Podcast 83 team to discuss state budget, fall priorities
MAC’s Podcast 83 team will lead a special live edition on Monday, Sept. 21 to field questions from county leaders on the FY21 state budget and all other legislative matters coming to a head in Lansing this fall.
Executive Director Stephan Currie will moderate the discussion that will include Deena Bosworth, governmental affairs director, and Meghann Keit, governmental affairs associate.
Click here to register for the free webinar, which will run from 1 p.m. to 2 p.m.
If the event doesn’t work with your schedule, don’t worry. A video recording will be made available on the Podcast 83 homepage on Sept. 22.
To ensure your question gets the full Podcast 83 treatment, send it in advance to Bosworth at bosworth@micounties.org.
Webinar goes over latest on COVID-19 for locals
The latest webinar in a series co-sponsored by MAC, the Michigan Department of Treasury and others reviewed the latest guidance and tips involving COVID-19 aid for local governments on Sept. 8.
To see a video recording of the session, click here.
Also, on Friday, Treasury reported that the Funding Acceptance Packet for the Coronavirus Relief Local Government Grants (CRLGG) is now available.
For more information on Treasury information on COVID-19, visit their webpage.
Bill would create state Emergency Management Department
A state Department of Emergency Management would be created under a bill filed last week.
House Bill 6148, by Rep. Jack O’Malley (R-Benzie), would remove the emergency management functions from the Michigan State Police Department and relocate it to its own department; require an emergency management plan be submitted to the governor and the Legislature every two years; require each county emergency management coordinator to be certified and report directly to the county board chair; require distribution of federal grants to counties and municipalities; and prohibit an elected official as serving as the emergency management coordinator.
Testimony on the bill is expected next week. MAC has not taken a position on the bill yet.
For more information on this issue, contact Deena Bosworth at bosworth@micounties.org
New PPT bills would affect heavy equipment, solar
The House Committee on Tax Policy took testimony this week on House Bills 5778 and 5779, by Rep. Jim Ellison (D-Oakland), that would change the way rented heavy equipment is taxed in Michigan. Currently, heavy equipment is taxed as personal property (PPT) and credited to the taxing jurisdiction where it physically sits on Dec. 31 of each year.
Since this equipment is rented and movable, neither the companies paying the taxes are clear what their obligations will be on a year to year basis nor can the local tax collecting units forecast the revenue in an efficient manner. The bills seek to eliminate PPT on this equipment and instead replace it with a 2 percent tax on the rental of the equipment. This tax would be paid by the customer, collected by the company renting the equipment and submitted quarterly to the Michigan Department of Treasury.
By May 20 of each year, Treasury would be required to send 90 percent of this revenue to the local tax collecting unit where the rental transaction originated, and 10 percent of the revenue to the other counties, cities, villages and townships not receiving a share of the distribution. Within 35 days of receiving the revenue, the tax collecting unit would be required to disburse the revenue to the taxing units (counties, et al) in the same proportion as it distributes property taxes.
In addition to the equipment rental bills, bills affecting the PPT on solar energy facilities have been introduced. Senate Bill 1105, by Sen. Curt VanderWall (R-Mason) and SB 1101, by Sen. Kevin Daley (R-Tuscola), would exempt solar energy facilities and storage systems from the PPT and instead create a PILT (payment in lieu of taxes) system.
Proponents are seeking a standardized, statewide system that will provide predictability in the taxes owed, regardless of the jurisdiction; escape the variability in assessments and millage rates; and provide a flat stream of revenue for those communities that host this equipment. The legislation would create a PILT of $3,500 per megawatt maximum annual payment, as opposed to a tax based on an assessed value and depreciation schedule.
In order to qualify for PILT as opposed to a tax, the owner of the facility would be required to file for and receive an exemption certificate, which would not expire unless they permanently ceased production, received a judicial determination that they failed to make their payments, or upon the jointly agreed upon termination date. MAC is seeking clarification on the equitable amount per megawatt hour, the assumptions that brought them to that amount, the efforts of the Michigan Tax Tribunal to make recommendations on standardizing the assessment of the equipment and the overall financial impact to counties.
MAC has not yet taken a position on any of these bills. The legislation will be discussed at our September Finance and General Government Committee session.
For more information on this issue, contact Deena Bosworth at bosworth@micounties.org.
State launches Futures for Frontliners campaign
County frontline workers put their own health at risk during the worst of the pandemic. That’s why Michigan has created Futures for Frontliners – to offer essential workers like you the opportunity to attend school tuition-free full-time or part-time while you continue to work. MAC is pleased to partner with the state and others on this initiative.
