Legislative Session Reaches Mid-Point

The Michigan House and Senate wrapped up their work last week for the calendar year as the mid-point of the current 2021-22 legislative session.  Following the holidays, the legislature will return to session on Wednesday, January 12, 2022 to resume action.  All legislation introduced during 2021 remains eligible for action through the end of 2022.

Year-end legislative activity centered on the book closing supplemental (HB 4398) and the passage of the Economic Development package (SB 769,771 and HB 4082, 5603) that the small taxpayer PPT expansion was tied into (HB 5351).

The book closing supplemental appropriated nearly $850 million between Fiscal Years 20-21 and 21-22 across a variety of state departments.  Of main interest to League members was the appropriation of $140 million in federal emergency rental assistance funds for rental and utility assistance to preserve housing and avoid eviction, almost $200 million in non-discretionary ARPA funds through MDOT for airports and transit agencies with nearly $170 million of that appropriation aimed at the state’s primary airports, and $140 million of FEMA funds to the Michigan State Police for emergency and disaster response and mitigation.

The Economic Development package (SOAR – Strategic Outreach and Attraction Reserve) was signed by the Governor this week and has been outlined as follows:

  • $1 billion for two new MEDC job creation funds to use for cash incentives for large corporations and construction site improvements
  • $409 million in grants for businesses affected by the COVID-19 shut-downs

https://www.bridgemi.com/michigan-government/michigan-legislature-passes-1b-incentive-plan-big-projects-gm

The inclusion of the expansion of the Small Taxpayer Exemption component of the Personal Property Tax reimbursement system was outlined in our Inside 208 blog following the late night action last week and was also discussed on the MIRS News Monday Podcast.  In the Governor and Legislature’s final move to secure the necessary votes for passage of this piece in the Senate, they added $75 million into the funding bill for the SOAR package (Senate Bill 85) to cover the first year’s cost of the expansion (which doesn’t kick in until 2023). The Senate Majority Leader and numerous other legislators made public comments committing to securing a long term reimbursement mechanism and discussions on this replacement will be a top priority for the League in the new year.

Three different supplemental budget proposals also saw action by one chamber during recent weeks.  House Bills 5522, 5523 and SB 565 provide some insights into legislative ARPA spending priorities around public safety, public health investments, and water and sewer infrastructure. These bills will likely form the basis for ongoing ARPA and state GF/GP fund balance spending negotiations that will continue in earnest in the new year.  Our team is heavily engaged, through our coalition efforts, in shaping the spending proposals within these bills and developing additional spending plans outside of these subject areas.

Other year-end legislative action can be headlined for League members by what did not happen.  No further action took place on HB 4722, the short-term rental zoning preemption or on SB 429, the aggregate mining preemption bill.  The legislature also failed to act on an extension for continuing to allow remote meetings under the Open Meetings Act.  As of December 31, 2021, local emergency declarations will no longer be allowed for remote meetings of public bodies under the OMA.  The marijuana caregiver package we are supporting was also held up, pending additional negotiations.

The Legislature did finalize action on Senate Bill 698, that extends the freeze on situs for assessment of equipment being used by remote workers and House Bills 5502-5506 which shifts the personal property tax business filing to a one-time filing with Treasury.  The state-funded cancer presumption for workers compensation was expanded to include part-time, paid on-call, and volunteer firefighters in House Bill 4172. The cost of this expansion will be supported by deposits to the state’s First Responder Presumed Coverage Fund from the state’s internet wagering proceeds.  A five-year extension of the sunset for the Transformational Brownfield program was also sent to the Governor prior to last week’s recess in Senate Bill 671 with League support.

A local fiscal “early warning” proposal was introduced right before the holiday recess.  Senate Bill 780 was introduced alongside a full repeal of the state’s Emergency Manager law.  SB 779 simply repeals all of Act 436 of 2012. The two bills are not tie-barred together but we expect the legislature to begin deliberation on the two proposals in the new year. In discussions with the Department of Treasury and the bill sponsor prior to introduction, we expressed grave concerns with the original approaches outlined in SB 780 and proposed numerous revisions.  We continue to work with the Department and the bill sponsor to ensure local autonomy in fiscal decisions and raise awareness of the broad range of factors outside of a local unit’s control that could contribute to a community’s financial situation and ensure that those factors are acknowledged by any legislation on this topic.

Also introduced last week was the reform of the disabled veteran property tax exemption that the League has been requesting.  Senate Bills 783784 were introduced on December 8th and the proposal would shift the burden of the veteran property tax exemption to the state’s income tax through the Homestead Property Tax credit program.  These bills have 12 bi-partisan Senate sponsors and we will be aggressively advocating for passage of these bills in the coming year.  League members are encouraged to contact their legislators to express support for these bills.

Following their return in January, the legislature will resume action on the remaining ARPA and state budget fund balance spending plans as they prepare for the Governor’s next executive budget recommendation and State of the State speech in late January/early February.

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

PPT Exemption Expansion Gets Wrapped Into Economic Development Deal

Much of the focus of this final week of legislative session for the calendar year focused on negotiations between the Governor and Legislature on an economic development proposal reacting to Ford Motor Company’s recent decision to locate their new battery/electric vehicle plant in Tennessee.

As a component of the larger package, legislative leadership aggressively pursued a broader-based business tax relief proposal to counter the impression that the economic development package would only help a few, large businesses.  The House, Senate, and Governor came together, despite strong opposition from local governments and other taxing units, to include a major expansion of the Small Taxpayer Exemption portion of the state’s new Personal Property Tax system in the overall package.

Action between the two legislative chambers and the Governor’s office accelerated over the past few days on House Bill 5351, following the bill being reported from the House Tax Policy committee late last week, despite the objections of the League and other local government organizations. While the committee reported the introduced version of HB 5351, which would have simply instituted an annual CPI increase to the current $80,000 True Cash Value (TCV) Small Taxpayer Exemption threshold, the bill was completely altered by the House to double the existing $80,000 threshold to exempt all commercial and industrial personal property owned by a business below $160,000 in TCV. This change by the House was done without providing any replacement revenue to local governments to cover the roughly $50 million ongoing burden the expanded exemption would have cost local communities.

