A plan to phase out the tax on most industrial equipment has cleared a state Senate committee on a party-line vote. Republicans say the plan will remove a big disincentive for manufacturers to build facilities in Michigan because most other states don’t have a similar tax.
But local government officials oppose the plan because it will reduce revenue that goes to cities, townships, counties, and school districts.
“It’s a tax cut to businesses to the tune of hundreds of millions of dollars, which, unfortunately, will result in a tax shift to citizens who will pay an increased millage rate because of school bonds and library bonds and other bonds,” says Summer Minnick of the Michigan Municipal League.
Local government officials want the Legislature to put an amendment on the ballot that would guarantee all the revenue currently generated by the tax on industrial equipment will be replaced. Senate Republican leaders say that’s a step they are not willing to take.
“The reason some of the municipalities and some of the school boards and school districts are in the kind of financial situation they’re in and need emergency financial managers and have unfunded liabilities, etcetera, etcetera, is because of poor management decisions over the past couple of decades,” says state Senate Majority Leader Randy Richardville. He says he thinks local governments could still find cost savings to make up the difference, without resorting to tax increases.
A Senate vote on the plan is expected in the next week or two.