Who’s eligible? All essential workers in Michigan without college degrees or high school diplomas or equivalency who staffed our hospitals, nursing homes, and grocery stores, who cared for our children, provided critical police and fire services, delivered our food, picked up our trash, manufactured PPE, and other key jobs during the April-June period that kept our state running.
The application for seeking a college degree or certificate, attaining your high school diploma or equivalency, and additional program information are available now at Michigan.gov/Frontliners, with enrollment in classes available beginning January 2021.
Please share this information with your county employees.
NACo unveils toolkit for lobbying Congress
To help local leaders advocate for top county priorities between now and the end of the year, NACo has developed an online Advocacy Toolkit, which features in-depth information, talking points, sample advocacy emails, tweets and Facebook posts, federal legislation trackers and exclusive NACo materials to help tell the county story.
As members of Congress are in their home districts, this toolkit provides resources to communicate with them, demonstrate the impact of county programs and advocate for federal policies that support local priorities.
Water School webinars aimed at local officials
MSU Extension is offering a free online Michigan Water School webinar series for elected and appointed officials and staff. Elected and appointed officials often need to make important decisions regarding the future of shared water resources. The new online version of the Michigan Water School program from Michigan Sea Grant and Michigan State University Extension provides decision-makers with critical, relevant information needed to understand Michigan’s water resources in order to support sound water management decisions.
This year, Michigan Water School: Essential Resources for Local Officials will be offered for free in a series of Zoom webinars from 3 p.m. to 5 p.m. on four Thursday afternoons (Oct. 8 and 22, Nov. 5 and 19). The program will include sessions on water quantity; water quality; water finance and planning; and water policy issues. Topics to be covered include:
- The Blue Economy
- Fiscal benefits of water management
- Incorporating water into local planning and placemaking
- Resources to help address water problems
- Water policy at the federal, tribal, state, and local levels
Water School speakers will include educators and faculty from MSU and MSU Extension as well as other experts providing local perspectives.
Register to attend the free, policy-neutral, fact-based program at events.anr.msu.edu/WaterSchoolWebinarSeries2020. Not sure if you will be able to attend the live sessions? Each webinar will be recorded and all registrants will receive links to the recordings so you can watch them at a more convenient time, along with additional resources.
For more information, contact Michigan Sea Grant Extension Educator Mary Bohling at bohlingm@msu.edu. Follow on Twitter with #MIWaterSchool.
Staff picks
- More than one-third of prime-age Americans have never married (Institute for Family Studies)
- Michigan registered voters by county (Secretary of State’s Office)
- Michigan announces statewide EMS Naxolone leave behind program (ems1.com)
- Growing shift to telehealth raises questions about access in rural communities (Mibiz.com)
Almost 60 Michigan counties lacked the financial resources in 2017 to cover the public services they need to provide, even after accounting for state aid such as revenue sharing, says a new analysis from a Michigan State University professor.
Shu Wang, an assistant professor at MSU who has presented at MAC on local government finance issues, compared a county’s revenue-raising capacity (RRC), its expenditure need and its state aid in the years 2011 and 2017 to assess the “fiscal gap.” While 24 counties did not show a gap in 2017, after adjusting for all county and state resources, 59 did, with the largest problems concentrated in the Upper Peninsula and Southwest Michigan. (See full county-by-county results here.)
The report states the “main drivers for counties’ needs are violent crime rate, population density and distribution, and employment in the manufacturing industry.”
MAC spoke with Dr. Wang this week to learn more about the report and what Michigan counties face fiscally:
What finding surprised you the most?
Shu Wang
Wang: “I don’t have preconceived assumptions so can’t say any result to be surprising. Rather, I’d share a few noteworthy points. One is the different equalizing effects of state revenue sharing (SRS) and other forms of state aid. Figure 2 (above) shows SRS does not close fiscal gap as much as other state aids. From a policy standpoint, SRS has some sort of formula, whereas other state aids are more difficult to track or to structure. Counties may want to further investigate the roles played by other aids from state in addition to SRS.
“A second point is variations of fiscal gap between regions and within regions. Again, figure 2 shows the northern Lower Peninsula has a small fiscal gap to begin with, and additional state support actually creates a fiscal surplus, whereas the Upper Peninsula still has a wide gap after all state support. In terms of within-region variation, Oakland and Wayne counties in the southeast can have quite different challenges. The fact that state support seems to close fiscal gap for that region shouldn’t mask their differences.”
What is the greatest misconception about county finances right now?