The League and our partners reacted quickly to the House’s action with a coordinated effort to convince the Michigan Senate and the Administration to slow these discussions and consider the impact this cut would have on local finances.  We contacted every Senate office to raise concerns about the state’s inability to properly estimate the cost of the proposed expansion, the lack of urgency to move the bill since the supposed relief to small taxpayers wouldn’t take effect until 2023, spotlighting the complete misperception that this change would help small, main street businesses, and explaining the unintended consequences that this proposal would have on the other parts of the complex personal property tax reimbursement system.  At its core, this expansion perversely serves as a disincentive to local economic development efforts as the cost of this expansion will be paid through a reduction in reimbursement funds for communities that have experienced new investments.

Under pressure to finalize their deal on the overall economic development package, the Governor and legislative leaders ended up agreeing to further expand the Small Taxpayer Exemption threshold up to $180,000 of equipment TCV (more than double the current $80,000 level), but in response to our messaging and League member engagement, $75 million was appropriated to the Local Community Stabilization Authority in Senate Bill 85 to cover the estimated cost of the first year of this expanded exemption.  In addition to this one year of funding support, we secured bipartisan public commitments from legislative leaders to pass a long term funding mechanism to support the ongoing costs of this expansion.

The headline of the Senate Majority Leader’s public statement following passage of the full package read, “Senate Majority Leader Applauds Economic Development Progress, Commits to Long-Term PPT Solution”.

Senator Ruth Johnson (R – 14th District), in a statement on the Senate floor, explained that she had concerns with the cut to local revenue and said the reason for her yes vote was because “I’ve been given a solid commitment that this body and our colleagues in the House will work to address the loss in revenue.”

Senator Jeremy Moss (D – 11th District) continued his staunch defense of local government in his floor speech explaining why he was voting no. “This funding pays for things that we depend on. Our residents who pay taxes depend on police and fire to show up when there is an emergency, so do – I presume – the businesses too, who pay this tax,” Moss said. “By repealing this tax in perpetuity with no replacement to local communities beyond the first year, you are directly defunding the money that goes towards public safety.”

While yesterday’s action did not have the outcome we had worked toward, the Municipal League and our local government partners will work together with our collective memberships to hold the legislature’s and Governor’s feet to the fire to pass an ongoing revenue replacement for this tax cut as soon as possible in the new year. We worked with our partners at the Michigan Association of Counties and the Michigan Townships Association to release this joint statement after the bill passed last night. We encourage all of our communities to remind their State Representatives and Senators of the need to make this a top priority for 2022.

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

 

 

Tell Your Senators Today to Oppose or Slow Down on Personal Property Tax Bill

The Michigan Municipal League needs your help to oppose a bill related to the personal property tax that could get a vote in the state Senate as early as Tuesday, December 14th. While we prefer you call your state Senators, we’ve also created this sample letter through our Action Center that you can email to them.

House Bill 5351 passed in the House Wednesday and appears to be on a fast-track for a vote in the Senate. The bill would double the small taxpayer personal property tax exemption for small businesses from $80,000 to $160,000. No fiscal analysis of this bill has been done, but best estimates are that this change could cost local governments $40 million to $50 million in anticipated personal property tax revenue.

It is not known how many businesses will be impacted by this, and most importantly the bill DOES NOT provide a revenue replacement to local government.

There is no reason to rush this bill through the legislature because it wouldn’t take effect until Dec. 31, 2022 and wouldn’t lower the personal property tax that commercial and industrial businesses pay until July, 2023.

The League is encouraging state Senators to hold off on voting on this important issue until after the first of the year so that proper time can be spent determining the full economic impact of this legislation. We’re also encouraging legislators to identify an appropriate revenue replacement for this significant cut to local governments to avoid cuts to vital local services.

Here are some talking points to use when discussing this issue with your Senators:

  • The state is sitting on billions of dollars that could help small business immediately so why cut small business taxes that does not provide any financial relief until July of 2023?
  • If this passes, how do you plan to replace the revenue for this significant cut to local governments?
  • What’s the rush? There is no immediate need to do this now and it should be delayed until we know the true impact to local government and small business.
  • Let’s work together to find a solution that immediately helps small business and doesn’t cut local government funding.
  • This legislation is not needed to pass the broader economic development incentive package the legislature is currently considering.

Please contact your Senators today! Call them or send them this letter. Thank you!

That’s A Wrap – 100th Legislative Session Finalized

With the expiration of 14-days on the Governor’s desk this past week, the last bills presented from December’s lame duck legislative action brought the 100th Legislative Session to an official close.

All told, nearly 300 new bills were introduced between the House and the Senate during the lame duck period, following the November election.  A total of 402 bills became new Public Acts (PAs) in 2020, with 158 of those PAs being finalized during lame duck, mainly during the month of December.  In addition to the volume of new laws, the Governor leaned heavily on her veto pen during the final days of the 100th Legislative Session.  All told, 36 bills were either directly vetoed or expired without signature, resulting in a pocket veto. The legislative action of 2020 stands in stark contrast to the activity of 2019, where only 178 new PAs were signed and no bills were vetoed. 

The following updates summarize many of the main issues that League staff were engaged with during this lame duck period and those issues that we expect to see returning during the 2021-2022 legislative term.

