LANSING, Mich. — The Senate Finance Committee on Tuesday approved Sen. Mike Shirkey’s legislation to address the impact of personal property tax (PPT) reimbursements to local communities.
“The personal property tax was penalizing investment and putting us at a disadvantage in the competition for new jobs, and phasing it out was an important step in improving our economy,” said Shirkey, R-Clarklake. “This legislation is in response to a local concern brought to my attention about the phaseout. The bills would maintain a community’s current ability to bond for necessary improvements as the PPT reforms take effect.”
In 2012, the Legislature passed PPT reforms that phased out the tax for eligible manufacturing personal property. Local units of government are required to be fully reimbursed by the Local Community Stabilization Authority (LCSA) for lost revenue. The voters approved the reforms in August 2014.
The amount of debt that a community can have is limited to 10 percent of its assessed value of real and personal property.
“An unintended consequence of the PPT reform is that it reduces a community’s assessed property value, and therefore, the amount that the community can bond for to make critical investments,” Shirkey said. “This legislation does not increase a local government’s debt limit. It simply maintains the ability to bond at current levels.”
Senate Bills 590-593 would retain the debt capacity that each local unit of government had prior to the time the PPT phaseout began. The only difference now is that the funds are coming from the LCSA instead of through a PPT assessment.
The bills have been sent to the full Senate for consideration.