IRON MOUNTAIN – Michigan city leaders are wary of a new tax cut for businesses that they say puts about $ 75 million in annual funding for local governments at risk.
House Bill 5351 was included in a $ 1.5 billion trade incentive package signed in late December by Governor Gretchen Whitmer. From 2023, the measure provides for a tax reduction for companies that pay taxes on non-industrial equipment and personal property. The exemption, based on the value of the equipment, is increased from $ 80,000 to $ 180,000 per package.
At the behest of the Michigan Townships Association, the Michigan Municipal League, and the Michigan Association of Counties, legislation was also passed to provide $ 75 million in replacement revenue to local governments, but that’s only for a year.
Beyond that, the erosion of funding can be permanent unless the legislature and governor find a solution, city leaders warn.
“We fully intend to ensure that our members keep the Senate, House and Governor on fire to design a permanent funding solution that will preserve essential services in our local communities,” the MTA, MML and MAC said in a joint statement.
Municipal organizations deplored the “Long-standing practice of using local government funding to fund other priorities.”
At a meeting of the Dickinson County Board of Directors last week, Commissioner Barbara Kramer reported on Bill 5351 and the state’s one-year commitment to provide replacement income. “I don’t think we can count on this year after year”, she said.
Lawmakers from the Upper Peninsula voted in favor of the bill, including Rep. Beau LaFave, R-Iron Mountain; Representative Greg Markkanen, R-Hancock; representative Sara Cambensy, D-Marquette; and Senator Ed McBroom, Township of R-Waucedah.
In a Senate statement, Senator Ruth Johnson, R-Holly, said she was concerned about the impact on local communities but voted yes because âI have received a firm commitment that this body and our colleagues in the House will strive to address the loss of revenue. “
No Senate Democrats supported Bill 5351.
“By repealing this tax in perpetuity without replacement for local communities beyond the first year, you are directly financing the money that goes to public security”, Senator Jeremy Moss, D-Southfield, said in a ground speech.
In a Michigan City League blog shared among members of the Iron Mountain City Council, Chris Hackbarth, the league’s director of federal and state affairs, said replacement income would be a top legislative priority for 2022.
Jim Anderson can be reached at 906-774-3500, ext. 226, or [email protected]