Federal Judge O’Meara Plans to Issue Ruling on PA 269, ‘Important Case’ Soon

Dowagiac Mayor Donald Lyons explains why he is opposed to PA 269.

Dowagiac Mayor Donald Lyons speaks at a recent news conference opposed to PA 269. He is one of three League members listed as plaintiffs in a lawsuit.

ANN ARBOR, Mich. – Recognizing the urgency of the case, U.S. District Court Judge John Corbett O’Meara today said he would issue a written ruling soon regarding a lawsuit charging that a “gag order” provision in Public Act 269 is unconstitutional and asking that the law be overturned.

Judge O’Meara heard oral arguments from both sides Thursday morning. Jerome R. Watson spoke as one of the attorneys representing the plaintiffs – 17 local government officials and one private citizen. Defendants in the case are Secretary of State Ruth Johnson and the State of Michigan.

“The heart of this case is not about misusing public funds. This case is about abusing First Amendment rights. This case is all about censorship of speech,” said Watson, of the Miller Canfield law firm, during the hearing at the U.S. District Court, Federal Building in Ann Arbor.

Calling it an “important case,” Judge O’Meara said he hoped to issue a decision soon on the plaintiffs’ request for a preliminary injunction. The case is regarding Subsection 57(3) of Public Act 269, which amended Michigan’s Campaign Finance Act. State law already prohibits governmental officials from using tax dollars to advocate for or against a proposal. This new provision goes far beyond what is constitutionally permissible.

Specifically, subsection 57(3) bans local officials or employees of local governments and school districts from using public resources to communicate with voters by giving them factual information about a ballot measure through radio, television, mass mailing or prerecorded telephone messages within 60 days of the election.

There is urgency to this case because more than 100 school districts and local governments have issues on the March 8 ballot and already are being affected by the 60-day gag order time period.

The case is Robert Taylor et al v. Ruth Johnson and the State of Michigan. It was filed Jan. 26 in the U.S. District Court for the Eastern District of Michigan, based in Detroit.

Lawsuit plaintiffs include Michigan Municipal League members Roseville Mayor Robert Taylor, Algonac City Manager Douglas R. Alexander, and Dowagiac Mayor Donald Lyons. Other plaintiffs are Tuscola County Commissioner Matthew Bierlein; New Haven Community Schools Superintendent Todd R. Robinson; Riverview Community Schools School Board President Gary O’Brien and Superintendent Russell Pickell; Tecumseh School Board President Kimberly Amstutz-Wild and Superintendent Gary O’Brien; Waterford School District School Board President Robert Seeterlin and Superintendent Keith Wunderlich; Goodrich Area Schools Superintendent Michelle Imbrunone; Clinton Community Schools Superintendent David P. Pray; Byron Area Schools School Board President Amy Lawrence and Superintendent Patricia Murphy-Alderman; Warren Consolidated School District Superintendent Robert D. Livernois; Lansing School District Superintendent Yvonne Caamal Canul; and Stephen Purchase, a private citizen.

Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at 810-874-1073.

Roseville, Algonac, Dowagiac Officials Are Among Plaintiffs in Federal Lawsuit Against ‘Gag Order’ Law

League President and Dearborn Mayor Jack O'Reilly leads a press conference announcing a lawsuit against PA 269.

League President and Dearborn Mayor Jack O’Reilly leads a press conference announcing a lawsuit against PA 269.

City officials from Roseville, Algonac, Dowagiac are among 18 plaintiffs in a federal lawsuit filed today in Detroit charging that a “gag order” provision in Public Act 269 is unconstitutional and asking that the law be overturned. (View a press release about the League plaintiffs in the lawsuit and view a statewide press release about the suit.)

Subsection 57(3) of Public Act 269, which amended Michigan’s Campaign Finance Act, prohibits elected and appointed public and school officials from providing factual information to voters about local ballot measures within 60 days of an election. State law already prohibits governmental officials from using tax dollars to advocate for or against a proposal. This new gag order goes far beyond what is constitutionally permissible.

“It’s an absolute gag order preventing public officials from addressing their constituents and residents of about matters of local concern,” said Scott Eldridge, an attorney with Miller, Canfield, Paddock and Stone who has filed the lawsuit against Public Act 269. “It’s so overly broad and vague that it penalizes public officials with a crime if they speak in even an objectively neutral tone about ballot issues.”

Tuesday's press conference.

Tuesday’s press conference.

The League hosted a press conference Tuesday afternoon to announce the lawsuit. The news conference was led by Board President and Dearborn Mayor Jack O’Reilly and included some of the 18 plaintiffs named in the suit. League members serving as plaintiffs are Roseville Mayor Robert Taylor, Dowagiac Mayor Donald Lyons and Algonac City Manager Doug Alexander.

