Nine House Republican-sponsored bills and a House joint resolution (HJR) were introduced in the state House in late April to provide broad property tax reform and make major changes to Michigan’s tax structure:
- House Bill 5872 would eliminate the uncapping or “pop-up” tax when the property is sold. Currently, when a property is sold, its taxable value resets to match the current market value.
- HB 5873 would eliminate the six mills State Education Tax.
- HB 5874 would repeal the state real estate transfer tax.
- HBs 5875, 5876 and 5877would amend statutes to reflect the repeal of the state real estate transfer tax.
- HB 5878 would eliminate ALL personal property taxes, including utility personal property taxes.
- HB 5879 would require public utilities to provide a correlating reduction in residential rates.
- HB 5880 would create a 6% sales tax on “luxury” services to be deposited in a dedicated fund with distribution to the state’s School Aid Fund and remaining funds allocated to local units of government.
- House Joint Resolution T, a constitutional amendment, would eliminate the uncapping (pop-up tax) for all property when sold.
All but HB 5880 received a hearing this week in the House Government Operations Committee. Under HB 5580, the revenue replacement mechanism, schools would be held harmless and remaining revenue generated would go to local units of government; however, if the revenue is not sufficient funds to hold local units harmless, the amount for local governments would be prorated.
Fiscal projections estimate a $4.9 billion reduction in total property tax revenue, while the proposed new sales tax on services would generate roughly $4.7 billion. Although MTA supports property tax reform, this proposal as currently structured does not provide a reliable, stable funding source for Michigan’s local governments. MTA maintains that any reform should protect local governments from revenue losses and urges our members to convey this position to their state representative.