BY DAWSON BELL

DETROIT FREE PRESS LANSING BUREAU


The shrinking City of Detroit could retain crucial taxing authority under two bills approved in the state House on Wednesday.

The legislation authorizing Detroit to continue special taxes on income and utility users was jeopardized by the city's population decline in the 2010 census. It was narrowly approved in the House, but is expected to get prompt attention in the state Senate and has at least tacit support from Gov. Rick Snyder.

The bills allow the city to levy income taxes of 2.5% for residents and 1.25% for nonresidents [[compared with 1% and 0.5% in most other cities), and continue to collect a 5% tax on phone, electric and gas bills.

Reps. Harvey Santana and David Nathan, Detroit Democrats who sponsored the bills, said the tax revenues are crucial to maintaining public services and fiscal stability.

The lawmakers and Detroit Mayor Dave Bing said losing the augmented tax authority would cost the city an estimated $90 million a year based on collections in 2010 [[an earlier legislative analysis put the figure closer to $140 million, but a Bing aide said that number was incorrect).

The bills reduce the population threshold for a city to levy the taxes from 750,000 to 600,000, and were introduced after Detroit's population fell to about 714,000 in last year's census. The tax bills are the two most urgent changes to state law sought by the city in the wake of the census.

The House mustered a bare majority to pass the legislation; most of the Republican majority opposed. All the chamber's Democrats voted yes.

Continued at: http://www.freep.com/article/2011060...-taxes-Detroit