End Run Around A Tax Increase

[Terry Lee Grams]

Before Ludington Adds New Charges, Show Us the Math: The City of Ludington says it is facing a projected General Fund deficit of approximately $550,000 in 2027 and $500,000 in 2028. Its response, at least so far, should concern every city taxpayer.

Instead of first showing residents exactly where this half-million-dollar annual problem came from and what spending can be reduced, the City Council has directed City Manager Kaitlyn Aldrich to investigate special assessments for street lighting, police protection and fire
protection.

Before City Hall sends property owners another bill, taxpayers deserve to see the math.

The city's own audited financial statements make the current situation especially difficult to understand. At the end of 2024, Ludington's General Fund was not $500,000 in the red. The General Fund ended the year with a $2,266,446 fund balance, and its balance declined by only $46,976 after transfers to other funds. Actual General Fund expenditures were also $613,677 below budget. The city's independent financial report described Ludington as being in a relatively strong fiscal position. The adopted 2025 budget anticipated using $157,100 of General Fund reserves.
Now, little more than a year later, residents are being told to expect deficits exceeding half a million dollars in both 2027 and 2028.

What changed?

That should be the first question answered publicly and in detail. The proposed street-lighting assessment illustrates what is happening. The city manager says approximately $130,000 to $140,000 of street-lighting costs may be eligible to be shifted to a special assessment, possibly as much as 100 percent of the cost. Street lighting is not a new city service. Residents are already paying for it through existing city revenues.

If the city takes an expense currently paid from the General Fund and places it on a
separate assessment bill, the cost of government has not been reduced. The bill has simply
been moved.

The same concern applies on a potentially much larger scale if police and fire expenses are
shifted from the General Fund to special assessments. Calling this a special assessment rather than a tax does not change the practical reality for a homeowner who has to write another check. There may be legitimate reasons for Ludington's financial pressure. The city's audit identifies rising pension obligations, health-care costs and aging infrastructure. No responsible discussion should pretend those expenses do not exist. But legitimate financial pressure does not eliminate the government's obligation to control spending.

One legal point makes this more important. Michigan's Headlee Amendment limits ordinary local property-tax increases and generally requires voter approval for new local taxes or increases beyond authorized rates. A valid special assessment is legally different from a tax because it must be tied to a special benefit to assessed property; Michigan law provides assessment mechanisms for street lighting and qualifying police/fire services. That does not
prove Ludington is evading tax limits. But if the city is turning to assessments because it cannot simply raise ordinary taxes without voter approval, taxpayers deserve to be told that plainly.

What is noticeably absent from the discussion reported so far is anything approaching the same level of detail about reducing expenditures. Where is the report identifying $550,000 of possible savings? Where is the analysis of staffing levels, administrative expenses, professional and legal costs, vacant positions, shared services, consolidation with neighboring governments, postponement of nonessential projects, equipment replacement schedules and other possible reductions?

Where is the explanation showing which alternatives were considered, which were rejected and why?
Instead, the process for raising additional revenue is already moving ahead. The city manager is preparing an assessment report. Two public hearings are contemplated. Assessment rolls can be prepared. The newspaper reports that a final vote could occur as soon as late October or early November.

That seems backwards.

City officials are also emphasizing an extensive list of future capital needs - streets, water and sewer infrastructure, marina docks, parks, vehicles, heating and air conditioning systems, computers, roofs and other projects. Many undoubtedly deserve attention. But wanting to spend money on worthwhile things does not, by itself, justify asking taxpayers for more money. Before approving any new special assessment, the City Council should require a simple
public accounting showing how Ludington went from its 2024 audited financial position to a projected $550,000 General Fund deficit in 2027. Start with actual 2024 revenues and expenditures. Show every significant increase and decrease through 2027. Identify increased payroll, benefits, pensions, insurance, legal and professional expenses, capital spending, transfers and every other material change. Then put cost reductions and new revenue side by side and let the public see the choices. Perhaps, after seeing those numbers, residents will conclude that additional revenue really is necessary. But taxpayers should not be asked to reach that conclusion on faith.
The city should show us the cuts it considered before showing us the bill it wants us to pay.

Sources for Verification

• Ludington Daily News, Shanna Avery, 'City weighs new fees,' Aug. 27, 2026, pp. A1-A2. The article reports
projected General Fund deficits of $550,000 in 2027 and $500,000 in 2028 and describes the proposed special
assessment process for street lighting, police and fire protection.
• City of Ludington, audited financial statements for the fiscal year ended Dec. 31, 2024. General Fund figures cited
in this letter include the $2,266,446 ending fund balance, the $46,976 decline in fund balance after transfers, and
expenditures that were $613,677 below the final budget.
• City of Ludington, adopted 2025 budget / 2024 audited financial report. The city projected use of approximately
$157,100 of General Fund reserves for 2025.
• Ludington Daily News, Aug. 27, 2026, p. A2. City Manager Kaitlyn Aldrich stated that approximately $130,000
$140,000 in street-lighting costs could be eligible for a special assessment, subject to Council decisions about the
amount assessed.
• Michigan Constitution, art. IX, §§ 31 and 34, and Michigan Department of Treasury Headlee materials. These
sources describe voter-approval requirements for new local taxes or tax-rate increases beyond authorized levels
and the Headlee millage rollback.
• MCL 117.4d; 1951 PA 33 (MCL 41.801 et seq.); Michigan Department of Treasury, Numbered Letter 1993-01
(Revised). These authorities address street-lighting and qualifying police/fire special assessments and the legal
distinction between a benefit-based special assessment and a general tax.

[dowland]

YES ! Thank you Terry LG for this well laid out common sense update. Please every 1 share.                   !