Signed By The Governor:

  • COVID Extension to Boards of Review: HB 5824 and 5825 (PAs 251 & 297 of 2020) – The League supported these two bills which codify the Governor’s now nullified Executive Order that had extended the March 2020 Boards of Review and allowed certain additional appeals and valuation changes during the July 2020 Boards of Review.
  • Poverty exemption: SB 1234 (PA 253 of 2020) – This bill amends the current residential property tax poverty exemption to assist with various COVID-related impacts that low-income residents are facing as they attempt to apply for the exemption. Upon determination of the local unit of government, existing poverty exemption applications may remain in effect for up to three years to counteract personal and public facility limitations due to COVID-19.  A similar, 3-year extension is also authorized for local units that choose to offer the extension for eligible residents on fixed income from public assistance. The League and the City of Detroit testified in support of these bills.  Treasury negotiated a number of amendments as a condition of their support prior to passage, including requiring each local unit’s poverty exemption policy and guidelines be posted on their website and bringing uniformity to the allowance of any partial exemptions, less than 100%, unless authorized by the State Tax Commission.
  • Personal Property Tax COVID Location Freeze: SB 1203 (PA 352 of 2020) – Amends the General Property Tax Act to freeze the location of all personal property being used by remote workers as assessable only at the business’s ordinary location for the 2021 tax year.
  • Tax Foreclosure Proceeds: SB 6761137 (PAs 255 & 256 of 2020) – These bills were passed in response to the recent Michigan Supreme Court Rafaeli decision that found that all “excess” proceeds from a tax foreclosure sale must be paid to the former owner of the property. This decision could have a long-term harmful impact on County Delinquent Tax Revolving Funds that will lead to chargebacks being assessed to local taxing jurisdictions. Communities that also leverage their right of first refusal to acquire these foreclosed properties for the minimum bid may also face a more expensive path to acquiring these parcels as the court decision also puts the ability to acquire parcels for the minimum bid at risk. Following months of work group discussions and negotiations with local units, the County Treasurers Association, and the Michigan Department of Treasury, the League secured amendments to retain a process for local units to continue acquiring some parcels for the minimum bid and language providing for an annual  local fiscal impact analysis from Treasury to help evaluate and make recommendations to address any increase in chargebacks to local units.
  • OMA Virtual Meetings: SB 1246 (PA 254 of 2020)Senate Bill 1246 amends the Open Meetings Act to allow communities to continue meeting virtually due to the pandemic through March 31, 2021. The prior allowance had allowed communities to meet virtually only through the end of 2020, so this extension was a high priority for the League. This new legislation also makes technical changed requested by the League to allow a local state of emergency or state of disaster to be declared pursuant to a local ordinance (in addition to those declared under law or charter in the current law) and adds a local chief administrative officer (in addition to a local official or local governing body) as a person who may declare the local state of emergency. In addition, the bill sets requirements a public body shall follow if a meeting is held in person before April 1, 2021, including adherence to social distancing and mitigation measures recommended by the Centers for Disease Control and Prevention for purposes of preventing the spread of COVID-19 and adopting heightened standards of facility cleaning. Read this blog for additional details.
  • Historic Preservation Tax Credit: SB 54 (PA 343 of 2020) – The League has fought for a number of years to restore Michigan’s state-level Historic Preservation Tax Credit program that was repealed under former Governor Snyder. The new program will provide a 25% credit on rehabilitation expenses against state income tax. For homeowners in historic districts, this credit helps offset the costs of repairing older homes while retaining their historic attributes. SB 54 caps the total number of credits per year at $5 million in order to have minimal initial impact on the State budget. The necessary $5 million for funding of the first year of the credit was already appropriated in the current state fiscal year in anticipation of this bill’s passage.
  • COVID critical infrastructure worker: SB 1258 (PA 339 of 2020) – Public Act 238 of 2020,  adopted earlier in 2020, established certain employee protections related to exposure to COVID-19. One aspect of that law required employees to quarantine for 14 days following certain instances of exposure. Specific classes of employees/businesses are exempt from that 14-day quarantine, like health care employees and first responders. Officials from the cities of Oak Park and St. Clair Shores joined the League in advocating for language in SB 1258, which would extend the specific employee/business exemption from the quarantine requirement to include critical infrastructure employees in the energy industry and other critical municipal service categories like water and wastewater operations.  During final negotiations, the bills was amended to allow the Dept of Health & Human Services Director to designate certain categories of employees for critical infrastructure deemed necessary to preserve public health or public safety. The bill also provides additional flexibility for returning to work with negative test results and time periods for isolation and/or quarantine as determined appropriate by the CDC, as opposed to designating a specific number of days in statute. The League and other local units have submitted a letter (view it here) to the Department Director requesting the immediate designation of critical municipal operations pursuant to the language in the new law.
  • Movable Bridge Public-Private Partnerships: SB 12151218 (PAs 353-356 of 2020) – The League and Bay City officials testified in support of this package of bills that will help Bay City address the replacement of two city-owned movable bridges. Due to the unique nature of these bridges and the extraordinarily high cost of replacement, this package will provide statutory authority for Bay City to enter into a public-private partnership that will provide for the replacement of both bridges and free up substantial city resources that can be invested in other infrastructure projects.
  • Water Shut-Offs: SB 241 (PA 252 of 2020) – A new version of this bill was adopted to codify the Governor’s previous Executive Order related to water shut-offs. In early July Governor Whitmer issued Executive Order 144 that placed a moratorium on water shutoffs until December 31st of this year. Following the nullification of the Governor’s E.O.s by the Michigan Supreme Court, the Administration and the Legislature negotiated the language in SB 241 to codify the intent of that E.O. into statute. This agreement in this bill reinstates the moratorium on water shutoffs and extends the date to March 31, 2021
  • Supplemental Budget Appropriation/CARES Hazard Pay Grant Extension: SB 748 (PA 257 of 2020) – Separate from the political grappling between the Legislature and Governor over state spending for COVID relief and unemployment benefits, language was included at the League’s request to extend the time period for local units to have issued first responder hazard pay premiums under the state’s Coronavirus Relief Fund grant program and be eligible for a reimbursement.  The original language had required payroll be issued by 10/31/2020, this change allowed communities to issue their payroll by 12/29/2020 and still be eligible for reimbursement.
  • Brownfield Redevelopment Authority Administrative Change: HB 4159 (PA 259 of 2020) – Provides technical changes and oversight to brownfield redevelopment authorities. Additional amendments were adopted to section 13b to increase the number of active projects that an authority may have at one time and also allow for a corresponding increase in expenditures for administrative and operating costs relative to the number of projects. This change is also consistent with the recently updated MEDC strategic plan and their revised Community Revitalization Program guidelines.
  • Small Cell Road Commission Fix: SB 1256 (PA360 of 2020) – Late in lame duck SB 1256 was introduced and moved without a committee hearing, receiving bi-partisan support in both chambers. This bill added country roads commission to the definition of authority and clarifies the original intention of the legislation. As a result of this change, all entities within the right of way would operate on a level playing field. The League did not support this legislation but did request, and have secured a commitment from the bill sponsor (Sen Dan Lauwers), to provide additional clarification that the rate will be paid exclusively to cities, villages, and townships. A bill addressing this clarification will be introduced early in 2021 and we anticipate it being taken up shortly after committees begin to meet.

