Benton Harbor Mayor Marcus Muhammad says it’s reasonable that the city may have to move more local income tax money into its general fund to continue meeting its financial obligations. That’s after City Manager Alex Little last week asked the Public Safety and Public Works Committee to approve an emergency transfer of $800,000 of income tax money to pay bills.
At Monday’s regular meeting of the Benton Harbor City Commission, Muhammad weighed in on the issue after some questions from a resident earlier.
When Benton Harbor voters approved the creation of the local income tax in 2017, its stated purpose was to pay for street, sidewalk, and alley repairs, but Muhammad noted another stated purpose was to deal with emergencies. The city manager now says there’s an emergency.
“The city has obligations, the city has to pay bills, the city has lawsuits with exorbitant legal fees,” Muhammad said. “That’s not in the budget.
Muhammad said the city isn’t the same as it was in 2017, and new circumstances have presented themselves. Besides, he noted many other Michigan cities with their own income taxes don’t restrict the use of those funds the way Benton Harbor has until this year.
“It’s 23 other cities that have the income tax. The city of Benton Harbor is the only city that only uses it for infrastructure. Everyone else, they use it for operations, for city services.”
Muhammad said that Grand Rapids, for example, pays for a large portion of its services with the city income tax.
Commissioners on Monday did not consider Little’s request for the emergency transfer. That will be discussed by the Personnel and Finance Committee later this week before going to the full commission.
Little’s request last week raised eyebrows because it came just a few months after commissioners approved a $450,000 emergency transfer of income tax funds to the general fund, the first transfer of its kind in the city of Benton Harbor since the local income tax was created.