About a dozen media members participated in the news conference including reporters from the Detroit News, mlive.com, the Detroit Free Press, Dowagiac Daily NewsMIRS News Service, Gongwer News Service, the Associated Press, Michigan Public RadioMichigan Radio Network and TV 6 and TV 10, both out of Lansing.

More than 100 school districts and local governments with issues on the March 8 ballot already are being harmed by the new law, which bans local officials or employees of local governments and school districts from using public resources to communicate with voters by giving them factual information about a ballot measure through radio, television, mass mailing or prerecorded telephone messages in the final two months of an election.

Algonac City Manager Doug Alexander talks about the impact of PA 269 on his community.

Algonac City Manager Doug Alexander talks about the impact of PA 269 on his community.

The result will be that uninformed voters are likely to first learn about complex matters when they look at ballots on election day without having received basic information such as what the proposal is about, how much it will save or cost them and what the consequences of a yes or no vote are. In addition to being unconstitutional, the law will also negatively affect local credit ratings and result in higher costs for local taxpayers, Moody’s Investors Service has warned.

Algonac City Manager Doug Alexander said his city is requesting voters to allow the city to enter a 20-year lease agreement with the US Coast Guard for 200 feet of Riverfront Park dockage in exchange for the Coast Guard repairing at its cost the seawall at that location.

“Under the current law we can’t mail any information to voters about this lease agreement with the Coast Guard. For example, we would have normally explained a ballot issue like this in our quarterly newsletter that is mailed to about 1,900 city households,” Alexander said. “Should I expect a local group of citizens to get together and form a campaign committee to explain this to the voters? Not likely, nor should they have to. This is a function of government. People expect their local government to do these types of negotiations, put these questions before them and then share factual information with the public so that they can make educated decisions. Our newsletter would have just stated factual, objective and neutral information to our residents. But we can no longer do that.”

Dowagiac Mayor Donald Lyons explains why he is opposed to PA 269.

Dowagiac Mayor Donald Lyons explains why he is opposed to PA 269.

Dowagiac Mayor Donald Lyons said his city is asking voters to change the city charter to have its clerk appointed instead of elected.

“This law strips away or brings into question the legality of many of the most effective means of communication that we have traditionally used,” Lyons said. “For a community that values transparency, the removal of some of our most effective means of communicating with our electorate by a poorly crafted and confusing piece of last-minute legislation is simply wrong. It is a sad day when the state Legislature tells me that I can no longer communicate effectively with the people I was elected to serve.”

Here are some excerpts from a couple of the media reports:

From the Detroit News:

… the law violates the First Amendment to the U.S. Constitution by banning “the free flow of objectively neutral, core political speech,” according to a complaint filed in U.S. Eastern District Court in Detroit.

Attorney Scott Eldridge of Miller Canfield answers questions from the media during Tuesday's news conference.

Attorney Scott Eldridge of Miller Canfield answers questions from the media during Tuesday’s news conference.

The suit also contends the law violates the 14th Amendment, which guarantees the right to due process, by subjecting public officials to criminal prosecution without providing adequate notice or guidance about what amounts to a violation.

“As a result, it chills speech altogether,” said Scott Eldridge, an attorney with Miller, Canfield, Paddock and Stone who is representing the plaintiffs.

“This law was created by the Legislature in the dark hours of the night, and this kind of last-minute, knee-jerk policy making is exactly what continues to plague our great state,” (said Warren Consolidated School District Superintendent Robert D. Livernois, a plaintiff in the suit). “In this particular case, that law resulted in the trampling — and I mean trampling — of our constitutional rights.”

From Mlive.com:

The lawsuit alleges that the 60-day limitation violates the United States Constitution’s free speech protections, ensconced in the first amendment. It also alleges the 14th amendment, which protects due process, was violated.

Reporters cover the press conference Tuesday at the League's office in Lansing.

Reporters cover the press conference Tuesday at the League’s office in Lansing.

“We’re confident that the court is going to rule in favor of free speech and against censorship,” …Eldridge (said).

… Dowagiac Mayor Donald Lyons said that in his 18 years as mayor he’s regularly communicated with residents ahead of ballot proposals to explain them.

“Think about this for a minute. Think about the fact that if I were to perform my duty as I have performed it over the last 18 years I would be subject to a fine, jail sentence and to charging with a misdemeanor, all because I tried to do my job,” Lyons said.

From the Detroit Free Press:

Douglas Alexander, Algonac city manager, said that while much of the attention is on ballot initiatives that have to deal with taxes, he’s concerned about what it will mean for a March 8 proposal in his community to approve a lease agreement with the U.S. Coast Guard for a section of the Algonac seawall.

In the past, the city would have provided “factual, objective and neutral information” in its quarterly newsletter “so our residents could make an informed decision.”

“Now, we can no longer do that,” Alexander said. “We would have explained that the Coast Guard would be paying for repairs.”

Residents, he said, will have questions.

“Should I expect every one of them to pick up the phone and call me? I hope not. But that’s the alternative we have now and it doesn’t make sense.”