Vetoed By The Governor:

  • Solar Projects Tax Exemptions: SB 1105 & 1106 – These bills were vetoed by the Governor as premature, given the State Tax Commission’s ongoing ad hoc review committee and related analysis and recommendations were not considered in the development of the vetoed language. The League opposed these bills and submitted a letter requesting the Governor veto these bills. The two bills would have exempted all utility-grade solar projects from the industrial personal property tax and replaced that lost property tax revenue with a Payment In Lieu of Tax reimbursement of $4000 per megawatt, an arbitrary value that would have amounted to pennies on the dollar for many local units.  Local units would have also been required to approve every tax exemption application it received as long as the project matched the definition of an “qualified renewable energy facility”, regardless of local land use or economic development plans or support.  As stated in the League’s veto request letter, which you can read here, we support additional investment in alternative energy systems in Michigan, but any PILT proposal must be developed in conjunction with local government and provide a balance between promoting solar development and maintaining the services residents rely upon.
  • Meijer Warehouse Equipment PPT cut: SB 1153 – This bill, along with two other bills (SB 11491150) had proposed exempting consumer goods handling warehouse equipment from personal property, sales and use tax. The bills died on SB 1149 1150 1153 veto request letter 12.22.20the Governor’s desk when she declined to act on them before the 14 days expired at the end of the term. The League opposed all three bills and submitted a veto request letter to the Governor, which you can view here. These bills would have provided Meijer and other large commercial retailers with full sales, use, and personal property tax exemptions for all large-scale consumer goods handling warehouse distribution equipment. The League and all other local government and school groups, and the MI Department of Treasury testified in opposition to these bills and a separate three bill package that did not end up moving (SBs 1178, 1179, 1180) that would have provided similar sales, use, and personal property tax exemptions for so-called “micro-fulfillment” systems installed by retailers to facilitate filling online customer orders. The Governor had expressed concern publicly with SBs 1149, 1150, and 1153, questioning the unknown impact that these cuts would have on state and local revenues.
  • Summer Property Tax Deferral/Penalty & Interest Relief: SB 943 – Originally introduced this summer as part of the summer tax deferral proposal that was vetoed, a substitute version of SB 943 was quickly adopted and passed targeting a select number of industries hit hardest by the pandemic. This alternative approach would have allowed for the retroactive deferral of any delinquent summer tax bills and waiver of related penalties and interest from four specific industry segments, until Feb 15, 2021. The bill also provided for state reimbursement to local units for any forgiven penalties and interest owed on any of these deferred amounts.  Treasury had opposed the bill based upon concern over administering the program. The Governor declined to act on the bill before the expiration of the 14-day limit, resulting in a pocket veto.
  • Rental Inspections: SB 692 – The League was neutral on this bill as the change would have only impacted certain change of ownership situations and only for a limited time period, not indefinitely. This bill was also pocket vetoed based upon a limited rationale for the legislation.

Bills Opposed By The League That Died Without Action:

  • Zoning Preemption For Aggregate Mining: SB 431– The League strongly opposed this effort to preempt local units of government from virtually any zoning or other currently authorized regulation of gravel and aggregate mining.  This bill is expected to be reintroduced in 2021 and the League will continue to engage League members and work with our allies to block its passage.
  • Preempting Regulation Of Automated Delivery Devices: SB 892
  • Zoning Preemption For Certain Large Foster Care Facilities: HB 4095
  • Short-Term Rental Zoning Preemption: HB 4046

Legislation The League Will Continue To Pursue In 2021:

  • Headlee/Proposal A Reform: HB 6454 – This bill was introduced to address the negative interactions between Headlee and Proposal A before any property value reductions from the current pandemic recession could impact local budgets.  We are working with the bill sponsor to reintroduce this proposal in the new term.
  • Public Notice Reform: HB 6440 – This was the main bill in a more than 100-bill package that proposed reforming the current, obsolete public notice requirements throughout state law.  This is a reintroduction of a similar package that the League supported in the 2015-16 session.
  • Speed Limits: HB 4733 – This bill would have further clarified local government’s ability to adjust speed limit below the 85th percentile speed when demonstrating a situation with hazards to public safety through an engineering and safety study.
  • Stormwater Authority Creation: HB 4691 and Basement Back-Up Liability Protection: HB 4692
  • Dark Store Property Assessing Reform: SB 26 & 39
  • Veteran’s Property Tax Exemption: HB 4176

The League will also continue to prioritize restoration of cuts and additional protections for statutory revenue sharing, funding for municipal infrastructure at risk from high-water levels and shoreline erosion, and opportunities to improve funding for roads and underground infrastructure in the new term, among other priorities.

