A recent push in the state legislature to reduce or eliminate a tax assessed on business equipment is making municipalities anxious, to

say the least.
The personal property tax or PPT generates $1.2 billion a year in the state with much of the funding going to local governments and public schools.
Buchanan City Manager Bill Marx said the city stands to lose about $148,000 in revenue if the personal property tax is fully eliminated without an alternative revenue source put into place.
“That would be pretty devastating,” Marx said. “That general fund hit would require us to go to our police department and eliminate two positions. That’s the issue for Buchanan. PPT elimination equals two police officers.”
State Sen. John Proos, R-St. Joseph, said the goal for axing the PPT would be to help create a business tax structure more welcoming to businesses.
The personal property tax is assessed on business and utility equipment, like machinery and computers. Some lawmakers are arguing

the tax keeps businesses from investing in equipment and technology that would build business and create jobs.
But Proos is confident the personal property tax won’t be completely eliminated without finding replacement revenue for local governments and schools affected.
“We all acknowledge that so many rely on this funding for their operating expenses,” Proos said in an interview Wednesday. “Knowing that’s the case, we are being cautious to find appropriate replacement of these dollars while maintaining the goals for a competitive business environment.”
Proos pointed out that losing the PPT would be especially advantageous for southwest lower Michigan. Proos argues that the region is losing businesses to Indiana, which offers tax incentives for investment in industrial machines.
While no bills have been presented on the issue yet, there has been heavy discussion on different options, Proos said.
City of Niles officials are also nervous as the potential legislation is being kicked around.
Niles could lose more than $268,000 if the PPT is eliminated without replacement revenue. The city operates a $10 million general fund budget.
City Administrator Ric Huff said the hit would be “significant” and the only place to make the appropriate cuts would be personnel.
Huff is concerned the legislature is making a lot of changes too quickly.
“The state is moving pretty fast at changing a lot of the rules, whether they are taxes, employment or health care,” he said.
“It’s making it very difficult for municipalities to project revenues. It’s making the budgeting process and staffing decisions very difficult.”
The Michigan Municipal League is heavily pushing the state to not eliminate the PPT and encouraging local government officials to do the same.
“We cannot create the type of communities where people want to live, work and play…if Lansing continues to raid funds that local citizens expect to fund essential local services,” said Dan Gilmartin, executive director and CEO of the Michigan Municipal League, in a recent press release.
The City of Buchanan has already passed a resolution, urging legislators and the governor not to remove the PPT without finding replacement revenue. Berrien County is considering a similar resolution.
“We’re not against tax breaks to businesses,” Marx said. “I understand. There’s good merit there. But let’s do it in a way so we don’t have to lay off anymore policemen.”