CHICAGO - Michigan voters Tuesday will consider a ballot proposal to phase out the personal property tax, a central source of revenue for many local governments.
Local government officials opposed the measure when it was first introduced, and passed, by Michigan lawmakers during the winter legislative session. But most opponents, including the Michigan Municipal League, now support the revised version, which replaces the lost revenue.
Under the measure, the state would phase out the Michigan Personal Property Tax, a tax levied on large equipment owned by businesses and manufacturers. Its elimination would hit those cities and towns with large manufacturing presences hard — many use it to fund public safety — while other municipalities won't suffer a loss at all. It's expected to mean the loss of roughly $500 million in annual revenue.
Proposal 1 focuses on the reimbursement piece of the measure, which would divert a piece of the state's use tax, collected on goods purchased outside of the state, to local governments. The proposal would create a new authority to distribute the new "local community stabilization share" of the use tax to local governments, who could use it for essential services, including public safety and ambulance services.
The proposal would also increase the portion of the state use tax that goes to local school districts and prohibit the state from raising the tax over its existing 6% limitation.
Because the ballot language focuses on the reimbursement tax, proponents like the municipal league warn that if voters reject the proposal, the Legislature could get rid of the property tax anyway but without the replacement revenue.
Gov. Rick Snyder proposed the PPT elimination last year, saying the state was losing business to Midwest states that didn't have the tax.