The 101st Legislature will officially be seated and commence action on Wednesday, January 13th. Since the House is re-forming under a new Republican Speaker (Jason Wentworth, R-Farwell), a new committee structure will be established, and new committee membership will need to be announced. At this point, only the incoming leadership team and the House Appropriations committee chairmanship (Thomas Albert, R-Lowell) have been revealed. Neither the House nor Senate leadership have revealed their policy agendas for the coming year. 

Following the ceremonial first day of session on the 13th, the state’s annual Consensus Revenue Estimating Conference is scheduled for 9 am on Friday, January 15th. This revenue conference will establish the baseline that the Governor’s budget team will utilize to craft her Executive Budget Recommendation that will likely be released in early February. The Governor’s State of the State address has been scheduled for Wednesday, January 27th at 7 pm.  That speech and the subsequent budget presentation will offer insight into the Administration’s legislative goals for the year. 

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

Lame Duck Round Up – Week 3…

With the Michigan Senate’s final action late Friday night, only Monday’s House session remains before the 100th Legislative Session comes to an end.

The Senate remained in session throughout the day Friday, concurring in bills that the House had sent over late on Thursday and working to formulate a deal on a year-end state budget supplemental.  As one of their final votes Friday night, the Senate passed SB 748, a $465 million appropriation bill aimed at providing additional, state-level Coronavirus relief.  Within the Senate-passed bill, $128 million is targeted at COVID-19  health-related programs funded through the Department of Health and Human Services, and over $278 million will run through the Department of Labor and Economic Opportunity to support an extension of state unemployment benefits and various small business grant offerings.  The League supported two items that were part of the appropriations for the Michigan Department of Treasury; a $5 million appropriation to cover the costs for any penalties or interest waived as part of the recently passed SB 943, which offers retroactive summer property tax deferrals to four specific industry segments harmed by pandemic shutdowns, and a change in the language outlining the First Responder Hazard Pay Premium program authorized earlier this summer, to extend the deadline for local units to have paid these hazard pay premiums to eligible employees out to December 29, 2020.

This appropriation bill now moves to the House for concurrence on Monday, along with a few remaining bills that the House was unable to act on last week.  The Governor has not indicated if she will support this supplemental appropriation.

The following are brief summaries of action during this third week of lame duck: 

OMA Virtual Meetings: The state House and Senate passed Senate Bill 1246 that would amend the Open Meetings Act to allow communities to continue meeting virtually due to the pandemic through March 31, 2021. The bill now heads to Governor Whitmer for approval. As you may recall the current law allows communities to meet virtually through the end of this month so getting this extension was a high priority for the League. This new legislation also allows a local state of emergency or state of disaster to be declared pursuant to a local ordinance (in addition to those declared under law or charter in the current law) and adds a local chief administrative officer (in addition to a local official or local governing body) as a person who may declare the local state of emergency. In addition, the bill sets requirements a public body shall follow if a meeting is held in person before April 1, 2021, including adherence to social distancing and mitigation measures recommended by the Centers for Disease Control and Prevention for purposes of preventing the spread of COVID-19 and adopting heightened standards of facility cleaning. Read this blog by the League’s Jennifer Rigterink with all the details. 

Solar Projects Tax Exemptions: SB 1105 & 1106 – Status: passed Houseboth bills now head to the governorThe League is opposed to these bills and is drafting a veto request letterThese two bills would exempt all utility-grade solar projects from the industrial personal property tax and replace that lost property tax revenue with a Payment In Lieu of Tax reimbursement that amounts to pennies on the dollar for many local units.  Local units would also be required to approve every tax exemption certificate application if the project matches the definition of an “qualified renewable energy facility”, regardless of local land use or economic development plans or support.

Summer tax deferral: SB 943 – Status: passed, heads to governor for approval. Originally introduced this summer as part of the summer tax deferral proposal that was vetoed, a substitute version of SB 943 was quickly adopted and passed by the Senate to target a select number of industries hit hardest by the pandemic. This new version allows for the retroactive deferral of any currently delinquent summer tax bills and waiver of related penalties and interest from four specific industry segments, until Feb 15, 2021. The bill also provides that the state will reimburse local units for the lost penalties and interest owed on any of these deferred amounts (see summary of SB 748-supplemental budget appropriation above). It is not known if the Governor will sign the bill. 

Poverty exemption: SB 1234  Status: passed House, heads to governor for approval. This bill amends the current residential property tax poverty exemption to assist with various COVID-related impacts that low-income residents are facing as they attempt to apply for the exemption. The League and the City of Detroit testified in support of these bills in both the House and Senate Treasury negotiated a number of amendments as a condition of their support prior to passage.

Meijer Warehouse Equipment PPT cut: SB 1153 – Status: passed House along with two other bills (SB 11491150exempting this equipment from sales and use tax.  All three bills now head to the governor. The League opposed these three bills and is drafting veto request letter. These bills would provide Meijer and other commercial retailers with full sales, use, and personal property tax exemptions for all large-scale consumer goods handling warehouse distribution equipment. The League and all other local government and school groups, and the MI Department of Treasury  testified in opposition to these bills. 

Historic Tax Credit: SB 54 – Status: passed House, heads to governor. This proposal has long been supported by the League to restore Michigan’s state-level Historic Tax Credit program that was repealed under former Governor Snyder. The new program will provide a 25 percent credit on rehabilitation expenses against state income tax. For homeowners in historic districts, this credit helps offset the costs of repairing older homes while retaining their historic attributes. SB 54 caps the total number of credits per year at $5 million in order to have minimal initial impact on the State budgetThe necessary $5 million for funding of the first year of the credit was already appropriated in the current state fiscal year in anticipation of this bill’s passage.  

