Governor Presents Final Budget Recommendation

Governor Snyder presented the FY2019 state budget to a joint hearing of the House and Senate Appropriations committees Wednesday morning.  Matching his tone following January’s consensus revenue estimating conference and his comments about spending restraint during the recent State of the State address, the budget didn’t offer many surprises.

The key announcement for League members centered on his proposal for revenue sharing.

Constitutional revenue sharing payments are expected to grow, based upon sales tax growth, to the tune of 3.1% ($24.7 M) in the coming budget.

The Governor did not recommend a continuation of the 2.5% statutory revenue sharing increase that we were able to secure in the current budget, taking this $243 million appropriation back down to a level that has been flat over the previous four years.

Instead of increasing statutory revenue sharing through the traditional budget process, the Governor is building off of his comments from last year’s budget on the distribution of excess Personal Property Tax reimbursements.  The Governor has called for a simpler and fairer approach to the distribution of those excess reimbursements and emphasized the need to continue providing that support to local units of government.

His recommendation would maintain the apportion of PPT reimbursement revenue going to each type of local unit of government and have that revenue instead distributed by the Local Community Stabilization Authority to communities as an additional revenue sharing payment.  This would amount to a $73 million revenue sharing distribution to cities and villages.

Additionally, the Governor is proposing to use the excess reimbursement dollars that had gone to libraries and miscellaneous authorities to preserve and increase fire protection grant funding to local units with qualifying state or higher education facilities.

Other line items or programs of interest to local units of government included:

Adding $175M of one-time General Fund to go with the $150M already scheduled to go into roads as part of the previous road funding pkg

Adding $2M to continue and expand Project Rising Tide

Building in the $79M from his previously proposed solid waste tipping fee increase to support brownfield site contamination cleanups, water and beach monitoring and other environmental programs that had previously been supported by the former Clean MI Initiative bond proceeds.

The budget will now be reviewed by each chamber over the coming weeks, with initial action expected prior to the Spring/Easter Break.

For more details on today’s budget announcement –

PowerPoint Presentation – (slide 24 relates to revenue sharing/PPT excess)

Issue Papers –  pages 31-32 detail the revenue sharing/PPT proposal

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 Regional Training Opportunities

Treasury shared the following information earlier today on training opportunities they have scheduled in communities throughout the state.  Interested local officials are encouraged to participate.

The Michigan Department of Treasury is pleased to announce the development and implementation of a one day course titled Understanding the Basics of Assessing for Local Unit Officials. This one day course will be offered free of charge to any Local Unit Official who wants to learn a little bit more about assessing and the Audit of Minimum Assessing Requirements (AMAR) process. We currently have scheduled 7 sessions at various locations throughout the State.

 

Sign up for the program is through Eventbrite using one of the links below. Space is limited so we suggest you sign up early!

 

Green Oak Township April 27, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-green-oak-location-tickets-41109827601

 

Marquette Township May 9, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-marquette-may-session-tickets-41109862706

 

Fruitport Township May 17, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-fruitport-township-tickets-41319644168

 

Gaylord May 18, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-gaylord-location-tickets-41110001120

 

Big Rapids June 14, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-big-rapids-location-tickets-41109957991

 

Marquette Township July 11, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-marquette-july-session-tickets-41109914862

 

Howell August 6, 2018:  https://www.eventbrite.com/e/understanding-the-basics-of-assessing-for-local-unit-officials-howell-location-tickets-41124557659

 

Questions regarding the training can be directed to Kelli Sobel at sobelk2@michigan.gov.

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

Year-End Legislative Wrap-Up

While last week’s House and Senate adjournment merely marks the mid-point of this two-year legislative session, that did not mean that the Legislature coasted into their holiday break.

Highlighted by the intense activity surrounding OPEB reform, both legislative chambers pursued aggressive agendas in the final days before adjourning.  Numerous bills that the League was tracking and engaged with experienced some measure of action:

The now 13-bill OPEB package was signed by Governor Snyder this week as Public Acts 202-214 of 2017 and takes effect immediately.  New reporting requirements under the bill are expected to be phased in over the next year, with some reporting expected due as early as January 31, 2018.  The League will work to update member communities as more information becomes available in the next couple of weeks.

