Reporting by the Livingston County Press & Argus shows that Michigan schools will take hit of over a half billion dollars under a new plan by Michigan Republicans to eliminate the state’s Personal Property Tax (PPT).
The elimination of a state tax on business furniture and machinery would further cut funding for Michigan’s public schools, state and school officials said.
Elimination of the tax on commercial personal property would create a loss of roughly $573 million in revenue for Michigan’s public schools, based on 2010 revenue figures, according to a House Fiscal Agency report.
Michigan schools, which will receive a total $470-per-student cut this school year, would suffer an even greater hit if the tax is eliminated and not replaced with other revenue, said Dan Danosky, superintendent of Pinckney Community Schools.
“That means that the state will simply have to pick up a bigger portion of the foundation allowance. Therein lies the rub: Where are they going to get it?” he said.
“When they don’t have it, they’ve proven they’re not giving it to us,” Danosky added.
Local governments also receive revenue from the persona property tax.
There’s little question that the PPT puts Michigan businesses at a competitive disadvantage with other states without this tax on equipment. Because of this, state Rep. Jack Brandenburg (R-Harrison Township) has introduced a bill to eliminate it. Gongwer reports:
All new business equipment purchases would be exempt from the Personal Property Tax under a bill that Sen. Jack Brandenburg, the Senate Finance Committee chair, will introduce soon.
Mr. Brandenburg (R-Harrison Township) said he prefers this method because it would give local governments time to adjust to decreased revenue and spur the economy as businesses purchased new equipment because of the incentive of no longer having to pay the Personal Property Tax. Under this plan, the tax would die once all existing equipment depreciates in value to the point where it no longer is taxable.
Here’s the rub: there’s no provision for replacing the revenue. As I reported last month, Senate Majority Leader Randy Richardville doesn’t feel there’s a need to replace the funding that makes up a substantial amount of revenue for many schools and municipalities.
On the issue of the personal property tax (PPT), Richardville has a warning for local governments and schools that receive at least $800 million from the tax on business equipment from paper clips to giant presses. He said he does not favor replacing all of the lost revenue if the PPT is phased out.
Richardville said he wants to use this debate as a means to bring about more consolidation of local government and school services which, he figures, will help to make up part of the lost revenue those entities will not get from the state.
“If they want to raise money, they should talk to their own people,” Richardville said.
In other words: suck it. This is simply another way for state level lawmakers to balance their books while shoving the pain and financial distress back onto local municipalities. Oh, and if your budget goes into the red, well, they have a nice Emergency Manager you might like to try on. He or she can help you get rid of all those pesky union contracts and help you outsource your municipality’s services to private interests sitting on the sidelines licking their chops.
Meanwhile, if this passes, another half billion dollars will be stripped from our education system. In Republican FantasyLand™, that’s what’s called investing in our future.
I’m going to go back to something former Governor Granholm said at her recent talk in Ann Arbor: THERE IS SWEET REVENGE AT THE BALLOT BOX
The 2012 elections can’t get here fast enough.