Water Shut-Offs: SB 241 – Status: passed House, heads to governor for signature. A new version of this bill was adopted to codify the Governor’s previous Executive Order related to water shut-offs. In early July Governor Whitmer issued Executive Order 144 that placed a moratorium on water shutoffs until December 31st of this year. Following the nullification of the Governor’s E.O.s by the Michigan Supreme Court, the Administration and the Legislature negotiated the language in SB 241 to codify the intenof that E.O. in statute. This agreement in this bill would reinstate the moratorium on water shutoffs and extend the date to March 31, 2021. 

Tax foreclosure proceeds: SB 676 and 1137 – Status: passed House, heads to governor for approvalThese bills have been developed in response to the recent Michigan Supreme Court Rafaeli decision that found that all “excess” proceeds from a tax foreclosure sale must be paid to the former owner of the property. This court decision could have a long-term harmful impact on County Delinquent Tax Revolving Funds that will lead to chargebacks being assessed to local taxing jurisdictions. Communities that also leverage their right of first refusal to acquire these foreclosed properties for the minimum bid may also face a more expensive path to acquiring these parcels as the court decision also puts the ability to acquire parcels for the minimum bid at risk. Following months of work group discussions and negotiations with local units, the County Treasurers Association, and the Michigan Department of Treasury, the League secured amendments to retain a process for local units to continue acquiring some parcels for the minimum bid and language providing for a local fiscal impact analysis from Treasury to help evaluate and make recommendations to address any increase in chargebacks to local units.

COVID Extension to Boards of Review: HB 5824 and 5825 – Status: House concurred in Senate changes, heads to governor for approval. The League supported these two bills which codify the Governor’s now nullified Executive Order that had extended the March 2020 Boards of Review and allowed certain additional appeals and valuation changes during the July 2020 Boards of Review.

Rental Inspections: SB 692 – Status: passed House, heads to governor for approval. The League was neutral on the bill as the change only impacts certain change of ownership situations. 

COVID critical infrastructure worker: SB 1258 – Status: passed Senate this week and the House is scheduled to vote on this bill on Monday. A new law adopted this fall established certain employee protections related to exposure to COVID-19. One aspect of the new law requires employees to quarantine for 14 days following certain instances of exposure. Specific classes of employees/businesses are exempt from that 14-day quarantine, like health care employees and first responders. The League advocated for the amendments in SB 1258, which would extend the specific employee/business exemption from the quarantine requirement to include critical infrastructure employees in the energy industry and other critical employee categories necessary to preserve public health or public safety, as determined by the Dept of Health & Human Services DirectorThe bill also provides additional flexibility for returning to work with negative test results and time periods for isolation and/or quarantine as determined appropriate by the CDC, as opposed to designating a specific number of days in statute. 

The House is scheduled to commence session on Monday, December 21st at 10 a.m. and wrap up action on around a dozen bills before ending for the year.

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

Treasury Announces PPT Reimbursement Error Correction Process

Earlier this afternoon the Michigan Department of Treasury released the following information for communities seeking to correct any valuation errors related to their Eligible Manufacturing Personal Property reimbursement calculations. League members are encouraged to review their calculations and submit error corrections as appropriate.  Following Treasury review, validated error corrections will be addressed within the May 2021 PPT reimbursement distribution.

This is a reminder that the Local Community Stabilization Authority Act (LCSA Act) provides municipalities with the opportunity to correct errors in the 2020 Personal Property Tax (PPT) reimbursements that are distributed in October 2020 and February 2021.

In order for a municipality to determine if there was a reporting error or a calculation error, the municipality will need to review the 2020 PPT reimbursement calculations, millage rates, and taxable values posted to the Michigan Department of Treasury’s PPT Reimbursement website (www.michigan.gov/pptreimbursement).

NOTE: It is recommended, but not required, that municipalities review the PPT calculations and the data used in the PPT calculations for accuracy.

If a municipality does not identify an error, the municipality does not need to file a form or take any further action to notify the Michigan Department of Treasury.

If a municipality does identify an error, the municipality will need to complete the appropriate form to notify the Michigan Department of Treasury of the reporting or calculation error(s). The PPT reimbursement correction forms are intended to be utilized by a municipality that has identified an error in its 2020 PPT reimbursement. In addition to the form(s), municipalities must provide substantiating documentation to support an adjustment to the reported value or the calculated reimbursement amount.

Below is a list of the correction forms that are available on the Michigan Department of Treasury’s PPT Reimbursement website (www.michigan.gov/pptreimbursement).

Form Number Form Title Form Completed By

Form

Submitted To

Statutory

Due Date

5651 Correction of 2020 Personal Property Taxable Values Used for the 2020 Personal Property Tax Reimbursement Calculations Municipality County Equalization Director February 28, 2021
County Equalization Director Department of Treasury March 31, 2021
5654 Correction of School Millage Rates or Other Errors for the 2020 Personal Property Tax Reimbursement Calculations Municipality Department of Treasury March 31, 2021
5658 Modification of 2013, 2014, and 2015 Personal Property Taxable Values Used for the 2020 Personal Property Tax Reimbursement Calculations Municipality Department of Treasury March 31, 2021

Please direct any questions regarding the PPT reimbursement correction process to TreasORTAPPT@michigan.gov or 517-335-7484.

 

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

Lame Duck Round Up – Week 1

This week kicked off the first full week of lame duck legislative activity since the November election.  The League’s advocacy team is engaged on multiple fronts to promote a number of pieces of legislation we have been supporting and defending against a host of proposals that will harm local control and local budgets.

While the full calendar of expected lame duck session days is still a bit murky, our team is preparing for this lame duck period to extend through December 17th, giving legislators and committees two more weeks to try and complete legislative priorities.

Given that limited schedule, this first week of action focused on putting a large number of bills in play so that they could have enough time to be completed before the final adjournment for the year.