From the Associated Press:

…But groups representing school districts, municipalities and other government entities said the “fix” pending in the House Elections Committee is inadequate and would only let them communicate the election date and a 100-word ballot summary of the proposal to voters.

Dearborn Mayor Jack O’Reilly, president of the Michigan Municipal League, said the secretary of state found only five valid complaints in three years of a local entity improperly advocating for a ballot measure.

“There is no indication there was any great calamity to be solved” by this law, he said during a news conference in Lansing to announce the suit. “This was a political thing that never should have happened.”
Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at mbach@mml.org or 734-669-6317.

U.S. Rep. Sandy Levin and Macomb County Area Officials Seek Repeal of ‘Gag Order’ in PA 269

Roseville Mayor Robert Taylor kicks off Thursday's news conference at the Roseville Fire Department.

Roseville Mayor Robert Taylor kicks off Thursday’s news conference at the Roseville Fire Department.

Numerous Michigan Municipal League members and mayors from the Macomb County area attended news conference in Roseville Thursday against the “gag order” provision in the newly enacted Public Act 269.

The highly successful, well-attended event at the Roseville Fire Department was organized and led by U.S. Rep. Sandy Levin, D-Royal Oak. More than 75 people attended and participants included current League board members Ed Klobucher, Hazel Park city manager, and Mark Vanderpool, Sterling Heights city manager, as well as past board member and Eastpointe Mayor Suzanne Pixley. Other communities represented included Roseville, Royal Oak, Ferndale, Center Line, Mount Clemens, Pleasant Ridge, Berkley, Huntington Woods, St. Clair Shores, Fraser, and Warren. View a list of other attendees here.

“Repeal the gag rule, there’s no other alternative. We don’t want a modification, we want repeal of that provision,” Levin stated at the start of the news conference. “Under the new law – passed under the cloak of darkness – within 60 days of an election, a school district or local government cannot tell people whether a millage question appearing on their ballot is a new tax or a renewal of a previous millage, or even tell residents what their tax dollars would be spent on should a millage be approved. The large gathering today of local leaders from various walks of life vowed to turn up the heat until this misguided provision is repealed.”

U.S. Rep. Sander Levin calls for a repeal of the gag order provision in PA 269.

U.S. Rep. Sander Levin calls for a repeal of the gag order provision in Michigan’s PA 269.

Many of the speakers were not just critical of PA 269 (formerly SB 571), but they were angry about it.

A provision in PA 269 places a gag order on ways local officials can communicate with their residents about local ballot questions within 60 days of an election. This gag order is currently in effect for those of with ballot items in the March 8 election and in all subsequent elections. There are more than 100 entities with ballot questions heading to voters March 8, including several in Macomb and Oakland counties.

Specifically, the law prohibits local governments from communicating with voters by giving them factual information about a ballot measure through radio, television, mass mailing or prerecorded telephone messages within 60 days of an election.

“I want this to be perfectly clear,” Klobucher said, “Public Act 269 is nothing less than an attack on the free speech rights of local officials in the state of Michigan to provide information to their constituents. I can’t say that strongly enough.”

Hazel Park City Manager Ed Klobucher speaks against Section 57 in PA 269.

Hazel Park City Manager Ed Klobucher speaks against Section 57 in PA 269.

Klobucher talked about the need to inform voters about a public safety funding consolidation effort involving the city of Hazel Park and the city of Eastpointe a year ago. Voters in both cities overwhelming approved in February of 2015 the creation of the public safety authority that included a 14-mill tax increase. The plan was essential in keeping the two communities financially afloat and out of potential emergency management, he said.

“I cannot believe that I’m standing here in 2016 in the State of Michigan and we are actually debating the issue in which the Michigan Legislature has curtailed our right to educate. Sorry I’m going to continue to open my mouth no matter what, come and arrest me. This is the United States of America and my voice will be heard and I hope all of your voices will be heard as well.”

Jessica Keyser, director of the Ferndale Public Library, spoke on behalf of her colleagues in Macomb and Oakland counties. Keyser, as quoted in the Macomb Daily, said the law violates the most-important responsibility of any librarian: to provide information to the public.

“If they want to throw us in jail, they’ll need to make more room in the cells,” she told the gathering.

Sterling Heights Mayor Michael Taylor addresses the crowd at Thursday's news event in Roseville.

Sterling Heights Mayor Michael Taylor addresses the crowd at Thursday’s news event in Roseville.

Sterling Heights Mayor Michael Taylor said there are already laws in place to prevent local governments from advocating on local ballot issues and a system .

“Last year, the Governor asked Mayors from across the state to share information with our residents about Proposal 1, which was a very complicated ballot measure,” Taylor said. “A few weeks ago, he signed a bill into law that would make me a criminal for doing what he asked me to do less than one year ago. This law needs to be repealed to allow us as public officials to give our residents unbiased, factual information about what we are placing on the ballot for their consideration.”

