HB 6022, 6024, 6025, 6026, and SB 1065-1071 Personal Property Tax (PPT) On the last day of the lame duck session, Lt. Governor Calley and MAC reached an agreement on the PPT package of bills that would tie bar the entire PPT repeal to the passage of the use tax vote in 2014. This move, along with the inclusion of jails in the essential services assessment and the movement of the minimum threshold for 80% reimbursement from the state, brought MAC to a neutral position on the bills. Although the package is not perfect, the Lt. Governor and the House and Senate have agreed to keep working throughout the next legislative session to address any unanswered questions and unfinished issues. This package represents a significant improvement over all other options on the table. It has been our goal to achieve the most comprehensive and reliable replacement revenue source for our counties. The other option on the table was complete elimination of new personal property tax for new purchases starting Jan. 1, 2013 without any reimbursement plan. This would have left counties at a negotiating disadvantage with little incentive for the other interest groups to negotiate reimbursement proposals. All counties in Michigan will be eligible to assess an essential services assessment and 63 of Michigan’s counties will be eligible for reimbursement from the diversion of the state’s use tax. SB 1021 and 1022, HB 5367 Payment In Lieu of Tax (PILT) SB 1021 and SB 1022, sponsored by Sens. Casperson (R-Delta County) and Booher (R-Osceola County) respectively, are on their way to the Governor for a signature. The bills increase state payment in lieu of taxes (PILT) obligations to counties according to inflation. In addition, they would allow counties to apply fees and penalties against the state if PILT payments are late or are not fully paid. In all, the bills would increase PILT payments to local units of government by about $9.7 million. MAC thanks Sens. Casperson and Booher, along with Rep. Frank Foster (R-Emmet County), the Governor, and all of the Northern Senators and Representatives for their hard work on this issue. Additionally, HB 5367, sponsored by Representative Chuck Moss (R-Oakland County), is on its way to the Governor for a signature. The bill provides supplemental appropriations in the amount of $2.6 million to fully fund the state’s PILT obligation for the current year. Special thanks to Representative Moss, Senators Casperson and Booher, and the Governor for getting this done for counties.

PPT is headed to the House floor for a vote this morning, with a new proposal from house republicans that would exempt all new personal property from January 1, 2013, on, with no reimbursement.  This would mean a virtual phase-out, with NO reimbursement to local governments. This is an URGENT call to action.  Please call your state representative to slow this down and not rush this through lame duck. Click here to find contact information for your legislators. You can reference the Legislative Update from 12-7-12 for more details on the current PPT proposal, on MAC’s website under “resources” then “publications”.

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  

The MAC Education and Training Program has been designed to provide tools and information that facilitate creative, new, and innovative approaches from counties to prosper in the new and changing structure of county government. With easy to follow online courses, MAC offers technical, legal, and legislative expertise on a wide range of topics that are fundamental to county operations. 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.