Berrien County lobbies to keep personal property taxes

Published 9:40 pm Tuesday, March 6, 2012

Last week, Berrien County commissioners asked the Michigan Legislature and governor to keep the personal property tax in place until there is a replacement for the revenue that would be lost for counties and municipalities.

The county board passed a resolution Thursday to send a letter with that message to Gov. Rick Snyder and local state representatives.
State Sen. John Proos, R-St. Joseph, for one, is in agreement.

Proos told the Daily Star Tuesday he supports personal property tax reform but only if the Legislature can find a way of replacing the lost revenue for counties, municipalities and schools.

The state tax is paid on machinery and equipment in industrial, commercial and utility buildings. The levy, which generates $1.3 billion a year, benefits county and local governments, K-12 public schools, libraries and community colleges.

Last fall, Senate bills were introduced to put an end to the personal property tax, but Proos said that was just to “get the conversation started” about reform of the tax.

“I’m advocating for some form of replacement,” Proos said. “We can’t pull the rug out from under municipalities and counties that rely on this tax.”
County and local government officials are concerned that phasing out personal property taxes without replacement funding would limit governmental units’ ability to provide services.

Niles stands to lose more than $268,000, while Buchanan could lose about $148,000.

Berrien County Administrator Bill Wolf told commissioners last week that, with the “most favorable spin,” the county would lose $340,000 in revenue in 2013.

The board’s resolution said “years of declining revenue and cuts to state revenues to counties, coupled with unfunded state-mandated services have placed Michigan counties in a position of financial stress.”

Proos said a complete elimination of the tax is unlikely. More likely is a gradual phasing out of the tax on commercial and industrial property. The tax on utility companies wouldn’t be removed.

The Legislature is considering replacing lost revenue with the expiration of business tax credits, mostly from electric batteries, Proos said.

“I’m not sure that’s the most secure funding,” Wolf told commissioners last week.

Proos said the tax reform will make Michigan more competitive in bringing businesses to the state.

“Virtually everyone agrees this (PPT) is not beneficial to us in creating an environment for jobs to be created and to grow business in Michigan,” Proos said.

He pointed out that neighboring state, Indiana, offers businesses tax credits instead of tax bills for investing in new equipment.

“We need to focus on competitiveness and job growth. The job picture in this state has been awful for a decade,” Proos said. “We are trying to create a climate to allow for that job growth.”

Organizations such as the Michigan Association of Counties and the Michigan Municipal League continue to pressure the state to replace lost revenue if it decides to phase out the personal property tax.