Detroit City Council Member Mary Waters is partnering with conservatives on a proposal that aims to make Michigan the first state to eliminate property taxes.

Waters invited Kent County activist Karla Wagner to virtually attend a Sept. 28 town hall, where the pair promoted efforts to change the state Constitution through a proposed ballot measure. Wagner argued property taxes are hurting homeowners, small businesses and farms, and should be eliminated to prevent foreclosures. The proposal also seeks to eliminate revenue used to fund public libraries, museums or zoos, but Wagner argued that those institutions should charge admission fees instead.

“There’s going to be sacrifices that have to be made and priorities and adjustments to be made, but the most important thing is to stop creating homeless people,” Wagner said in an interview.

A ballot petition introduced by AxeMITax, a nonprofit formed by Wagner in February, would prohibit taxation of property and require a two-thirds supermajority in the state Legislature to increase revenue. It would replace a portion of lost revenue for local governments by reallocating portions of other state taxes like the sales tax and taxes on alcohol, tobacco and marijuana.

Property taxes represent the main source of funding for local governments and school districts across the state. Critics of the ballot initiative argue the loss of this revenue would be difficult to make up through adjustments in other taxes alone. The proposal comes amid widespread acknowledgment among Detroit officials that high property tax rates are a barrier to development and homeownership.

“I believe it’s worth taking a look at,” Waters said in an interview. “There are too many people who lost their homes to property taxes and it would take a tremendous amount of stress off so many families if they had property tax relief.”

Michigan’s Board of State Canvassers must first approve the petition language. Organizers will then have to collect roughly 447,000 signatures from across the state. Waters said she plans to help collect petition signatures in Detroit so the initiative can be placed on the ballot for voters to decide in November 2024.

“I’ll personally collect signatures and I will be asking everybody I know who wants to see tax reform,” Waters said.

It’s an uncommon alliance between Waters, a Democratic former state lawmaker, and Wagner, a conservative real estate developer. Wagner has been invited by Republican groups across the state to promote the ballot initiative, including the Mackinac Republican Leadership Conference. 

Wagner also previously ran the campaign of Ryan Kelley, a Republican gubernatorial candidate who pleaded guilty to illegally entering the U.S. Capitol during the Jan. 6 riot. Waters said she connected with Wagner after learning about the proposal earlier this year from a constituent at a community meeting on Detroit’s west side. She said it’s a bipartisan partnership. 

“That’s what politics is all about – we can work together on common interests,” Waters said. 

Wagner and Waters focused on the potential benefit for homeowners when speaking with residents at the Sept. 28 community meeting. They said Detroit’s high property tax rates put homeowners at an equally high risk of foreclosure. 

The proposal was also promoted as an alternative to Mayor Mike Duggan’s land value tax plan. Duggan is supporting a bill package that would allow Detroit to reduce taxes on buildings by 14 mills and increase taxes on vacant land by 104 mills, more than double the current levy. He says the average homeowner will automatically save $184 on their tax bills if the legislation is approved by Michigan lawmakers. 

Waters has come out in opposition to the plan as she seeks more data on how tax bills will change. She said Duggan’s plan is untested and unproven.

Wagner said high property taxes are a barrier for real estate development, causing cities like Detroit to hand out large taxpayer-funded subsidies to help finance projects. Wagner criticized Democratic Gov. Gretchen Whitmer for allowing large businesses to avoid paying property taxes while continuing to charge Michigan residents. 

Some of Wagner’s arguments align with local activists who are fighting against taxpayer-funded development. However, organizations like Detroiters for Tax Justice oppose tax abatements because they want tax revenue to fund schools and libraries. 

Wagner said those amenities shouldn’t receive funding through property taxes at all. She is broadly opposed to millages funding public services that she said go unused. 

Russ Bellant, an organizer with Detroiters for Tax Justice, said eliminating property taxes would be a disaster. Bellant said the group is creating a fact sheet to inform residents about the impact of the proposal. 

“I think it’s a horrendous reactionary solution to a real problem,” Bellant said. “It’s initiated by people who want to defund public sector activities such as libraries.”  

Theo Pride, an organizer with the Detroit People’s Platform, said the proposal looks appealing at face value, but public institutions would be harmed if property taxes are eliminated. 

“They want to lead out front with the idea of reduction in property taxes, which is something folks want, but on the other side of that is the diminishment of public services, libraries and schools,” Pride said. “If we want to pay less taxes, there are other ways to do it and still maintain our fiscal responsibility.”

Duggan’s office declined to comment on the impact of a potential ballot proposal. Property taxes make up around 11% of the city’s revenue. 

Detroit is expected to collect $138 million in property tax revenue for the current 2024 fiscal year. The city collects more revenue from income taxes ($396 million), state revenue sharing ($224 million) and gambling taxes ($256 million). 

The proposal is being promoted as other city leaders acknowledge the high tax burden Detroit residents face.  

Waters invited Wagners to speak to residents during the September meeting primarily focused on the value tax plan. 

The mayor’s pitch is fairly straightforward: Detroit’s broken property tax structure punishes homeowners while incentivizing blight and land speculation. Homeowners pay some of the highest rates in the country, leading to higher rates of foreclosure and population loss. Taxable value of vacant land is much lower, which Duggan said allows speculators to treat property like cheap lottery tickets that could pay off with a big sale years down the road.

Duggan needs the Michigan Legislature to pass a series of bills first. However, the bills did not have enough votes to pass through the state House this week. Waters took credit for the outcome in a press release claiming she “torpedoed” the legislation. 

Waters said the last time Duggan went to Lansing with reforms, Detroiters didn’t have much to show for it. She said a long-awaited auto insurance reform law that took effect in 2020 has failed to make an impact on Michigan’s status as one of the most expensive states to drive. 

Waters also said residents are skeptical after the city illegally overassessed properties following the Great Recession, causing taxpayers to pay $600 million more collectively between 2010 and 2016. 

If the land value tax bills are passed into law, Detroit’s City Council will be asked to put an initiative on the ballot allowing voters to decide whether to approve the tax. Waters told residents who attended the Sept. 28 meeting that she would not support the plan. She’s skeptical that homeowners would save money on their tax bills. 

“When it tanks, don’t blame me,” Waters said.