The following is a brief summary of action that occurred this week on bills that the League’s State & Federal Affairs team is engaged with…

  • HB 5824-5825 – These bills would codify the Governor’s Executive Order from earlier this year, that the court’s struck down, which extended the March and July Boards of Review.  The League supported these bills in Senate committee earlier this week and the full Senate voted today in unanimous support.
  • SB 1234 & HB 4828 – These bills are identical to each other and amend the current residential property tax poverty exemption to assist with various COVID-related impacts residents are facing as they attempt to apply for the exemption.  The League and the City of Detroit testified in support of these bills in both the House and Senate committees this week.  The full Senate reported SB 1234 unanimously this afternoon and further work is expected on the bills next week.
  • SB 11051106 – These two bills would exempt all utility-grade solar projects from the industrial personal property tax and replace that lost property tax revenue with a $3500/MW Payment In Lieu of Tax.  This amounts to pennies on the dolar for many local units versus the existing tax liability and would require mandatory approval of the exemption by all local units. The League previously testified in opposition to these bills, but did indicate a willingness to engage in discussions on a more reasonable PILT alternative that communities would have the option to employ, if this was a development they were choosing to incent. These bills were reported by the Senate in their original format earlier today along a mainly party-line vote and we continue to oppose.
  • SB 1153 & 1179 & HB 6198 & 6284 – These four bills are part of four identical tax exemption packages being considered by both the House and the Senate to provide Meijer and other commercial retailers with full sales, use, and personal property tax exemptions for all large-scale consumer goods handling warehouse distribution equipment and so-called “micro-fulfillment” system equipment used by retailers to assist with filling online orders.  The League and all other local government and school groups testified in both chambers in opposition to these bills.  The Senate reported the bills from committee yesterday and are expected to vote on the package later today.
  • SB 1203 – Would amend the General Property Tax Act to freeze the location of all personal property being used by remote workers as assessable only at the business’s ordinary location for the 2021 tax year. While the League took no position on this legislation, we are tracking its movement and making the argument that this proposal should be accompanied by a similar freeze in work location for remote workers whose ordinary work location falls within a city income tax community.
  • HB 6454 – This bill was introduced earlier this week to address the negative interactions between Headlee and Proposal A before any property value reductions from the current pandemic recession impact local budgets.
  • SB 676 & 1137 – These bills have been developed in response to a recent Michigan Supreme Court decision that found that all “excess” proceeds from a tax foreclosure sale must be paid to the former owner of the property.  This court  decision could have a long-term harmful impact on County Delinquent Tax Revolving Funds that will lead to chargebacks being assessed to local taxing jurisdictions.  Communities that also leverage their right of first refusal to acquire these foreclosed properties for the minimum bid may also face a more expensive path to acquiring these parcels as the court decision also puts the ability to acquire parcels for the minimum bid at risk.  Following months or work group discussions and negotiations with local units, the County Treasurers Association, and the Michigan Dept of Treasury, these bills were reported from the Senate this week by a unanimous vote.
  • SB 431 – The League continues to strongly oppose this blatant move to preempt local units of government from virtually any zoning or other currently authorized regulation of gravel and aggregate mining.  This bill is expected to be brought up for a vote on the Senate floor later today and the League is vigorously working with our allies to secure enough votes to block its passage.
  • HB 6207 and SB 1246 – This legislation extends the current Open Meetings Act allowance for remote meetings during the current pandemic.  The current sunset date of 12/31/2020 would be extended through March of 2021 under the bill. The League has made this change a primary focus of our advocacy during lame duck. The bill was reported by House committee earlier this week and is expected to move off the House floor early next week.
  • HB 5822 – This League supported this legislation in House committee earlier this week to allow the City of Grand Rapids to establish their own Land Bank Authority in light of the recent dissolution of Kent County’s Land Bank.
  • SB 54 – This bill would restore Michigan’s state-level Historic Tax Credit program that was repealed under former Governor Snyder.  This proposal has long been supported by the League and was reported unanimously from committee and overwhelmingly out of the Senate earlier today.
  • HB 6440 – This is the main bill in a more than 100-bill package that would reform the current, obsolete public notice requirements throughout state law.  This is a reintroduction of a similar package that the League supported in the 2015-16 session.  The package was brought up on the House floor where it awaits sufficient support for passage.
  • HB 4035 – Legislation that allows regulation of dangerous behavior of dogs without reference to breed.  The League is neutral on this bill following significant negotiations to achieve the current compromise language and the bill was reported from Senate committee earlier this week.
  • HB 6448 & 6467 – These bills provide amendments to the recently enacted COVID employment protections that were passed earlier this fall by expanding the types of critical infrastructure workers exempt from the new law’s 14 day quarantine requirements. The League testified in support of both HB 6448 and HB 6467 in the House Judiciary Committee along with officials from the cities of Oak Park and St. Clair Shores, while also stressing the importance of incorporating all critical municipal services, like water and wastewater, in the exemption from the quarantine requirements.  Both bills passed House Judiciary Committee and await action on the House floor.
  • SB 234 – This proposal would allow Police Academy enrollees to be held accountable for tuition support from a municipality if they do not end up working for that community.  The League supports this proposal and it was reported from committee earlier this week.
  • SB 714  – Bill provides for the erection of certain emergency structures to prevent shoreline erosion.  Following a number of months of workgroup negotiations with EGLE, the League supported the version that was reported by the House committee this week.  The compromise proposal will streamline the application and processing timeline and allow for coordinated application processing with the Army Corps of Engineers.
  • HB 4733 Speed Limits – This bill would further clarify local government’s ability to adjust speed limit below the 85th percentile speed when we are able to demonstrate a situation with hazards to public safety through an engineering and safety study. This bill was voted out of House Ways and Means Committee this week with the League’s support.
  • SB 12151218 Movable Bridges – The League and Bay City officials testified in support of a package of bills in Senate Economic and Small Business Development Committee this week that would help Bay City address the replacement of two city-owned movable bridges. Due to the unique nature of these bridges and the extraordinarily high cost of replacement, legislation was needed that would allow for Bay City to enter into a public-private partnership that will provide for the replacement of both bridges and free up substantial city resources that can be invested in other infrastructure projects. This package received bipartisan support this week as it moved unanimously out of the Senate.
  • HB 5762 – Provides for waste water or drinking water energy performance contracting projects to be funded by the state revolving loan fund. The League supported this legislation based on the added flexibility to this program that will continue to increase opportunities for funding for municipalities.  The bill was reported from House committee earlier this week and awaits final floor action.

