The debate at the state Capitol to get rid of Michigan’s tax on most industrial equipment began today with a Senate hearing.
Manufacturers say this is overdue tax relief targeting the biggest sector of the state’s economy but local government leaders say the plan threatens their ability to deliver services.
Local governments and school districts say the Republican-drafted plan will pile a new round of financial pressures on communities that rely on factories for tax revenue.
“It’ll push some communities into insolvency, bankruptcy. For others, they will cut police, fire, essential services,” says Utica Mayor Jacqueline Noonan.
Another alternative: Noonan says, some local governments might have to raise other taxes.
Local leaders are calling for an amendment to the state constitution to guarantee all the revenue from the industrial tax will be replaced.
But leaders of the Michigan Manufacturers Association say there is a tradeoff. Mike Johnston says manufacturing created half the new jobs in the state last year.
“So we are at the beginning of a recovery. Now is the time to ensure a sustained recovery by getting rid of this barrier to competition,” he says.
Johnston says Michigan and Indiana are the only states in the Midwest that still tax industrial property.