Macomb County Executive Mark Hackel was also very direct explaining he is “absolutely appalled that this legislature took away the basic Constitutional right of freedom of speech. … This needs to be repealed.”

The League and a coalition of organizations have supported bipartisan efforts to repeal the gag order provision in Section 57 of PA 269 and lift the limitations on local officials trying to give voters important, basic and factual information on local ballot issues.

Warren Mayor James Fouts speaks during the news conference.

Warren Mayor James Fouts speaks during the news conference.

View an article about the Thursday’s news conference by Detroit News reporter Christine Ferretti and another by the Macomb Daily’s Frank DeFrank. View a press release about the event from U.S. Rep. Levin’s office.

Please contact your lawmakers today and ask them to support bills that would repeal Section 57 of PA 269. Read the League’s issue summary, view sample resolutions from Michigan communities seeking repeal, and check out the joint statement calling for repeal, and Chris Hackbarth’s blog detailing League concerns. More.

Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at (810) 874-1073 and mbach@mml.org.

Sample Resolution, Issue Summary on PA 269/SB 571 Now Available for League Members

The Michigan Municipal League is leading a coalition of organizations in continued opposition to the campaign finance bill SB 571, which Governor Snyder signed January 6, and is now known as PA 269. As part of this opposition, the League is asking members to reach out to their state Representatives and Senators and ask them to repeal the new language in Section 57 of PA 269.

Please call your lawmakers today and go here to get their contact info. The League also has prepared an issue summary and sample resolution that your local governments can use in calling for the repeal. Go here for the summary/talking points and go here for the downloadable sample resolution. Please forward any resolutions on this issue that you adopt to mbach@mml.org so that we can log them and share them with other members.

Read more about this bill/law and why the League so adamantly opposes it from the League’s Chris Hackbarth here. View a joint statement from the coalition calling for the repeal here.

Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at mbach@mml.org and 734-669-6317.

 

League, other organizations to Governor Snyder: VETO SB 571

Dearborn Mayor and League President Jack O'Reilly discusses SB 571 during a news conference Tuesday, Jan. 5, 2016.

Dearborn Mayor and League President Jack O’Reilly discusses SB 571 during a news conference Tuesday, Jan. 5, 2016.

Governor Rick Snyder needs to veto a campaign finance bill sitting on his desk that would create more problems than it attempts to solve.

This was the basic message of a well-attended news conference Tuesday at the Michigan Municipal League’s Lansing office about SB 571. The event was covered by nearly a dozen members of the media, including radio, TV and print/online. Read articles about the news conference by: the Detroit News, mlive.com, WLNS TV, WILX TV, WOOD TVLansing State JournalDearborn Press & Guide, WSJM radio and subscription news services Gongwer and MIRS. The League’s call to veto this bill (read details about that here from the League’s Chris Hackbarth) seems to be gaining momentum.

Check out this Kalamazoo Gazette article that quotes some Republican lawmakers who are having second thoughts about approving SB 571. View this Detroit News editorial calling for a veto.

Rochester Hills Mayor Bryan Barnett discusses SB 571 during a press conference Tuesday,

Rochester Hills Mayor Bryan Barnett discusses SB 571 during a press conference Tuesday,

Senate Bill 571 passed the legislature on Dec. 16 with some extensive last-minute revisions. The bill expanded from 12 pages to 53 pages, but the very last change is the one we had the press conference about. Section 57 of the bill would prevent public entities from distributing information about a ballot proposal in the 60 days before an election.

“In other words, in the weeks before an election we cannot use a mailing or local cable outlets to inform our constituents if a measure will raise or lower their tax rate, who it will affect, if it will mean the community will be selling a piece of property and where it is, how a charter change will affect them or anything else,” said Dearborn Mayor Jack O’Reilly, president of the Michigan Municipal League.

The legislation would prohibit them from distributing public notices on television, radio and in print media explaining property tax proposals, school bond issues or changes in a local charter.

Orion Township Supervisor Chris Barnett discusses SB 571.

Orion Township Supervisor Chris Barnett discusses SB 571.

“Local officials wouldn’t even be able to tell voters in their newsletter who’s running for city council,” said League CEO and Executive Director Dan Gilmartin.

Chris Barnett, supervisor of Orion Township, said the legislation amounts to a “gag order” on election officials 60 days prior to an election.

“What (voters) expect me to do is answer questions and give them information,” Barnett said.

Republican Rochester Hills Mayor Bryan Barnett said perhaps this is a legislative effort to stop tax increases, but that’s not what’s going on in his community. Over the past four years the largely conservative community has considered seven ballot proposals, and only one was a tax increase.

To educate voters on these issues, which are often complicated, Rochester Hills government has turned to YouTube and public access television. But the line could get blurry.

“Can I respond to a resident asking a question about a millage proposal? It’s very concerning,” Barnett said.