Senate Bill 110 clarifies that municipalities implementing plans to increase the supply of below market housing are not violating the Rent Control Act (PA 226 of 1988) by offering voluntary incentives. This League-supported legislation was introduced in February and received a committee hearing this last week of session. It’s anticipated the bill will receive another committee hearing in early 2018 and be voted out.

Two economic development proposals of key interest to municipalities were also voted out of the Senate during the last week of session.  Similar to legislation that died at the end of 2016, the Senate sponsor introduced Senate Bill 393, which consolidates all tax increment financing authorities, excluding Brownfield Redevelopment Authorities, into one act with added transparency and reporting requirements.  Senate Bill 469 would reinstate the Michigan Historic Preservation Tax Credit.  Both of these bills were voted out of committee and out of the Senate last week and have been referred to the House Tax Policy committee where they are expected to receive committee consideration in the new year.

The League was also pleased with the Governor’s signature on legislation allowing urban grocery store projects to access funding from the community revitalization program this week. The House and Senate coordinated efforts last week on House Bill 4207 to provide State Rep. Andy Schor with one last Public Act before he resigns to take over as mayor of the City of Lansing.

Three different proposals related to the new Personal Property Tax system also saw movement before the recess, with Senate Bills 570-573 being finalized and sent to the Governor.  These bills provide for a much needed local mechanism to address late-filed business exemption applications.  Senate Bills 590-593 were voted out of the Senate and were referred to the House Local Government committee.  These bills, promoted by the League and reported from the Senate committee earlier this fall, would essentially hold communities harmless from any reduction in their debt limit due to a reduction in their property tax base from now-exempt personal property.  Finally, House Bill 5086 was developed between local government groups and the Department of Treasury to address a host of technical and minor policy issues related to the continuing implementation of the new system and the need to align the statute with the practical realities of managing and administering the new law.  This bill moved nearly unanimously out of the House last week and will be considered by the Senate Finance committee in early 2018.

Finally, a League-supported proposal to allow for the voluntary coordination of election duties and functions moved this month as House Bill 4671 received overwhelming support in the House and is now awaiting further action before the Senate Elections & Government Reform committee.

Infrastructure and technology issues also experienced a flurry of lobbying and negotiation over these final weeks of 2017.

Our advocacy efforts combined with a broader coalition opposing legislation which would have preempted most local control over private telecommunication provider line relocation projects.  We were able to delay action on House Bill 5098 that was being pursued by the industry before the end of the year.  This proposal remains alive, however, and we will continue to work to block further action on this bill.

The discussions surrounding the proposed industry roll-out of small cell technology is quickly becoming a big issue for municipalities. Small cells are low-powered antenna nodes that have a range of up to 2 miles and are installed for the purpose of relieving congestion for wireless users. The term “small” refers to the footprint of the device. Small cell devices can be mounted on their own 40’ poles, or on existing utility or street light poles. Senate Bill 637 was recently introduced that would create a new act that allows for small cell technology to be consider a permitted use both inside and outside the right-of-way with limited exceptions. The bill would severely limit local control around siting, impair municipal ability to protect the public health, safety and welfare of residents, and hinder local government’s ability to manage the ROW, potentially leading to a significant increase in the number of new poles within our communities.  Supporters of this proposal are looking for a statewide regulatory structure that is similar to the Metro Act and the Video Franchise Act.

The League is opposed to the language as introduced but working with the Chairman, Senator Mike Nofs, of the Senate Energy and Technology Committee to improve the bill. To do that we have extensively researched legislative efforts in other states, discussed the issue with several communities and municipal attorneys, and looked at the Distributed Antenna System (DAS)/Small Cell License Agreement created by the Grand Valley Metro Council.