Many of the bills outlined above will likely see continuing action next week.  League members are encouraged to connect with their legislators on these issues.  Please reach to anyone of the State & Federal Affairs team if you have questions on these or any other bills.  Thank you for your support!

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

Commercial Equipment PPT Tax Cut Moves Despite Opposition

The Senate Economic & Small Business Development committee reported a series of bills along a party line vote this afternoon to exempt consumer goods handling equipment and so-called “micro-fulfillment” systems from personal property tax assessment.  Senate Bills 1149, 1150, & 1153  would offer sales, use, and personal property tax exemptions to large retailers for their new warehouse distribution equipment like what Meijer uses at their Delta Township distribution facility in Eaton County.

Separately, Senate Bills 1178, 1179, & 1180 would offer similar sales, use, and personal property tax exemptions for consumer goods “micro-fulfillment” systems that many retailers are moving to as they work to handle the increased demand from online orders.

The Municipal League, along with all other local government and school organizations and the Michigan Department of Treasury have actively opposed this legislation, along with a duplicate package that was heard by the House Tax Policy committee yesterday but was not voted on (HBs 6196-6198 and 6284-6286).

Testimony from Meijer indicated that the company views this warehouse/distribution equipment as no different than other industrial equipment that was exempted under the Eligible Manufacturing Personal Property reform package in 2014, yet the proposal moved out of Senate committee today makes no effort to provide for a similar local reimbursement mechanism, as is the case with EMPP.

With the extremely limited number of session days remaining this year, these six bills are expected to be brought up quickly in the Senate tomorrow for a full vote.  League members are urged to contact their State Senator this evening and tomorrow morning to express opposition to these bills.  Please let your legislators know that these tax cuts are causing irreparable harm to local budgets, services, and residents.

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

PPT Reimbursement Error Correction Process Announced

The Michigan Department of Treasury provided the following information for communities to use if they have questions about their recent Personal Property Tax reimbursement.  If a community believes there was an error in their reimbursement amount, the new PPT reimbursement system provides a process that communities can follow to correct those errors and receive any eligible additional funds as part of the May 2020 payment.

To Whom It May Concern:

This is a reminder that the Local Community Stabilization Authority Act (LCSA Act) provides municipalities with the opportunity to correct errors in the 2019 Personal Property Tax (PPT) reimbursements that are distributed in October 2019 and February 2020.

In order for a municipality to determine if there was a reporting error or a calculation error, the municipality will need to review the 2019 PPT reimbursement calculations, millage rates, and taxable values posted to the Michigan Department of Treasury’s PPT Reimbursement website (www.michigan.gov/pptreimbursement).

If a municipality does not identify an error, the municipality does not need to file a form or take any further action to notify the Michigan Department of Treasury.

If a municipality does identify an error, the municipality will need to complete the appropriate form to notify the Michigan Department of Treasury of the reporting or calculation error(s). The PPT reimbursement correction forms are intended to be utilized by a municipality that has identified an error in its 2019 PPT reimbursement. In addition to the form(s), municipalities must provide substantiating documentation to support an adjustment to the reported value or the calculated reimbursement amount.

Below is a list of the correction forms that are available on the Department of Treasury’s PPT Reimbursement website (www.michigan.gov/pptreimbursement).

Form Number Form Title Form Completed By

Form

Submitted To

Statutory

Due Date

5651 Correction of 2019 Personal Property Taxable Values Used for the 2019 Personal Property Tax Reimbursement Calculations Municipality County Equalization Director February 28, 2020
County Equalization Director Department of Treasury March 31, 2020
5654 Correction of Millage Rate or Other Errors for the 2019 Personal Property Tax Reimbursement Calculations Municipality Department of Treasury March 31, 2020
5658 Modification of 2013, 2014, and 2015 Personal Property Taxable Values Used for the 2019 Personal Property Tax Reimbursement Calculations Municipality Department of Treasury March 31, 2020

Please direct any questions regarding the PPT reimbursement correction process to TreasORTAPPT@michigan.gov or 517-335-7484.

www.michigan.gov/pptreimbursement

 

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

First Portion of 2019 PPT Reimbursement Payments Distributed

Michigan’s Local Community Stabilization Authority (LCSA) distributed over $170 million to more than 2100 local units of government and authorities today as reimbursement for eligible manufacturing personal property loss under the state’s new Personal Property Tax reimbursement system.

Today’s reimbursement payments represent 100% of eligible losses for essential services and other qualified loss.  Those communities/authorities with calendar year-end fiscal years will see their 100% reimbursement payments distributed in February. School districts and ISDs also will see $87 million distributed today for their eligible  losses. Payment amounts for October/February by unit/authority can be viewed on Treasury’s website here...

Other Municipalities

2019 PPT Reimbursement

 

Local units are encouraged to compare today’s (or February’s calculated payment) with their October/February payments from 2018 for any unexpected discrepancies and to contact Treasury if they believe a payment amount is in error.

Treasury will calculate any error corrections in the first quarter of 2020 and issue those corrected disbursements along with all remaining revenue in the LCSA on a pro-rated basis in May of 2020, similar to what has occurred in recent years.

For communities that have signed up for ACH deposits, be aware that the LCSA has informed us that a technical issue arose with today’s payments and some communities will be receiving their PPT reimbursement payment via check the week of October 21st, even though they had signed up for electronic deposit.

Communities eligible for Fire Protection Grant funding should expect to see their reimbursement dollars also distributed by the LCSA at the end of November.

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