A large amount of media attend a news conference Tuesday on SB 571 at the Michigan Municipal League's Lansing office.

A large amount of media attend a news conference Tuesday on SB 571 at the Michigan Municipal League’s Lansing office.

That concern was echoed by Democratic Dearborn Mayor John O’Reilly, who said “we’re going to end up having a lot of effort made trying to interpret where that line is.”

Governor Snyder has until Jan. 11 to decide whether to sign or veto the bill and already some Republican lawmakers who initially voted for it are saying it might be worth a second look. Read these articles from the Kalamazoo Gazette and Holland Sentinel that talk to lawmakers willing to revisit the bill.

The press conference was emceed by League CEO and Executive Director Dan Gilmartin and featured League Board President and Dearborn Mayor Jack O’Reilly, Rochester Hills Mayor Bryan Barnett and officials representing the Michigan Association of Counties, the Michigan Townships Association, Michigan Sheriffs Association, Middle Cities Education Association, Michigan Association of School Administrators, Michigan County Roads Association, Michigan Association of School Boards, Michigan Infrastructure and Transportation Association, and the League of Women Voters. View a joint press release about the issue.

League CEO and Executive Director Dan Gilmartin kicks off a news conference on SB 571.

League CEO and Executive Director Dan Gilmartin kicks off a news conference on SB 571.

We had nearly a dozen members of the media attend including two Lansing TV stations, Michigan Public Radio, Gongwer, MIRS, mlive, Lansing State Journal, Detroit News and Detroit Free Press.

The League along with numerous communities and organizations have sent letters to Governor Snyder asking him to veto the bill. Read the veto letters from: the League, Michigan Association of Counties, and the Michigan Townships Association.

You can register your opinion about this bill with Governor Snyder during regular business hours at (517) 335-7858. Or go to https://somgovweb.state.mi.us/GovRelations/ShareOpinion.aspx.

Excerpts from articles in mlive and Detroit News about the news conference were including in this blog post.

Matt Bach is Director of Media Relations for the Michigan Municipal League. He can be reached at mbach@mml.org and 810-874-1073.

Honors and Dark Stores and Roads, Oh My! 2015 Busy Year for League Legislative Staff

Dark Stores, speed limits, League honors and roads were just of the many issues and accomplishments involving the Michigan Municipal League in 2015.

Having Governor Snyder sign a long-term road funding package in November following the defeat of Proposal 1 back in May was certainly one of the top news stories out of Lansing this year. But there were many other noteworthy accomplishments in 2015 by the Michigan Municipal League’s advocacy staff in Lansing and Washington D.C.

Like in Michigan, Transportation funding was a hot topic in D.C. in 2015. A major long-term package, called the FAST Act, was signed into law by President Obama earlier this month. Of course, the major national issue in 2016 will be the President election and the League is an active supporter of the Cities Lead 2016 platform led by the National League of Cities.

Back in Michigan, 2015 ended with a flurry of activity in the state Legislature as lawmakers took on numerous bills in the final session days of the year. Click on these links below for details about some of the recent activity:

Other legislation positively impacting our municipalities include bills allowing for training reciprocity to out-of-state firefighters; cleaning up the personal property tax (PPT) implementation process; establishing the March Presidential Primary as the election date for local ballot questions; extending the Commercial Rehabilitation Act; expanding recreation authorities; clarifying rental inspections; and changing portions of the Mobile Home Commission Act. Some of these bills have been signed into law and others continue to move through the process.

There also are numerous other issues in which the League was very engaged 2015 and will continue to be into 2016 , including the Dark Stores Big Box property tax loophole; local speed limits; and a shift in broadband relocation costs to communities. View the League’s newly created web page dedicated to the Dark Stores issue.

In addition, throughout 2015 the League has been extremely active behind the scenes informing lawmakers about the state’s broken municipal finance system and the need for change. Stay tuned for more on this major initiative in 2016.

The final week of session for the Legislature wrapped up Thursday, Dec. 17. Read more on what happened and for all the latest legislative news be sure to frequently visit the League’s Inside 208 blog here.

Posted by Matt Bach on behalf of the League’s advocacy team.

Michigan Municipal League Members Testify on Dark Stores Issue; Call for Immediate Fix

Chris Hackbarth testifies on the Dark Stores issue along with MTA and MAC officials.

Chris Hackbarth testifies on the Dark Stores issue along with MTA and MAC officials.

(UPDATE: View the League’s new Dark Stores resource web page and view additional Dark Stores-related photos here).

The Michigan Municipal League and some of our members were given the opportunity to offer testify on the Dark Stores tax loophole issue Wednesday before the House Tax Policy Committee. If you’re not aware, the Dark Stores situation involving property tax appeals by Big Box stores like Meijer, Kmart and Wal-mart, is quickly becoming one of the most significant issues, with the biggest implications, facing Michigan communities.

