Deena Bosworth, Legislative Coordinator for MAC, talks to Michael Patrick Shiels about Personal Property Tax.
http://soundcloud.com/mibigshow/mbs-h3s4-mark-fisk-cont-deena
Your involvement is needed to help slow down the movement of the newest PPT proposal. See below for ways to get involved and how to figure out the impact this latest plan will have on your county.
Lt. Governor Calley unveiled his latest personal property tax reform package to the media on Tuesday and to the House Committee on Tax Policy on Wednesday this week. In response to the public unveiling of the plan, MAC and the Replace Don’t Erase coalition held our own media round table to discuss our take on the changes to the proposal.
The tax breaks for businesses remain the same as they were when the bills passed the Senate in May, but the new plan makes significant changes to the method and amount of revenue reimbursement to locals. The new proposal represents an improvement over the Senate passed bills (1065-1072), and we appreciate the Lt. Gov. listening to our initial concerns about subjecting our reimbursement to the annual legislative appropriations process. However, there remains many uncertainties with this new proposal and MAC has significant concerns about the potential for inequitable losses to counties and the unintended consequences of creating an authority to disburse our replacement revenue.
The plan has not been put into bill format yet, so we can only base our response, concerns and opinions on the stated intent of the legislation. As proposed the reimbursement plan would work as follows:
· Local units of government would be allowed to implement an Essential Services Assessment (ESA) on industrial real property in an amount equal to the total lost PPT revenue that was dedicated to police, fire and ambulance services. Please note, this is not all public safety expenses, just those associated with police, fire and ambulance.
· The remaining loss from PPT would be replaced up to 80% by the state with funds diverted from use tax collections.
· The electorate would have to vote on the diversion of a portion of the state’s use tax – these funds would be directed to a newly created statewide authority. This vote would happen in November 2014.
PPT CALL TO ACTION – YOUR INVOLVEMENT IS NEEDED
It is very urgent that you contact your legislators and get involved. There are only six session days left and the legislature and the administration have made passing PPT reform a priority. But there are still too many questions that need to be answered, and lame duck is not the time to rush legislation as crucial as this.
Please keep the following points in mind when discussing the issue with your Representative and Senators:
· This proposal may be better than the Senate passed version, but there is still no guarantee. If the state-wide vote doesn’t pass, then we do not have a dedicated revenue source for our reimbursement. This will leave us at the mercy of the annual appropriations process, and we all know how that worked out for us with revenue sharing.
· This legislation is moving too fast. We do not know how the plan will affect our counties, communities and schools. We need time to analyze the numbers and assess the impact. In addition, the Essential Services Assessment should be allowed for ALL public safety, not just police, fire, and ambulance. It must include all public safety functions, including 9-1-1 and jails.
· The bill language still has not been released. We know the intention of the legislation, but the devil is in the details. Without bill language, numbers and a guarantee, we cannot accept this proposal.
· We have yet to receive any calculations for the Essential Services Assessment (ESA), making it very difficult to determine the impact this will have on each county.
· We do not have specifics on the authority of the state-wide entity that will be created to reallocate the use tax and what strings could possibly be attached to such authority.
· MAC is still supportive of the repeal, but there need to be more guarantees and fewer holes in the proposal. Though this reform package is a huge step forward, and progress is being made, this is still not an ideal plan.
Please take action and speak to your legislators. The Lt. Governor’s new proposal needs to be fully vetted and any concerns rectified before action in the Legislature is takes action.
HOW DOES THIS NEW PROPOSAL AFFECT YOUR COUNTY
MAC has hired a consultant to help us determine the financial impact this proposal will have on our member counties. We are hoping to have a formula and financial calculator completed early next week. We will also be sending out a special alert requesting information to help further determine the potential impact.
Please email your information to Emily Dobson at Dobson@micounties.org
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MAC is currently offering “Open Meetings Act”, “County Finance 101 Series: Introduction to Government Finance”, and the brand new “Michigan’s County Incentive Program (CIP) FY2013”.
These learning courses are located on the MAC website and are free to MAC memberswho have registered for access to the site. Registration for the site can be found on the home page.
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:
http://www.mlive.com/opinion/kalamazoo/index.ssf/2012/11/legislators_cannot_eliminate_p.html#incart_river_default
http://www.pressandguide.com/articles/2012/11/23/news/doc50afd57d2121b451047030.txt?viewmode=fullstory
Veterans Day is a time to celebrate and honor the service of all U.S. military veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good.
Today, we would like to take a moment to thank all of our members, elected and non-elected officials, friends and family who have served to protect our freedoms.
Thank you, and happy Veterans Day,
-Michigan Association of Counties
