in favor (with reservations) of accepting the money, and commissioner Matt Milcarek, the lone “No” vote, worry about a lack of transparency and integrity around the deal, saying that it all seems unethical and dishonest. A short survey sponsored by the city in order to gauge local opinions on the situation asked leading questions like what residents planned to do with their property tax savings, what about the new foundation most excited them, and what “aspirational project” they would like to see the new foundation undertake.

While the money is supposedly being offered with no strings attached, accepting the donation creates new stakeholders in the form of interested, rich donors who may or may not (you never know!) ask for favors in return or seek influence in city matters. With taxation traditionally comes representation, and a voice in how the community’s tax dollars are spent. This endowment not only substitutes for taxation, it goes so far as to put a few hundred dollars a year back in the pockets of residents in the form of reduced property taxes. Does this mean that the wealthy benefactors, not citizens, will eventually be deciding what is best for Kalamazoo?

In one way, though, the noblesse oblige offered by the wealthy benefactors to the city and citizens of Kalamazoo couldn’t be more appropriate. One of the stated purposes of the Foundation for Excellence that will be funded by this endowment is to be a replacement for levying of “another tax.” Western Michigan traditionally leans Republican and the city’s push poll encouraging acceptance of the money arguably functioned as anti-tax marketing. The GOP’s platform of tax reduction is sold as a benefit to everyday citizens, but businesses and wealthy individuals have more to gain from populist anti-taxation policy. When the already-wealthy pocket even more money by avoiding paying into the public kitty, forcing residents to cope with broken infrastructure, reduced services, ill-equipped schools, potholes, and the million other things that a reduced tax base can’t pay for, inequality increases. If years of missing tax money that “trickled up” to the wealthy now trickles back down in the form of a “donation” rather than allowing the citizens the pride of being able to take responsibility for their own city, that’s one way of remedying the inequality problem. Unfortunately, it also becomes a form of dependence on the local nobility, which I’m sure is more of a feature than a bug to those who salivate at the idea of neo-feudalism.  It’s good to be the King, eh?

Kalamazoo Commission OKs Foundation for Excellence memo, posted by WOOD TV8


City leaders in Kalamazoo commit to a new way of funding city government
Kalamazoo mayor says accepting $70M donation would mean “a new day for Kalamazoo”
Kalamazoo donation threatens to redefine government
Kalamazoo Asks the Rich for Donations Instead of Hiking Taxes
Kalamazoo: Why Some are Looking a $70 Million Gift Horse in the Mouth
Kalamazoo ‘standing on the edge of history’ with offer of $70M donation to city
Decade after unveiling Kalamazoo Promise, Janice Brown discusses successes, missteps
Good Jobs First: Corporate Subsidy Watch

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