GRAND RAPIDS, Mich. — A large chunk of funding for the City of Grand Rapids comes from income tax dollars.
For the year 2020, Grand Rapids is set to lose $10-$21 million of their income tax.
Grand Rapids Mayor Rosalynn Bliss explains, "We're one of 24 cities in the state of Michigan that have a local income tax."
"It allows us to tax both residents who live here and work somewhere else, residents who live here and work in the city, and then individuals who live elsewhere, but work in the city."
Due to the stay-at-home order, many people who commute downtown to work didn't do that in 2020.
Now Mayor Bliss says the city is on track to lose "on the optimistic side, about a $10 million loss; on the worst-case scenario side, we're looking at about $20, $21 million."
How much money the city loses will depend on how many downtown workers, who worked from home this year, take the time to claim their money.
If you're one of those people eligible to save, listen up!
Scott Gumieny, accounting instructor at Davenport University, says in order to save you need to, "simply look at your W-2, and at the very bottom it will tell you if you're paying local or city income tax."
You can claim all of that non-resident income tax revenue that was paid in and get refunded for that.
This claim could add substantially to your refund.
If you make around $40,000 annually, you could see about a $250 return.
If you make around $75,000 annually, you could see about a $500 return.
If you make around $100K,000 annually, you could see about a $750 return.
"So, it can be something worth your time, for this year especially," notes Gumieny.
While you may save with this tax strategy, remember, the city loses. Mayor Bliss tells us their estimated $10-$21 million loss will be taken out of the city general fund, which typically has about $140 million in it.
How will this affect Grand Rapids?
"We do have some reserves," Mayor Bliss says. "So, likely we'll try to get through by maintaining some of the services, particularly in public safety, with reserves."
"But if we don't get some support from the state, or the federal government, to really fill this hole from the pandemic going into next year, we'll probably have to make some significant cuts." Those cuts may come in the form of delaying city projects or putting a hiring freeze on city positions. To prevent that, Mayor Bliss hopes President Biden's current "rescue plan" gains support in D.C.
The plan would give federal funds to communities regardless of their size. It's help Grand Rapids city officials say they've been asking for.
"What's frustrating for those of us in local government is that again and again conversations are about 'How do we help people survive this pandemic?' But very few times is the conversation about the impact on local units," says Mayor Bliss.
Another avenue to make up for the 2020 loss would be if downtown Grand Rapids experiences a boom in business as the city starts to reopen. Gumieny says if enough people come back downtown to eat, attend sports games and concerts, then that money could make up for what was lost during the pandemic.
If you want to ask questions about filing taxes or how this impacts you, tune in to our Facebook Live at 9 a.m. on Wednesday.