MTA Legislative Alerts

Sept. 18, 2009

Legislative Leaders Wallop Statutory Revenue Sharing

House Speaker Andy Dillon (D-Redford Chtr. Twp.) and Senate Majority Leader Mike Bishop (R-Rochester) agreed to an outline for state spending on a department-by-department basis this week. One of the specific items agreed upon by both leaders were overall cuts to revenue sharing for the coming year. The leaders agreed that they would persuade their individual chambers to cut statutory revenue sharing by 20%, beginning Oct.1. You are receiving this alert because our records indicate that this proposed budget cut will impact your township.

The proposed 20% cut to statutory revenue sharing is a significantly deeper cut than the cuts proposed for virtually any other program offered at the state level. This is one more giant step in the state's relentless efforts to convert money that has been designated for local operations for decades to be used to paste over the state's operational deficiencies. Meanwhile, constitutional revenue sharing is expected to see a 5% reduction for next year based on the economy; the Legislature has no control over this constitutionally protected fund.

MTA encourages township officials to contact their legislators immediately and ask that they reject this leadership agreement. Votes could take place as early as Tuesday. Specifically, ask why local government funding is being targeted for larger cuts than virtually any other state function. Why does the Legislature put so little regard in public safety, while the citizens put it at the top of the list for the use of public tax dollars?

Some legislators are talking about potentially raising revenue in the future to offset selected budget cuts. However, most political observers suggest this is highly unlikely once the pressure of approving a budget has passed. This is not a realistic response to this crisis. 

Please use the following links to contact your legislators:

www.house.michigan.gov/replist.asp and http://www.senate.michigan.gov/.

Sept. 26, 2008

Legislature creates chaos for local government budgets with property tax proposal

The Legislature is poised to cut property tax revenues and cost local governments approximately $100 million in 2009. The House of Representatives voted Thursday, Sept. 25 to place a constitutional amendment on the ballot that would place another cap on property tax revenues. HJR III was discharged from the Tax Policy Committee and approved with a unanimous vote.

HJR III states that in any year the State Equalized Value (SEV) of a piece of property goes down in value, the Taxable Value (TV) of that parcel may not increase. It further states that if the SEV increases by less than the rate of inflation, then the TV may not increase by more than that percentage.  Senate leadership has already expressed support for the proposal and wants it placed on the Feb. 2009 ballot with implementation concurrent with assessment changes in March.  The Senate Majority Leader has stated that the Senate will take up the measure when it next returns on Thursday, Oct. 2.

The proposal was approved despite the fact that no cost estimates or analysis of the proposal had been produced by either chamber's fiscal agency or the Michigan Department of Treasury. The Senate Majority Leader, speaking in support of the concept, offered his estimated cost of the proposal: "I think under the circumstances it would probably be neutral." As previously stated, MTA's initial estimates of the proposal are that it would reduce property tax revenues next year by approximately $100 million.

Local governments have been struggling for years with the fact that their second largest revenue source, revenue sharing, was either frozen or cut and they were already preparing for their largest revenue source, property taxes, to see a real decline for the first time in the memory of local officials.

Even without this proposed change to the constitution, assessing officials from across the state are estimating real reductions in property tax revenues for the coming year.  Many are estimating 10 percent reductions in SEV creating related reductions in estimated property tax revenues of 4 percent across the state.  Each unit of government will be impacted by a varying amount.

Instead of looking to assist property owners through state resources, the Legislature has instead decided to shift the cost of providing reduced taxes to local governments. These are the same governments that are already reeling from the decision of the Legislature to divert $500 million per year from revenue sharing in order to prop up the state budget.

This constitutional amendment is yet another example of where our state lawmakers are talking about how they cut property taxes while leaving local officials to deal with all of the problems associated with their actions.  It will be the local officials who will have to make the tough decisions regarding whether or not to cut the fire department budget or yet again withhold funding for the replacement of the crumbling roads or worse yet, go to the voters to ask for a millage increase. 

Call your state senator IMMEDIATELY and demand that they address this issue without passing the problem onto local government officials.

For past Alerts, click here.