Wang: “It largely depends on who we talk to. I’d like to remind officials (or general public) not to overestimate the role of property taxes. I don’t mean to discount the fact that it is the most stable major revenue source; however, due to prop A the taxable values have remained stagnant. Counties levy a lower mill and raise millage less frequently than cities, and that further limits their revenue-raising capacity from properties.”
What’s the no. 1 thing that county leaders should be doing to drive reform in financing?
“I’d suggest not to be tempted into easy, oversimplified formula such as dollars per capita. It is important to understand the structural needs faced by each county, including structural deficits, unfunded mandates and underlying socioeconomic issues that are driving county spending. While doing so counties should also pay attention to how state policies contribute to addressing these needs and affecting their revenue-raising capacity. This is largely what motivated my study. Fiscal gap is a thought exercise for understanding these issues. Just like treating a disease, fiscal distress is a symptom and county leaders as doctors should focus on the cause for the symptom.”
MAC’s Podcast 83 team will lead a special live edition on Monday, Sept. 21 to field questions from county leaders on the FY21 state budget and all other legislative matters coming to a head in Lansing this fall.
Executive Director Stephan Currie will moderate the discussion that will include Deena Bosworth, governmental affairs director, and Meghann Keit, governmental affairs associate.
Click here to register for the free webinar, which will run from 1 p.m. to 2 p.m.
If the event doesn’t work with your schedule, don’t worry. A video recording will be made available on the Podcast 83 homepage on Sept. 22.
To ensure your question gets the full Podcast 83 treatment, send it in advance to Bosworth at bosworth@micounties.org.
Key trial court costs bill to become law
Legislation to extend the authority of trial courts to levy costs to defendants will soon be law, after the Senate this week approved House Bill 5488 and sent it to Gov. Gretchen Whitmer for her expected signature.
The bill, a major priority for MAC in 2020, extends cost authority to Oct. 1, 2022. Without the legislation, by Rep. Sarah Lightner (R-Jackson), county courts would have lost this source of funding for operational needs in a few weeks. The final Senate vote on HB 5488 was 29-8, with all “no” votes from Democratic senators.
The state’s Trial Court Funding Commission has said court costs “directly account for as high as $291 million annually in support (most of the 26.2 percent generated). Additionally, approximately $127 million of the annual funds transferred from the State originate from court assessments at sentencing. When totaled, Michigan trial courts are supported, in significant part, by over $418 million assessed to criminal defendants.”
Of course, the work on this issue is far from over. The new deadline is just two years way, and the next phase will be to finally solve the long-standing problem of a stable court funding system. MAC stands ready to continue the work with the Legislature to help streamline and improve the overall system. While a variety of reforms are needed, a key one is to rebalance state and local funds in the court system, as reported by the Trial Court Funding Commission.
For more information on this issue, contact Meghann Keit at keit@micounties.org.
Nursing home report: Create more aid for staff, look to ‘recovery centers’
A new report on combating COVID-19 in Michigan’s nursing homes has 28 recommendations, including an emphasis on training and support for frontline care workers and the replacement of the state’s current regional “hubs” for COVID-positive nursing home residents with “care and recovery centers.”
The report came from a gubernatorial task force which has been meeting twice a week this summer. Renee Beniak, executive director of the Michigan County Medical Care Facilities Council (MCMCFC), chaired the task force’s staffing work group. She called nursing assistants’ jobs, which involve the most interaction with residents, “one of the most difficult. To take good care of the residents and do the best job possible, I think the staff have to be happy and fulfilled and not overwhelmed and burn out.”
MCMCFC represents 34 county-owned facilities scattered across the state from the western Upper Peninsula to Macomb County.
Next local finance webinar is Sept. 8; register today
The seventh in an ongoing series of webinars co-sponsored by MAC and the Michigan Treasury will be held on Sept. 8, starting at 2 p.m.
County leaders can sign up now for the webinar, which will include an update on state budget process and the CARES Act programs, information about local government unclaimed property.
Each webinar is limited to 1,000 attendees. Participants are strongly encouraged to register early.
Treasury also has developed a webpage with numbered letters, memorandums, webinars, and resources regarding COVID-19 updates for local governments and school districts. This webpage was created to ensure that Michigan communities have access to the most up-to-date guidance and is updated frequently with information and resources as they become available.
For the latest updates, please review the COVID-19 Updates for Local Governments and School Districts’ webpage.
State launches health IT input campaign
A new effort by the state Health and Human Services Department (DHHS) to create a “roadmap” for health information technology will include a series of 16 virtual engagement sessions on a variety of topics such as care coordination, racial disparities in health, coronavirus response, and behavioral health. The sessions get under way on Sept. 15 and will continue into November.
