The City of East Lansing announced today it will follow the lead of the IRS and push off the local income tax filing deadline. People who owe a 2019 income tax return to the City of East Lansing will not need to file the form and payment due for 2019 until July 31, 2020.
East Lansing’s Income Tax Administrator DaMar Boyd tells ELi that if someone owes tax with their 2019 filing, no interest or penalties will be assessed as long as they file by July 31, 2020. First quarter estimated payments for 2020 are now also not due until July 31, 2020.
In February, ELi reported that things were looking up for the City financially in part because the income tax was set to bring in what had been projected before the vote in favor.
But, while the 2019 income tax revenue should not be massively disrupted by the coronavirus emergency, the City’s finances could be profoundly hurt by the ongoing 2020 financial impacts of COVID-19.
Already the City is seeing a revenue decline as so many revenue sources have ceased, including daily parking revenue from ramps, Parks & Rec fees, and permitting fees.
Businesses that would normally be paying the City tax on their income have been shuttered, with employees that would normally pay tax on their income now in many cases furloughed or laid off.
If property values also decline, that will also hit the City hard. About half of the City’s revenues come from property taxes.
The City had been hoping to make progress on funding its significantly underfunded pensions with the income tax and with specific budgetary approaches. But the decline of the stock market is likely to make that a serious challenge.
Last year, the City’s pension manager, the Municipal Employees’ Retirement System (MERS), adjusted its investment assumption from 7.75 percent to 7.35 percent per year – and that change alone was set to push down the funded ratio for East Lansing’s pensions. (The funded ratio indicates how much is believed to be promised versus how much investment is actually in the system.) A bear market will make even that lower 7.35 percent assumption look pretty rosy-eyed.
The City faces other economic challenges, too. The DDA continues to owe about $5.4 million on its Evergreen Avenue properties. The most recent hope of paying that off had been pinned to a plan to solicit proposals from numerous developers and to pick one project that would bring a positive impact downtown while paying off the debt.
But as ELI reported last week, only one proposal remains, and the financial details in that proposal are thin. Additionally, that plan from developer River Caddis for major new office space was pinned to an assumption of a robust economy, something that seems increasing unlikely in East Lansing.
The City Council is due to start having budget meetings soon, according to the usual annual calendar for budget development. One thing is for certain: this year’s budget planning will be unlike any other.
Community members with questions about their East Lansing income taxes can contact administrator DaMar Boyd by calling (517) 319-6862 or by emailing firstname.lastname@example.org. Because City employees are working remotely, email works best, but voicemails left at that phone number will be returned.