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Lawmakers Move to protect Local Governments if Tax Repeal is Successful

Feb 26, 2014

Bills would make sure local government budgets don't get slashed with tax repeal
By Jake Neher

Michigan State Capitol Building
Credit Wikipedia Media Commons

Michigan lawmakers want to make sure local governments do not take a hit if voters decide to repeal an unpopular tax on business equipment.

State officials are urging voters to repeal the tax. They say it is outdated and kills jobs. But local governments depend on that tax to provide basic services to residents.

On Tuesday, lawmakers introduced bipartisan legislation that would fully compensate cities, towns, and counties if the tax is phased out.

"These package of bills will help provide us the revenues to keep us stable while giving our businesses and our job creators the incentives that they need to really continue to invest in our state, as opposed to elsewhere," said Holland Mayor Kurt Dykstra.

Lt. Gov. Brian Calley is championing the proposal in Lansing. He says although the tax provides revenue for communities, many local officials have complained that the money generated is not stable and has been declining in many areas.

"You do have the strength behind it of a statewide vote to dedicate a certain revenue stream to local governments," said Calley. "And I think, in that sense, that it actually improves the outlook for local government stability."

Calley says the state will use an expected "windfall" from expiring tax credits to help pay for the repeal.

The state Senate could vote on the legislation this week. Supporters of the bills hope it will clear the Legislature in the next month.

Voters will be asked to repeal the tax on business equipment in August.