The League testified along with the Michigan Association of Counties and the Michigan Townships Association. We discussed the impact from Dark Store theory of assessment and the need for immediate fixes. We told the committee about the manipulation of property values that big box retailers are perpetrating through the placement of negative use deed restrictions to devalue buildings that they vacate and then point to later on as support for lowering their assessments.

The League has organized a coalition of more than a dozen organizations to take on this issue. View our joint statement previously given to the committee. Along with organizing this coalition, the League is pursuing an aggressive public relations campaign to bring attention to this important issue through radio, television and print media. We urge your assistance with this effort by contacting your Senator and Representative to explain to them the importance of addressing these dark store appeals and restoring a fair and proper valuation system.

Three Rivers City Manager Joseph Bippus and Mayor Thomas Lowry testify on the Dark Stores issue Dec. 9, 2015.

Three Rivers City Manager Joseph Bippus and Mayor Thomas Lowry testify on the Dark Stores issue Dec. 9, 2015.

Among those testifying Wednesday were League members Three Rivers Mayor Thomas Lowry and City Manager Joseph Bippus. They testified as guests of State Rep. Aaron Miller, R-Sturgis. Lowry discussed the financial impact of the Dark Stores issue on his city.

“In the last two years we’re pushing well over $300,000 that we had to give back. We only have a $4.3 million budget, we’re approaching 10 percent of (our budget) just from the Dark Store theory,” Lowry told the committee. “We can get an employee for roughly 1 ½ percent of our budget. So for every 1 to 2 percent reduction in our general fund revenues we’re letting an employee go. This absolutely affects the level of services that we can provide to our citizens and our citizens still expect the same level of services.”

In essence, the Dark Store theory is a tax loophole scheme being used by Big Box retailers to lower the amount they pay in property taxes. Retailers such as Meijer, Lowe’s, Target, Kohl’s, Menards, IKEA, Wal-Mart and Home Depot across Michigan are arguing that the market value of their operating store should be based on the sales of similar size “comparable” properties that are vacant and abandoned (aka “dark”) and may not even be located in Michigan. In the last few years, the political appointees on the Michigan Tax Tribunal have upheld this “Dark Store theory” and cut property tax assessments in some cases by as much as 50 percent. This impacts local revenues and subsequently local services and making Michigan one of the only places in the country that assess Big Box retail buildings in this manner. These rulings have resulted in a loss of millions of dollars in tax revenue for local governments across Michigan and now other businesses – not just Big Box stores – such as drug stores and auto repair businesses are attempting to get their taxes lowered based on this same Dark Store argument.

Auburn Hills officials talk with State Rep. Jim Townsend following a House Tax Policy Hearing on the Dark Stores issue Dec. 9, 2015.

Auburn Hills officials talk with State Rep. Jim Townsend following a House Tax Policy Hearing on the Dark Stores issue Dec. 9, 2015.

 

Grand Rapids Attorney Jack Van Coevering, former chief judge and chairman of the Michigan Tax Tribunal, testified about how the Michigan Tax Tribunal rulings have resulted in Big Box property tax assessments that are significantly lower in Michigan compared to other states. He gave multiple examples:

  • In Michigan, Lowes stores are assessed at $22.10 per square foot. In Lowes home state of North Carolina, the same stores are valued at $79.08 per square foot.
  • In Michigan, Menards and Target are valued at $24.97 per square foot. In Menard’s home state of Wisconsin, the sames stores are valued at $61.23 per square foot.
  • Sam’s Clubs and Wal-Mart now average around $25.68 per square foot in Michigan. Studies of those buildings in the home state of Arkansas are being done, but Van Coevering said he expects them to be much higher than they are in Michigan.

Van Coevering added that most of the Big Box stores in Michigan used to be valued in the $55 range per square foot and now the amounts have been cut in half due to the Dark Stores theory.

Escanaba Assessor Daina Norden attends the Dark Stores hearing Dec. 9, 2015.

Escanaba Assessor Daina Norden attends the Dark Stores hearing Dec. 9, 2015.

The House Tax Policy committee led by Representative Jeff Farrington, R-Utica, first met on the issue Nov. 4 and scheduled this follow-up hearing after it ran out of time to hear from all those who wanted to speak on the issue. Officials from Auburn Hills were also present and attempted to testify and unfortunately time ran out and they did not get a chance to speak. Instead, they did submit written testimony and those in attendance were recognized by Chairman Farrington. I want to thank the Auburn Hills contingent for their continued work on this issue – Auburn Hills City Manager Thomas Tanghe; Assessor Michael Lohmeier; and City Attorney Derk Berkerleg.

Escanaba Assessor Daina Norden also attended the hearing.

The House Tax Policy committee has established a work group to study the issue. The work group, being led by House Tax Policy Committee Vice-Chair David Maturen, R-Vicksburg, includes representatives from all sides of the issue, including the League. Check out an in-depth radio video interview of Maturen discussing the issue and the workgroup.

Posted by Matt Bach on behalf of Chris Hackbarth, the League’s director of state affairs. Chris can be reached at 517-908-0304 and chackbarth@mml.org.

League, MAC and MTA Issue Joint Statement on Data Center Abatement Proposals

The Michigan House Tax Policy Committee today is reviewing legislative proposals regarding what’s known as the data center issue and the Michigan Municipal League along with other organizations have distributed a joint statement regarding the legislation.

The biggest concern from the League’s perspective is ensuring that local communities continue to have the ability to establish local control on both existing and future abatement requests, like we have for other economic development abatement tools. One proposal being shopped by the existing data center industry would eliminate the current language providing local involvement in future data center investments. The League and other local government groups are opposed to this effort. We feel it is appropriate to maintain local involvement in any decision on whether to abate taxes as an economic development tool.

Here is the full statement on this issue by the League, the Michigan Association of Counties (MAC) and the Michigan Townships Association (MTA):

As the representatives of local government in Michigan, our organizations ― which are responsible for delivering the daily services Michigan residents count on ― wish to clarify our position on the various legislative proposals being discussed for the data center industry, especially those surrounding exemptions for personal property.

Local governments welcome economic development/job creation in this state and our goal is to continue to partner with the state.

If the Legislature and administration believe exemptions for existing firms and their existing equipment in a broad-based personal property exemption framework are necessary, we recommend the exemption for current equipment follow the recently adopted system for small taxpayers and manufacturers, allowing the local units to be fully reimbursed for the reductions to their tax base.

In our view, though, a blanket, state-ordered exemption would be counterproductive, given the existing economic development tools available to reduce/abate personal property for business, including data centers.

Absent a reimbursement mechanism, language similar to what the House and Senate are considering, which allows for a local unit to approve/deny a request for an abatement of data center personal property, is vital. Allowing local governments to be involved in this way ensures they are able to evaluate the local budget costs against the benefits of proposed exemptions, just as they do with all other economic development decisions.

Adoption of one of these approaches will protect existing local government budgets and preserve the role of the local unit in these critical local economic development decisions.
Thank you for your consideration. We welcome the opportunity to discuss further should you have any questions.

– Chris Hackbarth, Director of State Affairs for the Michigan Municipal League
– Judy Allen, Director of Government Relations for the Michigan Townships Association
– Steve Currie, Deputy Director for the Michigan Association of Counties

Posted by Matt Bach on behalf of Chris Hackbarth. For more information contact Hackbarth at chackbarth@mml.org and 517-908-0304.

Michigan Municipal League Issues New Statement on Continuing Road Funding Discussion

Here is a new Michigan Municipal League media statement issued today regarding efforts to fix Michigan’s infrastructure:

Michigan Municipal League Urges Legislature to Pass a Long-Term Sustainable Roads Solution

The following statement is from Dan Gilmartin, executive director and CEO of the Michigan Municipal League. Gilmartin is commenting on the continuing efforts by the state Legislature to pass a package of bills aimed at fixing Michigan’s crumbling roads and bridges.

“The League continues to express our concerns with any road plan that relies on a significant amount of general fund revenue. The League believes a plan overly reliant on existing tax dollars could establish a foundation for potential cuts to local police and fire protection, higher education, economic development and our ability to attract and retain a talented workforce. We encourage continued discussion on this topic and stand ready to work with the Legislature and Governor on a long-term sustainable solution that invests in our road network, protects essential services, provides funding for transit and does not jeopardize future state and local government budgets.”

End of statement

Post from last week:

Last week, the Michigan House of Representative passed a plan that would raise $1.2 billion to fix Michigan’s infrastructure but relies heavily on state general fund revenue to do so. The plan could have a significant negative impact on the essential services that communities provide and Michigan Municipal League has consistently expressed our concern with any road funding solution that would jeopardize the long-term fiscal sustainability of this state and its communities.

This plan contains $600 million in new revenue and $600 million in general fund revenue. The new revenue would be generated by increasing gas taxes by 3.3 cents and registration fees by 40%. The plan does not identify where the existing revenue will come from. The following bills were included in the House passed plan.

HB 4370 provides $200 million in tax relief by expanding the Homestead Property Tax Credit and also dedicates $600 million of income tax revenue to transportation. Based on current revenue and expenditure projections, this statutory dedication of General Funds would not result in a year end budget deficit greater than $60 million in the next five years.

HB 4736  increases passenger and commercial vehicle registrations an average of $55 (40%) per vehicle. Additionally, the bill provides for plug-in hybrid ($30) and electric ($100) vehicle registration fee increases resulting in $400 million revenue increase for transportation.

HB 4614, HB 4616, and HB 4738 provide for gas/diesel tax increases to 22.3 cents (increase of 3.3 cents) per gallon by 2019. The bills also implement diesel parity, institute a process for taxing alternative fuels, and tie the fuel tax rate to inflation resulting in $200 million revenue increase for transportation.

HB 4610 allows townships contributing 50% or more to a road project to require an RFP for pavement projects over $50,000 and gravel projects over $25,000.

HB 4611 requires an RFP process for all projects over $100,000 for MDOT. Local road agencies must do RFPs for all projects, excluding routine maintenance, over $100,000, unless the local road agency affirmatively finds that they can do it themselves for less.

HB 4737 requires MDOT and local road agencies to secure warranties, where possible, for construction and preservation projects over two million dollars.

SB 414 creates an automatic rollback of the income tax rate equal to the amount General Fund revenue exceeds the rate of inflation annually. The rollback begins on January 1, 2019 and the tax cut level will be dictated by annual General Fund levels and will vary from year to year.

The League strongly encourages Governor Snyder and quadrant leaders to restart their conversation and come up with a road funding plan that does not jeopardize the essential services that Michigan citizens rely on, such as police and fire protection, schools and public transit.

Additionally, the League encourages members to contact their Senator and ask them to pass a long-term fiscally sustainable solution that relies more on new revenue and less on general fund revenue, does not jeopardizes future state budgets and does not negatively impact the essential services communities provide.

View a League media statement on the House roads plan.

John LaMacchia is a Legislative Associate for the League handling transportation, infrastructure, and energy issues. He can be reached at jlamacchia@mml.org or 517-908-0303.

Posted by Matt Bach, director of media relations for the Michigan Municipal League.

Local Election Results Show Voters Support Essential Local Services, Better Communities

A road crew fills potholes in Macomb County.

A road crew fills potholes in Macomb County.

(Go here to view the League’s statement on the defeat of Proposal 1)

Not to be lost in the overwhelming defeat of Proposal 1 last night, is the success of a majority of local ballot questions that also went before voters in Tuesday’s election. The results show voters are willing to support essential services that contribute to a community’s vibrancy.

According to MIRS news service, of the more than 200 questions on local ballots statewide nearly 70 percent were approved. In particular, voters approved nearly 70 percent of the school-related ballot proposals and 78 percent of the proposal dealing with police, fire and emergency services.

View a spreadsheet on the MIRS report here. View the subscription-only MIRS article on the local election results here under the headline “Local Road Proposal Approvals Go 50%, New Money Asks for Roads 21%”.

The local election results also are consistent with the findings of an EPIC-MRA survey co-commissioned by the League. The poll, which you can view here, found that a majority of voters who opposed the Proposal 1 ballot question want the Legislature to get back to work and pass a plan that fixes roads with new revenues. The poll shows that voters did not want major cuts to essential services that make our communities strong and liveable – namely schools, communities and police and fire protection.

Here are some key findings in the EPIC-MRA poll:

  • A strong majority of voters want the Legislature to get back to work now and fix the roads;
  • They are willing to support higher taxes as long as they money goes only to transportation, and they oppose major cuts to K-12 education, higher education, revenue sharing and healthcare to find the money to fix the roads;
  • 64 percent polled “strongly favor” or “somewhat favor” a 1-cent increase in the state sales tax to fix the roads, as long as the new revenue from the penny increase is guaranteed in the constitution for roads, bridges and transportation;
  • 88 percent oppose “major cuts” to K-12 education to pay for roads;
  • 76 percent oppose “major cuts” in revenue sharing for local communities;
  • 63 percent opposed “major cuts” to universities and community colleges;
  • 85 percent support the Legislature working all summer to pass a new roads plan.

The poll also found that the Legislature’s job approval rate sunk to just 27 percent (with only 1 percent giving the Legislature an “excellent” rating). That’s reflected in the constant complaint we’ve heard that the Legislature should have come up with a road solution itself instead of sending it to the voters.

A fire truck makes an emergency run over crumbling roads in Macomb County.

A fire truck makes an emergency run over crumbling roads in Macomb County.

Of note, the poll found that Governor Snyder’s approval rating is an all-time high – 52 percent positive job approval. The Governor has been an exceptionally strong leader on fixing our roads and the League was especially pleased with his statement issued following Proposal 1’s defeat last night. The statement, with the subheadline, “A plan must improve roads without hurting schools, communities,” explains that fixing the roads remains a top priority for the governor and that a new solution should be one that gives “Michigan residents the safe roads they need and deserve and helps our growing economy.”

The League pledges to continue working with governor and the Legislature on a new plan that will fix our roads and bridges while protecting those services essential to Michigan’s families, communities and economy. Like Michigan voters, we do not believe the state can cut our way to prosperity.

There will be much debate in Lansing in the coming days, weeks and possibly months over the next step to fixing our roads. Please stay tuned to this Inside 208 legislative blog for the latest developments. We may also call on you as various plans surface and gain momentum. So please be ready to contact your lawmakers when asked.

Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at mbach@mml.org and (734) 669-6317.