League staff have met with Chairman Nofs and presented alternative language based on our research and conversations with members. This viable alternative to the introduced legislation strikes a balance between local control and the nationwide deployment of this new technology. The telecommunications industry will continue its push for the bill when the legislature returns next year in the hopes of quick action . We have asked the Chairman that this issue not be rushed and that all parties be brought to the table to discuss this bill and our alternative.

The Michigan Municipal League is also participant on the Lead and Copper Rule Stakeholder Workgroup that is assisting MDEQ with recommendations to address modifications to the Administrative Rules promulgated pursuant to Michigan’s Safe Drinking Water Act, 1976 PA 399, as amended. The ongoing discussion continues to be about how to best protect the public from lead exposure.  Unfortunately, the preliminary draft rules add additional burdens to community water supply systems that run counter to the principles of asset management and may ultimately hinder the protection of public health. In addition to the League, there are more than a half dozen community water suppliers, the American Water Works Association, public health departments and others participating on this work group.

The draft rule would reduce the action level from 15 parts per billion down to 10 parts per billion, require communities to map their existing system to identify the presence of lead, require that a community water supplier be responsible for the replacement and cost of private lead service lines, along with many other requirements that could pose significant financial and logistic hardships on a community. The League has taken a stance that we are not opposed to determining how much lead is present in water systems or the need to systematically begin removing lead from systems, but it cannot be done in such a way that causes a financial hardship or conflicts with the Headlee Amendment or the Bolt decision.

Link to the Preliminary Draft Rule: 2017 Preliminary Draft Lead and Copper Rule

Link to the DEQ Summary Document: Summary Lead and Copper Rule Requirements

The Governor has requested this issue be placed on an aggressive timeline and a finalized draft rule is expected by the first of the year. Should our concerns not be addressed through the stakeholder process, communities will need to be prepared to offer public comments on the rule in early January. In the meantime we will continue to work with those stakeholders that have common concerns with the process and draft rules to make the necessary adjustment to help prevent exposure to lead while still allowing for the efficient management of our water supply systems.

The Legislature is scheduled to return to full session on January 10, 2018, with the Governor’s final State of the State message and the Fiscal Year 2018-19 budget presentation to follow shortly thereafter.

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

Senate Committee Reports Bills Protecting Local Debt Limits

Jeff Budd, Coldwater, and Sen. Mike Shirkey

Jeff Budd, Coldwater, and Sen. Mike Shirkey

The Senate Finance committee reported a bill package on Tuesday that has been a priority for the League this term.  Following testimony from the bill sponsors, League staff and officials from the city of Coldwater, the committee voted unanimously to send the bills to the Senate floor for further consideration.

The recently introduced package, Senate Bills 590-593 (Stamas/Shirkey), reverses an unintended consequence of the new personal property tax (PPT) reform system on municipal debt limit calculations. Currently, many local units of government are bound by statutory debt ceilings tied to a percentage of that community’s total assessed value for all real and personal property.  As small taxpayer and manufacturing equipment is removed from the tax rolls over the coming years due to the new personal property tax reform system, communities find themselves facing a situation where their statutory debt limit will be artificially reduced. This was an impact that was not discovered during the development of the PPT package in 2014, but had recently come to light in municipalities that were in discussion with rating agencies and bond counsels for potential bond proposals.

Working with Treasury and officials from the Michigan Government Finance Officers Association, the League was able to secure language through our Senate sponsors (Sen. Mike Shirkey-Clarklake and Sen. Jim Stamas-Midland) that allows for the assessed value equivalent of each community’s PPT reimbursement payment to be added into the debt limit calculation for every city, village and charter township, essentially holding every community harmless from any reduction in their debt limit due to the reduction of their overall assessed value.  This new provision is similar to how the Home Rule City Act allows for each city’s revenue sharing payment to be included in that city’s debt limit calculation.

These bills are now on the Senate floor awaiting a vote in the coming weeks before moving to the House for consideration.

