Supt. John Jarpe: Personal property tax needs a replacementPublished 11:45pm Wednesday, October 5, 2011
The Michigan Senate is considering Senate Bill 34. This legislation would eliminate the Personal Property Tax, or PPT. I can understand the desire to make our state and community more inviting to businesses. I totally get it that a business would want to locate across the border in Indiana if the taxes in Michigan are too high. However, this tax cut needs replacement revenue because of the shifted expenses that will result if the bill becomes law.
What is the PPT? This is a tax on commercial equipment and furniture, industrial equipment and machines, and other business types of fixtures. The money from the PPT is collected through tax millages from the state, local schools, and intermediate districts like Berrien RESA. So, if there is no longer a PPT, and it doesn’t get replaced by some other revenue, school funds that have already been reduced, will be reduced some more.
In past years, the state School Aid Fund has made up the difference if local taxes could not provide enough funding. However, increases in costs to the School Aid budget might not be covered. As we have pointed out before, the Governor and legislature were quite willing to use the School Aid Fund to cover public schools and community colleges last spring. This resulted in lower amounts for local districts.
In addition to operating millages, many school districts, like Brandywine, have debt millages that were approved by voters to do construction projects to keep our schools up-to-date. We are most thankful to our community for that support. The law states that those millages are written so that the pay-off rates must automatically increase if necessary, in order to make payments. Of course, they can also be reduced, during strong economic times. But, if a main source of tax revenue, like the PPT, is taken away and not replaced, the tax costs can get passed on to the other taxpayers. In this case, that becomes the homeowner.
The estimated impact on the Brandywine Community Schools for the elimination of the PPT is about $65,000. Taxes are not helpful to businesses, but cutting revenue to schools and legally forcing schools to pass along taxes to homeowners is not helpful, either. If you have concerns, contact Senator John Proos or Representative Sharon Tyler. Urge them to consider replacement revenues if they cut the PPT.