Local officials fear final end of personal property tax

By ANJANA SCHROEDER
Capital News Service
LANSING – Local governments across northern Michigan would face more budget cuts because of a personal property tax proposal passed by the Senate and awaiting House action.
The proposal would exempt businesses from taxes on personal property like machines, desks and supplies.
Local governments rely on the personal property tax to finance public services.
Josh Reid, who chairs the Gladwin County Board of Commissioners, said he is not confident that the state will make up the loss if the proposal becomes law.

“We have zero confirmation there will be replacement revenue,” he said.
Dan Papineau, the legislative director for Sen. Jack Brandenburg, R-Harrison Township, said local governments should not be concerned about replacement revenue because if the state doesn’t replace the revenue, the personal property tax will be reinstated.
Mason County Administrator Fabian Knizacky said it would become a burden on the local government to keep the state accountable.
He said the change would result in a loss of more than $200,000 annually for the county.
However, Knizacky said the county is not starting any pre-emptive planning but is waiting until 2016 when the bill would be implemented to take steps to deal with the situation.
He said he hopes there will be a constitutional guarantee of replacement revenue from the state to affected localities.
Sen. Goeff Hansen, R-Hart, stressed the importance of replacing revenue.
“This is so important and is the lifeblood of our locals.”
If the money isn’t replaced, the tax will be reinstated Hansen said.
Hansen said he remembers paying the personal property tax when he was in the grocery business.
Hansen was one of 23 senators who voted for the bill and he predicted it will become law.
Knizacky is not the only one calling for a constitutional guarantee to ensure the state pays.
Deena Bosworth, legislative coordinator for Michigan Association of Counties, said, “We are supportive of eliminating the personal property tax as long as the replacement revenue is guaranteed.”
However, Papineau said Brandenburg doesn’t support a constitutional amendment to guarantee replacement revenue but local governments should be reassured because the state has to pay.
Crawford County Administrator Paul Compo said he does not want local taxes raised to make up for any lost revenue.
“Our community is taxed enough,” Compos said. “Nearly 80 percent of the budget is in personnel costs,” adding that he hopes layoffs would not be necessary.
If the House passes the personal property tax bill and Gov. Rick Snyder signs it, cities, villages, townships, schools districts and counties would feel the effects in 2016.