MAC was invited to a special briefing in the Lt. Governor’s office to discuss his new plan for PPT Replacement. MAC’s position on PPT Repeal has remained the same, we will support the repeal if we get full reimbursement through a guaranteed revenue source. Lt. Governor Calley has heard our request and come up with a plan that may get counties 80% guaranteed reimbursement, but with the potential for additional reimbursement through a combination of a dedicated revenue source not subject to legislative appropriation and a special assessment to cover police, fire, and ambulatory services.
The basics of the repeal remain the same as they were when the bills passed out of the Senate. All commercial and industrial personal property with a taxable value of $40,000 or less would be exempt from the tax beginning in 2014. A new category of industrial personal property would be created to avoid giving certain industries, like wind turbines, the exemption. This new category is called Eligible Manufacturing Personal Property. The PPT exemptions for this category would be as follows:
* All new personal property bought after 12/31/2011 will be exempt as of 12/31/2015
* All personal property that is 10 years old would be exempt as of 12/31/2015 and continue each year until all the property is either new or 10 years old to achieve full exemption.
The reimbursement plan, although it meets some of our stated criteria, is not ideal. MAC has been assured by the Lt. Governor that for those counties who have more than 2.5% of their property taxes coming from personal property tax, their reimbursement cannot go below 80% of their PPT loss. Those less dependent on PPT (defined as having PPT revenue less than 2.5% of total property tax revenue) will not see any reimbursement. This revenue would come from utilizing a portion of the State’s use tax. This use tax money would be assessed by a new state-wide authority with broad powers and be distributed by the same entity, thus avoiding the legislature and the appropriations process. We are likely to have significant concerns over the power being granted to the authority, but we are still evaluating the proposal.
Counties would be able to make up more losses by placing a special Essential Services Assessment on industrial real property but only at a rate needed to replace 100% of lost PPT revenue that otherwise would have funded police and ambulance services from the County General Fund.
On the surface this proposal appears slightly better than the version that passed out of the Senate, but we still need time to evaluate it. We need to be especially careful that the lame duck legislature gets this right. When talking with your legislators, please reiterate the fact that the Senate passed version does not provide a good solution,and that the Lt. Governor’s new proposal needs to be fully vetted and any concerns rectified before action is taken.
This alert is an overview of what the plan is, but specific formulas for reimbursement or calculations have not yet been provided. As we learn more about the proposal and the impact it will have on counties, we will update you.
You can find more on the subject and how it will affect local government from these articles: