MML President Mayor Wild, Fellow Board Members Fighting for Michigan Communities

 

MML President and Westland Mayor Bill Wild (second row left) attends a Zoom meeting with U.S. Secretary of the Treasury Janet Yellen (bottom of frame) earlier today.

Michigan Municipal League Board President Bill Wild, mayor of Westland, and other board members were actively fighting on behalf of Michigan communities in recent days on a number of fronts. There was so much going on that we’ve decided to post this blog detailing it all.

Earlier today, Mayor Wild met with U.S. Secretary of the Treasury Janet Yellen about the need for a new federal stimulus package that provides direct, flexible support for communities battling COVID-19 on the frontlines. While this meeting that wasn’t recorded, we are able to share on social media how successful the League Board President Wild felt the meeting was. Here’s how Mayor Wild summarized the meeting for us:

“I think today’s meeting was very productive and remarkable in the Secretary’s understanding of the effect the pandemic has had on Local Government and the importance of allowing flexibility in the utilization of this funding.

I left feeling that the Administration was fully committed to moving this COVID-relief funding to communities very quickly and was encouraged that the line of communication will remain open to the White House post pandemic as we work to reopen our local economies, get Americans back to work and begin to rebuild the nation’s infrastructure.”

Westland Mayor Bill Wild, MML board president, attends a Zoom meeting with U.S. Secretary of the Treasury Janet Yellen earlier today.

The League is very appreciative of Mayor Wild’s work on our members’ behalf in trying to secure a COVID-related stimulus package that provides direct, flexible funding to local governments of all sizes from around the nation.

The meeting between Secretary Yellen, Mayor Wild and several other city leaders was requested by the White House through the National League of Cities. The NLC reserved a spot for the MML and we secured Mayor Wild’s participation. Other officials on the call included Council Member Kathy Maness, Lexington, SC, NLC President; Mayor Vince Williams, Union City, GA, NLC First Vice President; Irma Esparza Diggs, of NLC; Mayor Nic Hunter, Lake Charles, LA; Mayor Walter Eccard, Shallotte, N.C.; Mayor Patricia Branson, Kodiak, AK; and Mayor Charlene Lovett, Claremont, N.H.

Mayor Wild represented not just Michigan on the call, but the entire Midwest. The League provided Mayor Wild with talking points that he was able to share with Secretary Yellen. The current $1.9 trillion COVID-19 stimulus package being supported by President Biden includes a $350 billion emergency aid reconciliation package that provides flexible aid for our states, cities, counties, tribes, and territories. This package is on track to be approved in Congress, but the strong advocacy effort by the League and the NLC to garner support continues.

Helping Our Members in Various Ways

But Thursday’s meeting wasn’t the only way Mayor Wild and other MML board members were fighting for our membership in recent days.

Sunday’s Michigan Matter program featured League Board President William Wild, mayor of Westland, and League Board Vice President Deirdre Waterman, mayor of Pontiac. as well as the mayors of Rochester Hills and Warren.

On Sunday, both Mayor Wild and League Board Vice  President and Pontiac Mayor Deirdre Waterman appeared on the Michigan Matters news program on CBS Detroit. You can watch it here.

They were joined by fellow mayors Bryan Barnett of Rochester Hills and James Fouts of Warren to talk about the impact of COVID-19 on their communities.

Anything League members can do, such as media interviews like this one, to raise awareness over the need of direct funding for our communities battling the coronavirus is vital in getting the next stimulus package across the finish line.

Organizational Sign-On Letter Still Open

And here’s another way League members can help. As NLC and the MML prepares for the COVID Relief Package to head to the Senate – the coalition we are working with has reopened the sign-on letter previously distributed. Over 320 groups have already signed! 

 

THIS LINK contains the letter; as well as a sign up form. 


If you are a member of an organization that supports this effort, please have the organization’s representative sign the letter. If you work with other groups who might want to sign, we’d love to have them as well.


As a reminder, the NLC is not seeking individual government entities to sign this letter at this time – only organizations. 

TwitterStorm

The MML and many of our supporters also joined in the NLC’s TwitterStorm event today. In this social media campaign, people were encouraged to use the hashtags #AmericaRescuePlan and #AmericanRescuePlan to keep the pressure on federal lawmakers to pass the new stimulus plan. Here are some of the Tweets by the NLC and shared by the League and our staff:

  • Since the onset of #COVID19, frontline heroes have worked to keep us healthy and safe. Join us in supporting the #AmericanRescuePlan for the 93,000 first responders nationwide as we continue to move America’s communities forward.

  • Thank you Secretary @JanetYellen for taking the time today to connect with NLC! We look forward to continue to work alongside you & @USTreasury to build intergovernmental partnership, address residents’ critical needs & help communities respond, recover & rebuild #LeadingTogether

  • It is essential that the House passes this relief package this week so that the Senate to do the same. Tweet your Representative TODAY and let them know that their vote for the #AmericanRescuePlan will support our communities and drive the economy.

  • Municipalities face a more dire situation than states in the pandemic recovery. Although state and local relief have been grouped together in a recovery bill, the true impact of the pandemic varies between the local and state level. #AmericanRescuePlan

Live with the League

But wait, there’s more! Mayor Wild’s work also included joining our MML team on Live with the League conversation that took place Monday. He talked about his work in advocating for the new federal stimulus package that provides direct flexible funding for communities. Mayor Wild was joined by Mike Wallace of the National League of Cities and our Lansing team. It was a great  discussion n so please check it out here in case you missed it.

Mayor Gawron Testifies

This was also a busy this week on our behalf for Muskegon Mayor and MML Board Member Stephen Gawron. Mayor Gawron helped us out recently by testifying in a state House committee in support of Governor Whitmer’s budget proposal that called for $70 million to assist cities that have a local income tax.

Muskegon is among 24 Michigan cities that collect a local income tax and these communities are facing substantial revenue losses due to COVID-19. Mayor Gawron explained the impact on his city and why this is an important issue to be addressed in the upcoming state budget.

The mayor was also active on social media on this topic tweeting this:

Thank you @gregvanwoerkom and @RepSabo92 for the opportunity to testify as Mayor @cityofmuskegon advocating for aid and relief for Michigan’s 24 income tax communities so we can serve our neighbors. @WatchMuskegon

Thank you Mayor Gawron!

Other Lansing Testimony

In addition to having members testify, our League staff also testified in Lansing in recent days. Chris Hackbarth testified this Wednesday before House Communications and Technology committee about proposed cuts to broadband and the personal property tax. John LaMacchia testified last week in front of the House Transportation Committee on speed limits. John spoke in support of HB 4014, which provides decision-making power to #Michigan communities in setting speed limits. For more information on the bill go here: http://bit.ly/37lELlQ.

Whew! A busy many days!! Let’s keep the pressure on to help our communities get state and federal COVID support.

Governor’s Budget Recommendation Includes Key Items For Cities

Governor Whitmer released her budget recommendation for the upcoming Fiscal Year 21-22 budget cycle this morning and a number of items that the League has actively been advocating for were included in this morning’s announcement.  A full detail of the Executive Budget for FY2022 is available here.

Following last month’s Consensus Revenue Estimating Conference that revealed a rosier than expected state revenue picture, the state finds itself in a position where it has additional, one-time revenues from the prior budget year available to expend.  These revenues, coupled with other federal revenues that were made available at the end of 2020 provided the Administration with an ability to make a number of one-time investments across the state budget, including a $175 million partial restoration of the $350 million Budget Stabilization (Rainy Day) Fund withdrawal that was part of last year’s budget balancing efforts/

As part of today’s announcement, the following items are of primary interest to League members and will be actively supported by Municipal League staff:

  • City Income Tax Relief – $70 million of one-time General Fund dollars are recommended to provide relief to the 24 city income tax communities facing immediate revenue losses due to the pandemic.  These dollars are recommended to be spread proportionally to the 24 cities based upon their income tax revenues from 2019, with no city eligible for more than $25 million.
  • Revenue Sharing – the budget recommends a 2% increase in statutory revenue sharing, resulting in an additional $5.2 million for cities, villages, and townships.  This statutory increase is coupled with an estimated increase of 1.8% ($15.4 million) in per capita Constitutional revenue sharing payments.
    • Additionally, today’s proposal recommends creation of a new grant program in Treasury that would provide $5 million for first responder recruitment and training grants to local units of government.
  • Infrastructure – the Governor is recommending a series of investments in infrastructure spending:
    • $300 million of one-time funding targeted at approximately 120 local bridges in need of rehabilitation or replacement, including 59 that are currently closed to traffic. Construction on these bridges would be expected to begin in spring of 2022.
    • $290 million recommended for investment in wastewater protection infrastructure grants using remaining state bonding authority that focuses $235 million of that amount on sanitary sewer overflow prevention, $20 million towards removing direct and continuous raw sewage discharges, and $35 million to eliminate failing septic systems.
    • $40 million of one-time General Fund dollars are proposed for High Water Infrastructure Grants, with $30 million of that amount directed at specific infrastructure projects and $10 million designated for local government planning activities.  The infrastructure grants will provide funding for projects to address issues including flooding, coastal/shoreline erosion, storm water management, and others.
    • $15 million for the dam safety emergency fund.

Additional details, briefing, and presentation materials can be found here.

With today’s budget presentation, Appropriations subcommittees in both the House and the Senate will begin their review of the Governor’s recommendations.  Initial deliberation on the budget is expected to continue through the legislative spring break at the end of March, until concluding prior to the summer recess.  League members are encouraged to contact members of both Appropriations committees to urge their support for these measures.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Treasury Department Seeking Input on Local Govt Cash-Flow Needs

Late yesterday, the Michigan Department of Treasury circulated the following email to local units of government requesting feedback on potential cash flow concerns local governments may be anticipating based upon current state and local economic conditions.

The Michigan Finance Authority (MFA) provides effective, low-cost options for financing to municipalities. MFA is currently exploring possibilities to assist local governments that might need to access cash due to declining revenues during the current state of emergency, related to COVID-19. We are trying to determine if there is interest in a statewide pool of tax anticipation notes to provide near term cash flow for participants.

The program would be offered through the Local Government Loan Program and we are looking for feedback on or before May 1, 2020. If you believe your local government may be interested in participating, please e-mail your anticipated cash flow needs  from May through October to TreasMFA@michigan.gov. This will help us gauge the level of interest and the potential size of borrowing. MFA staff will then contact you to discuss your specific needs based on your response. 

For more information on the Michigan Finance Authority please visit: https://www.michigan.gov/treasury/0,4679,7-121-1753_55952—,00.html

For more information on the Local Government Loan Program please visit:

https://www.michigan.gov/treasury/0,4679,7-121-1753_55952_91251-5605–,00.html

 

Along these same lines, the Federal Reserve announced the creation of the new Municipal Liquidity Facility.  This new entity was authorized under the recent federal stimulus efforts and will allow the Fed to purchase up to $500B in short term notes directly from states.  States are then allowed to use those proceeds to support additional counties and cities within that state.

According to guidance published by the Federal Reserve:

An Eligible Issuer may use the proceeds of Eligible Notes purchased by the SPV to
help manage the cash flow impact of income tax deferrals resulting from an extension of an income tax filing deadline; potential reductions of tax and other revenues or increases in expenses related to or resulting from the COVID-19 pandemic; and requirements for the payment of principal and interest on obligations of the
relevant State, City, or County. An Eligible Issuer may use the proceeds of the notes purchased by the SPV to purchase similar notes issued by, or otherwise to assist, political subdivisions and instrumentalities of the relevant State, City, or County for the purposes enumerated in the prior sentence.

League members are encouraged to respond to the MI Department of Treasury survey so that the Administration can have a clear picture of the budget impacts local units of government are facing.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Federal Update – Support Needed for Add’l Local Government Relief

In working with our partners at the National League of Cities, there has been a flurry of activity this week on the implementation efforts surrounding the recently passed CARES act and new federal proposals to address some of the shortcomings for local governments within the federal stimulus efforts and promoting significant additional federal stimulus investments.

While nothing has been agreed upon for new additional federal spending, momentum appears to be growing for an expansion of the small business Payroll Protection Program (increasing spending from the current $350M to $600M) and coupling that expanded small business support with a significant additional boost in support for state and local governments (increase of a proposed $150B).  Speaker Pelosi and Senate Minority Leader Schumer are leading the charge on this negotiation for improved support for state and local governments, insisting that any swift action to increase small business spending be coupled with the additional state and local support.  The current $150B Coronavirus Relief Fund included in the CARES act is still awaiting some key guidance to be issued by Treasury to clarify eligible expenses that states and local governments can claim under that fund and these federal dollars are not scheduled to be released to the states until April 24th.

Also this week, Representatives Neguse (CO-2), Levin (MI-9), Luján (NM-3) and Malinowski (NJ-7) introduced the Coronavirus Community Relief Act (H.R. 6467), a bill to provide $250 billion in funding to all local governments with fewer than 500,000 residents.  The CARES Act only provided the 36 largest cities in the nation with access to direct federal aid. This bill creates a path to receive direct federal aid for the other 99.82 percent of municipalities that were shut out of the CARES Act.

In addition to providing a separate $250 billion fund, the Neguse/Levin/Luján bill makes three significant improvements on the CARES Act.

First, the Coronavirus Community Relief Act allows units of local government to use allocated funds to cover losses. Section 601 of the CARES Act restricts use of funds to cover “necessary expenditures.” Cities, towns, and villages will need federal assistance to persevere through the hardship resulting from rising costs and decreasing tax revenue and fees due to COVID-19. This change from the CARES Act will help local communities deal with revenue shortfalls that will happen as a result of the COVID-19 crisis.

Second, the Coronavirus Community Relief Act provides the necessary flexibility on how allocated funds can be used. If one city needs more funds that it is allocated while another city does not need all of its allocated funds, funds can be reallocated among cities within a state to ensure funds are put their best use. This is a change from the CARES Act.

Third, the Coronavirus Community Relief Act changes the rule regarding when a city, town, or village must certify in order to receive funds. Instead of placing a burdensome “shot clock” by which cities, towns, and villages must apply, this legislation allows more time for an applicant to request funds. Smaller cities and towns are facing unprecedented challenges and could be facing layoffs. In this environment, a “shot clock” to apply puts unneeded pressure on smaller communities in crisis.

Michigan Municipal League members are urged to contact their Member of Congress to urge them to support and co-sponsor this important piece of legislation to support local governments in Michigan.  While HR 6467 has already been introduced, cosponsors can still sign on to the bill by reaching out to Bo Morris in the office of Rep. Joe Neguse at Bo.Morris@mail.house.gov.

NLC is also working closely with House member Brad Schneider of Illinois, John Katko of New York, and T.J. Cox of California, on a bill to provide tax credits to governmental employers who provide paid sick leave and paid emergency family leave under the Families First Coronavirus Response Act (FFCRA). Please also include this piece of legislation in your conversations with your Members of Congress and urge them to contact Jessica Bernton (Jessica.bernton@mail.house.gov) with Rep. Schneider, IL to sign on. The deadline is Monday, April 13th at noon for co-sponsors for this bill.

 

An additional measure within the CARES act was also kicked off this week by the Federal Reserve.  According to NLC, the Federal Reserve announced it would purchase $500 billion of short-term notes (less than 2 years in maturity) under  the Municipal Liquidity Facility designed to provide direct access to all States, cities with a population of greater than one million residents (10 cities), and counties with more than two million residents (15 counties). Territories are excluded.

The primary purpose of this facility is to aid the cash crunch that many states will feel from Congress pushing back the tax filing deadline to July 15th. However, the second enumerated use for the eligible use of proceeds says that these funds can be used for “potential reductions of tax and other revenues or increases in expenses related to or resulting from the COVID-19 pandemic.”  While on its surface, the liquidity facility may only appear to be available to 75 Eligible Issuers-the 10 largest cities, 15 counties, and 50 states, however, the final line of the eligible use of proceeds says that “Eligible Issuer may use the proceeds of the notes purchased by the [fund] to purchase similar notes issued by, or otherwise to assist, political subdivisions and instrumentalities of the relevant State, City, or County for the purposes enumerated in the prior sentence.” Allowing states to purchase notes from their own political subdivisions makes the distribution of funds more efficient.  The Federal Reserve did not issue a start date for the facility, but the purchasing will cease on September 30, 2020.

The League is working with our partners at the Michigan Department of Treasury to investigate implementation of this new program and many other programs created within the CARES act that could benefit municipalities during this pandemic.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Talent, Taxes, and Roads, Oh My!

Governor Snyder recently unveiled his “Marshall Plan” for talent. It’s designed to combat the more than 811,000 career openings that will need to be filled through 2024 in fields that are facing a talent shortage. The plan calls for a $100 million budget injection for a five-year work plan to go toward a mix of existing and new programs, as well as investments into scholarships, teachers, and career exploration for students.

The Governor and House and Senate leadership quickly came together following the recent budget presentation to settle the outstanding personal exemption income tax conflict that arose as a result of the new federal tax reforms.  Senate Bills 748 and 750 disconnect Michigan’s state income tax personal exemption from the federal income tax to ensure that Michigan’s state-level personal exemption is not inadvertently eliminated by the federal action.  Additionally, the Legislature agreed to an increase in the personal exemption up to $4900 by 2021…reducing GF/GP revenue by about $135 when fully implemented. No other proposed state tax credits or reductions were included, however the Governor did agree with the Speaker to speed up the phase out of the Driver Responsibility Fee program by eliminating these assessments at the end of the current fiscal year and forgoing the standard $100 driver license reinstatement fee for individuals with any remaining fines. These bills were all signed by the Governor this week.

State Affairs staff had a chance to testify before the House Local Government committee, as they reported the four-bill package (SBs 590-593) promoted by the League to address the unintended consequence on local debt limits from the new Personal Property Tax law.  This package is now awaiting final action before the full House of Representatives.

We were also able to testify in support of legislation that would reimburse local units for any costs related to the veteran tax exemption. The veteran exemption reimbursement hearing was testimony only, but the chair has indicated his support for the concept and additional committee deliberation is expected this year.

Final legislative action was also completed on SB 393, the Tax Increment Financing (TIF) reporting legislation that the League has worked on in conjunction with Sen Ken Horn. This bill is now on its way to the Governor for his signature.

The Senate Finance committee took quick action on a new bill, supported by the League, that would extend the sunset date for local units to use bonds to fund outstanding pension and/or OPEB obligations.  The current authorization is set to expire at the end of 2018.  Senate Bill 838 would extend the sunset through the end of 2020.  This bill is on the Senate floor awaiting further action.

Treasury distributed their anticipated “waiver” guidance yesterday to the communities that have been preliminarily designated as underfunded according to the newly implemented pension/OPEB reporting requirements.  Those communities that have been identified and contacted by Treasury will now have 45 days to submit a waiver application, should they choose to do so.

Finally, the House and Senate have given a thumbs-up to pump an additional $175 million in one-time General Fund money for road improvements this fiscal year (lapsed revenue from the most recent budget year). The Governor had announced this move as part of his upcoming budget year proposal, and the Legislature is advancing the proposal within the current year in an attempt to get these dollars into projects this construction season.  This move will result in an extra $38 million in one-time funding for cities and villages.  This funding is part of the current year supplemental appropriation, House Bill 4321, and is now on its way to the Governor for his expected signature.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

 

 

 

 

 

 

Legislative Highlights To Kick Off The New Year

OPEB – Since the passage of the OPEB package, Treasury has been working with our staff to develop the reporting requirements necessary to begin implementing the new law. That reporting guidance was recently published, with an initial deadline for municipalities to respond by the end of January. Additional guidance is yet to be developed by Treasury on the waiver and corrective action plan processes. The League will continue working with the Department to ensure that the new law is implemented in a thoughtful and efficient way.

Consensus Revenue Estimating Conference – The main event for the first week following the holiday recess was the Consensus Revenue Estimating Conference on Thursday. The final consensus on revenues didn’t reveal anything unexpected—maintaining steady, slow growth for the coming years—and these numbers will serve as a baseline for the Governor’s upcoming budget presentation in early February.

Federal and State Income Tax Conflicts – One item that is virtually guaranteed to be addressed this month is the purported conflict between the recently passed federal income tax reform and Michigan’s state income tax personal exemption. The Governor is proposing to amend the existing state income tax personal exemption to ensure that the changes at the federal level do not cause an additional tax burden on residents at the state level. In addition to maintaining the existing state personal exemption, the Administration’s proposal would increase the personal exemption from the current $4,000 to $4,500 in three years.

Both the House and Senate are now moving competing proposals to expand on the opening the Governor has provided, with  the Senate moving Senate Bill 748 unanimously over to the House to expand the personal exemption to $4700 by 2020 and increasing the inflationary factor for years beyond 2020 up to a reported $5000. A companion bill that will move next week would also create a child/dependent tax credit similar to the feds.  Combined, these senate bills (SB 748-750) are estimated to reduce state tax revenue by approximately $225-250 million when fully phased in.

The House proposal was just introduced this week, as well.  House Bills 5420-22 would also preserve the existing state personal exemption and then expand the exemption beyond the Governor’s proposal, to $4800 for tax year 2020 and beyond.  Additionally, the House proposal includes a separate bill that would provide a $100 refundable tax credit for seniors above 62 years of age.  Combined, the House package would reduce state revenues by approximately $350 million.

Both packages also include a technical amendment to the Uniform City Income Tax Act to prevent any similar conflict with the personal exemption elimination at the federal level.

The State Treasurer and Budget Director have both cautioned against additional tax relief as the state already has over $2 billion in tax cuts still scheduled to take effect and other budget pressures, like road funding and Medicaid cost increases that will consume all of the state’s expected revenue growth for the foreseeable future. Conversations between the Governor, Speaker and Senate Majority Leader continue as they negotiate on a final amount of tax relief and under which format. We should know more by next week.

Veto Override – In a surprising move, both the House and Senate voted this week to override the Governor’s veto of the acceleration of the sales tax on the difference proposal for trading in used cars or boats.  This override vote comes just as the Detroit International Auto Show is set to debut and is the first override of a Governor’s veto in 16 years and only the fourth in modern history.

Senate Bills 94 & 95 move the currently scheduled phase out from 2039 to 2029 at a cost the House Fiscal Agency estimates at $300 million spread out over the coming years. Gov. Snyder had originally vetoed these bills, calling the proposal “not fiscally prudent” given the budget pressures the state faces in the next few years..

Both chambers voted overwhelmingly to override this veto on Wednesday, with the Senate’s override vote being unanimous.  Interestingly, the last veto override was one that was championed by the League to restore former Governor Engler’s veto of revenue sharing in 2002.

State of the State – The Governor will present his final State of the State address to a joint session of the Legislature on Jan. 23. Infrastructure and talent development are themes he is likely to continue promoting.

Events – The State & Federal Affairs and Member Engagement teams will be joining League member communities at the National League of Cities Congressional City Conference in March.  Registration for this conference is still open and members are encouraged to sign up and help share our message with Michigan’s congressional delegation.  The State & Federal Affairs team will also be providing legislative updates around the state this month, presenting to the South Oakland Mayors Association, the Michigan Municipal Treasurers Association Winter Workshop, the Michigan Municipal Executives Winter Institute, and at the Michigan Association of Municipal Attorneys winter retreat.  Team members are also serving as panelists talking medical marijuana at an event hosted by Saginaw Future, Inc. and meeting with the Portland Downtown Development Authority this month.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Congress Prepares for Final Vote on Tax Plan

The joint House-Senate conference committee announced their final reconciliation of the federal tax reform proposal on Friday.  Each chamber is expected to vote on the conference report early this week, where the bill is expected to receive enough support to make it to the President’s desk.

The League has been working with the National League of Cities and our delegation throughout the fall to advocate for changes to a number of provisions within the overall reform proposal that could impact communities in Michigan.  While a number of changes that we advocated for have been included in this final version, there are still areas of concern for Michigan municipalities.

After an initial review of the 503-page bill by NLC staff, the conference report on the Tax Cuts and Jobs Act (H.R. 1) does the following;

  • Publicly Issued Tax-Exempt Municipal Bonds: Preserved throughout the whole process.
  • Private Activity Bonds (PABs): Conference report sided with Senate version and preserved PABs.
  • Advance Refunding (ARs) Bonds: Conference report had no difference to reconcile. Tax exemption for interest earned on ARs would terminate on 12/31/2017.
  • New Markets Tax Credits (NMTC): Conference report sided with Senate version and preserved NMTC until their authorization normally expires.
  • Historic Tax Credits (HTC): Conference report sided with the Senate version and preserves the 20% credit for rehabilitation costs to certified historic structures, but eliminates the 10% credit for pre-1936 structures.
  • State and Local Tax (SALT) Deduction: Conference report provided a new modification to SALT. Taxpayers would be able to deduct up to $10k in property taxes combined with either income or sales taxes.  

House Actions: The House Rules Committee is expected to consider the bill on Monday (12/18) and possibly vote on it by Tuesday (12/19).

Senate Actions: The Senate aims to hold 10 hours of debate and a vote on Wednesday (12/20).

A continued thanks to all of you who have sent letters, called members of Congress and helped make sure city priorities have not been ignored.

Feel free to reference www.nlc.org/TaxReform for more information, or reach out with any questions or concerns. Stay tuned.

 

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

 

 

Congress Releases Details of Federal Tax Reform Proposal

Congress released the following details of the proposed federal tax reform legislation:

– Ways & Means Cmte Tax Reform Highlights

– bill text  https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf

Following NLC’s lead, MML staff have been talking with Michigan delegation members about preserving the State & Local Tax deduction (SALT) within the federal tax code.  The version of the bill released today retains a portion of that deduction for taxpayers to continue deducting local property taxes, but eliminates the deduction for local income taxes.

NLC leaders released the following statement in response to today’s announcement: http://www.nlc.org/article/tax-reform-bill-an-affront-to-local-control

You can view NLC’s State and Local Tax Deduction resource page here: http://www.nlc.org/SALT.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and chackbarth@mml.org.

Contact Your State Reps Today and Tell Them to Oppose Income Tax Elimination Bill

Act now logo new-320

***UPDATE:   

The Michigan House just adjourned session for the day (Tuesday) after adopting a substitute version H-3 for HB 4001 that would reduce the income tax rate from 4.25% down to 3.9% by January 1, 2021 and stopping at that point.  Following hours of caucus and floor discussion, the new version was introduced and adopted on the House floor with no explanation of the new version.  The House Fiscal Agency analysis of the new proposal pegs the state’s General Fund loss in the first year and $195 million and progressing upwards to $1.1 billion in FY2021-22.  The H-3 version of the bill is now on 3rd reading in the House and has been listed for action on TODAY’s (Wednesday’s) House calendar. So it is just as important to contact your Reps today and ask them to oppose the sub version of HB 4001. Governor Snyder came out with a statement last night opposed to the revised bill (he was also against the original bill).

Legislation being considered in Lansing would eliminate the state income tax, potentially blowing a massive hole in our budget and destroying vital programs and services communities and your residents rely on every day. Let’s face it, nobody likes to pay taxes. But we need the services those taxes support – police and fire protection, road maintenance, street lighting, drinking water, libraries, parks, and the list goes on and on.

This plan to eliminate the state income tax is moving quickly and we need your help to oppose it. On Feb. 15, a state House committee passed out HB 4001, which would cut $680 million from the state budget in the first, partial year alone. This idea is poor fiscal policy that would harm the state’s future ability to provide critical services for its residents, communities, and businesses. There is no question that with revenue reductions of that magnitude, the remaining statutory revenue sharing payments would be at risk and any future restoration of the cuts from the past decade would be a virtual impossibility.

Proponents of the tax cut say it would spur economic growth and allow people living paycheck to paycheck to see meaningful tax relief and allow them to buy more. A recent Midland Daily News editorial disagreed and broke it down like this: “But the reality is that is a bunch of bunk. A person making $50,000 a year would see a tax cut of $175 — about $3.37 per week (48 cents a day). That’s hardly going to bail out people living paycheck to paycheck and is a very minimal increase in buying power.”

Governor Snyder and Michigan Treasurer Nick Khouri also have spoken against the proposal and recent polling reveals little support for an income tax cut from voters, regardless of political party or geography, and almost no support once voters are told of the impact of the repeal. The poll found 74 percent of people oppose the idea of eliminating the income tax without a plan to replace revenue lost by the state.

Michigan communities have already lost $7.5 billion in revenue sharing dollars since 2002. This is money that should have gone to local communities, but instead state leaders kept the funds for their own budget priorities. Further risking cuts in revenue sharing, coupled with the dramatic declines in property tax revenues from the Great Recession, will only further devastate local governments. We should be talking about growth, not more cuts. With Michigan’s economy finally recovering, we should be looking for ways where our communities can share in that recovery, not push them further into crisis.

Please contact your State Representative today (look up their contact information by clicking here) and tell them to oppose HB 4001.

Matt Bach is director of media relations. He can be reached at mbach@mml.org.

City Income Tax Communities Oppose Senate Changes

The Michigan Senate voted Tuesday, Dec. 15, 2015, to discharge House Bill 4462 from the Senate Finance committee and then inserted language that many of the 22 income tax communities have weighed in on opposing. Despite the opposition, the Senate passed it late Tuesday night on a vote of 21-17.

The new language added by the Senate would allow a “voluntary” written agreement between an income tax levying city and an owner of property located in the city on behalf of a qualified employer or with a qualified employer who would make an advance payment of the withholding tax that would normally be deducted from employee compensation and remitted to the city, equal to the nonresident rate for the duration of the written agreement.

The Michigan City Income Tax Administrators Association, representing all 22 income tax cities met last week to discuss this proposal and subsequently, the 14 cities who were represented at the meeting passed a unanimous resolution opposing this proposal. Those cities represented at the meeting were: Grand Rapids, Muskegon, Pontiac, Saginaw, Lansing, Springfield, Jackson, Big Rapids, Lapeer, Ionia, Portland, Detroit, Battle Creek and Flint.

Beyond the grave concerns over the administrative burden that this type of concept would place on a city, there were numerous questions raised about the ability to administer such an agreement, where there is no model to follow and no other similar allowance for treatment of income tax and the federal, state, or local level.  Negative consequences for the taxpayer, possible loss of revenue for the city, and an inability to ensure accountability or compliance were among many of the reasons cited in opposition to this idea.

The League is working with these communities to oppose this legislation now that the bill has been returned to the House.

Chris Hackbarth is the League’s director of state affairs. He can be reached at 517-908-0304and chackbarth@mml.org.