“These sessions will provide an opportunity to collect input from stakeholders across Michigan on using data from health IT systems to address business needs as well as the needs of individuals they serve,” the department stated.
For more information, visit the MDHHS Health IT Commission web page.
Staff picks
- Election officials: ‘Flatten the curve,’ avoid backups amidst pandemic (naco.org)
- In views of U.S. democracy, widening partisan divides over freedom to peacefully protest (Pew Research)
- Our American States – a podcast (National Conference of State Legislatures)
- The case for making virtual public meetings permanent (Governing.com)
By: Dan Papineau, Director of Tax Policy and Regulatory Affairs, Michigan Chamber of Commerce
(Editor’s note: This article originally appeared in the August edition of Michigan Counties, MAC’s bimonthly e-newsletter.)
Perhaps it was the recent remark I made about Michigan’s broken municipal finance system while testifying in front of a state legislative committee that prompted the invitation to contribute to this publication.
I agree with the nonpartisan Tax Foundation that all tax policy should be based on four cornerstone principles: simplicity, transparency, neutrality and stability. The revenue side of our municipal finance system fails in all four of these categories. This is not hard to believe since local government revenues are overwhelmingly made up of property taxes. County governments depend on property taxes for 60 percent of their revenues. The crux of the problem behind our state’s municipal finance system is the over-reliance on property taxes. When we think about property taxes through the lens of the four principles of sound tax policy, we see why.
Simplicity
Since 1893, Michigan has had an ad valorem property tax system that relies on the current value of a subject property. Assessing a value to every piece of real property and all nonresidential personal property is no easy (or simple) task.
While the practice of assessment and appraisal has evolved into a complex science over the last 127 years, it is still a relatively subjective process. This subjectivity erodes simplicity. Both taxpayers and local units of government see this problem play out far too frequently in the form of property tax disputes that end up in court wasting the time and resources of everyone involved.
Property taxes can be looked at as a fair way to spread the cost of local government services across varying portions of the population but, our system has become so complicated and hamstrung by a plethora of minor tweaks and/or major deviations that our property tax system is caving in on itself. The mechanism that brings in the most significant portion of revenues county governments need is about as simple as the internal workings of the human brain.
Transparency
With increased accessibility to BS&A and other technologies, the principle of transparency has been greatly bolstered but, the process of assessment to state equalization is anything but transparent.
While summary appraisal record cards are available online either through free access or paid access, the level of detail made available lacks full transparency. For example, the building valuation work up, land value tables, economic condition factor tables and supporting studies are not available unless a Freedom of Information Act request is filed. Even the body that audits the entire property tax system, the State Tax Commission, does not share the results of their audits with the public.
Neutrality
The principle of tax neutrality is summarized as follows: “Taxes should neither encourage nor discourage personal or business decisions”. The fact is the property tax system Michigan imposes today does the exact opposite. The property tax system is actually designed to influence the decisions businesses make and to a lesser degree, the ones individuals make.
Property taxes have been used to compete for investment across local units of government and between states. Much of the policy that promotes this behavior is not within the control of the governing body of the local unit.
Policy-makers at all levels use the property tax system to encourage or discourage different behaviors. Michigan has a few parameters to promote neutrality, but they are so ineffective they are practically nonexistent.
Stability
By nature of its design, the property tax is unstable.
First, the personal property tax is based on depreciating value. It is literally designed to go down and therefore be anything but stable. Real property tax revenues or the values of which they are based on, while not as heavily affected by depreciation, are constitutionally prohibited from increasing beyond a certain level after being allowed to decline without restriction. Stable on the way back up but not down.
Second, value itself is not stable. A property worth a certain amount one day could be worth half the next. Our economic cycle contains peaks and valleys not a flat line of prosperity.
Third, policy-makers are constantly rearranging the property tax system to address its numerous faults; however, the never-ending alterations result in instability and effect budgets of police departments, public works departments and general fund spending of county governments everywhere.
Fixing the revenue side of our municipal finance system is extremely difficult while decrying its faults is easy. I respect those who dedicate their careers to finding ways to improve the system we have. We really must look at local government revenue from a completely new perspective. I believe this starts with revamping the complete service delivery method our state is currently straddled with. My friends at MAC hear me say often that county government is the best form of government. Counties should be the ones administering practically all of the services a citizenry relies on. To transfer to this type of service delivery model we must also permanently address the compounding debt burden facing counties across Michigan. Lastly, we can discuss opportunities to reinvent the property tax system (or scrap it) and create a more diverse revenue stream for local units of government to depend on.
