Michael Gerstein

The Detroit News

East Lansing voters defeated a plan to make their city the state's 23rd to impose an income tax on its residents, according to unofficial results late Tuesday night.

A majority of voters -- 53 percent -- rejected the ballot question to impose a 1 percent income tax on residents and 0.5 percent income tax on nonresidents. It would have covered Michigan State University’s 2,500 workers and most of its 50,300 students, as well as the city's 48,000 other residents.

There would have been an exemption from the income tax for those making $5,000 or less a year.

A separate proposal to reduce property taxes from 20 mills to 13 won with 63 percent in favor of the tax reduction.

The proposed twin moves would have boosted city coffers an estimated $5 million a year, according to a city study. That could have helped address the city’s $200 million in debt caused by rising pension and retiree health care costs. East Lansing has cut its workforce by a fourth, reduced health care benefits and entered cost-sharing partnerships with other municipalities.

MSU, which is the city’s biggest employer, opposed the plan as a blow to low-salaried workers and most part-time working students. University leaders argue the proposals would have shifted the tax burden from residents to MSU, which has more workers, 14,000, than all other city employers combined.

MSU proposed giving the city $2 million a year for 10 years in lieu of the tax, an offer rejected by East Lansing Mayor Mark Meadows.

The income tax-related ballot questions have caused tensions between city leaders and university officials.

"Some (MSU regents) remain adamantly opposed to paying the City to remedy its past financial mismanagement,” MSU President Lou Anna Simon wrote on July 21.

Meadows said other factors had caused the fiscal mess. “This statement is offensive and uninformed,” he wrote July 25.

The only major Michigan college whose hometown has a local income tax is Wayne State University in Detroit. Nearby Lansing also has a city income tax.

mgerstein@detroitnews.com

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