Long the top priority of the Snyder
Administration – and championed by Lt. Governor Brian Calley the effort to
eliminate the industrial portion of the personal property tax finally won
legislative approval near the end of the lame duck session, but with a twist.
The entire deal is contingent on voter approval on the August 2014 primary
ballot.
Lawmakers from both sides of the aisle had
voiced their discomfort with the Administration’s proposal based on complexity
and lack of 100% revenue replacement to local units of government – discomfort
that had appeared, early in the week, to potentially knock the train off the
tracks for approval during lame duck. However, a late alternative proposal
initiated by Representative Jeff Farrington (R-Utica) and backed by portions of
the business community and manufacturing lobby resulted in even greater
discomfort among local units – so much so that it resulted in their ultimate
support of the original plan.
The alternative proposal would have simply
exempted all industrial personal property purchased after January 1, 2013 from
the tax, creating an informal phase-out of the tax. Revenue replacement,
however, was not a part of the plan.
The original plan, ultimately passed on close
votes ranging from 58-51 to 56-53, is composed of House Bills 6022, 6024, 6025,
6026 and Senate Bills 1065, 1067, 1068, 1069, 1070 and 1071. Industrial
personal property tax will be phased-out from 2016 to 2022 with 80 percent
revenue replacement going to local governments provided that the lost revenue
equates to at least 2.3 percent of the unit’s total property tax revenue. Local
governments can also replace 100% of lost revenue to police, fire, ambulance
and jail operations through special assessment.
Under the final version of the package, lost
revenue to schools would also be replaced; however, through redistribution of
use tax dollars. A change in the use tax distribution methods, under HB 6026,
requires voter approval and since all bills are tie-barred to HB 6026, in
essence the entire plan requires the same approval.