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

 

 

 

Conversation Continues on New Personal Property Tax System

The League co-hosted a webinar this afternoon with Howard Heideman from Treasury’s Office of Revenue and Tax Analysis as a continuation of our effort to provide information and greater access to Treasury as communities move through the initial phases of implementing the state’s new personal property tax system.  More than 125 members registered for today’s presentation, which follows along with meetings held earlier this summer in Muskegon and Marquette.

See below for the full webinar and referenced documents. In addition, please visit Treasury’s Personal Property Tax Reimbursements web page for more details.

A special thank you to Howard and to Treasurer Khouri for their partnership and assistance in this outreach effort!

Personal Property Tax Implementation Webinar from Michigan Municipal League on Vimeo.

Documents referenced in webinar:

Excel:
2016 PPT Reimbursement Draft – Example City

MS Word:
Form 5429 Example With Instructions

Form 5403 Expired Tax Exemptions – Example With Instructions

 

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

Personal Property Tax Implementation Takes Center Stage

PPT training in Marquette on Wednesday, Aug. 10, 2016.

PPT training in Marquette on Wednesday, Aug. 10, 2016.

Based upon the significant level of questions from municipalities across the state with this initial phase of implementation of the new personal property tax system, the League reached out to Treasury and we are coordinating with the Department to provide opportunities for municipalities to hear from Treasury’s personal property tax staff through a few regional “office hours” style meetings.

The first of these meetings was held in July in Muskegon with an second event held today in Marquette.  Dozens of communities in these regions with a significant industrial/manufacturing personal property tax base, were able to send management and finance staff to participate in these events and talk directly with Treasury staff to get answers to their questions as this new system is being implemented.

Treasury staff provided an overview presentation on the status of implementation of the new law (Personal Property Tax Update 2016 Reimbursement Slides JJune 28 2016), discussed the relevant timelines they are working with according to the new law, reviewed the forms that have been (and are being) developed, discussed the role of the Essential Services Assessment as part of the overall reimbursement process, provided answers to some of the most commonly asked questions (PPT.FAQs_-_LCSSR_Essential_Services_Distribution_Calculation_529232_7), and walked the meeting attendees through some various examples for calculating PPT loss and estimating reimbursement (all subject to change depending on the actual revenues available this fall that the reimbursements will be drawn from).

Acknowledging the questions the Department continues to receive on the new process, Treasury has stated that they will continue to accept Form 5448 from any community that wishes to submit their information through the end of August.

The League appreciates Treasury’s willingness to participate in these events and we will continue to work with the Department to offer additional opportunities for municipalities to meet in person and have their questions and concerns addressed.

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

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

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

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

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

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

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

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

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

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

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

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

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

Treasury Distributing First Major PPT Reimbursements

Most Michigan Municipal League member cities have received Personal Property Tax (PPT) distribution checks in the mail in the past week. These reimbursement checks are the first amounts cities are receiving for operating mills under the PPT reform voters approved in a statewide referendum in August of 2014 and are being distributed by the Local Community Stabilization Authority (LCSA), which is a new creation under the Act.

As one of the first implementation phases under the new law, cities with a positive small taxpayer exemption loss are eligible to be reimbursed for their 2014 and 2015 personal property tax loss from millage not used to pay debt.  On October 20, 2015, Treasury certified a partial distribution of $15,736,006 to 214 cities. This distribution reflects 100 percent reimbursement of 2014 and 2015 operating millage less amounts reimbursed to TIF plans for city millage and amounts previously reimbursed to cities under the Act for debt loss.

In addition to this 100% reimbursement, the LCSA also has an additional $3,463,994 available to distribute to these eligible cities. Once all other data related to each city’s 2014 and 2015 debt loss is compiled, these additional dollars will be certified by Treasury to the LCSA for distribution. This additional distribution to cities stems from the design of the proration formula contained in the new law and represents payment in excess of 100 percent reimbursement. This extra payment will be finalized and distributed by early December of this year.

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

 

 

Treasury Provides Updated PPT Reimbursement Form

This afternoon Treasury provided the updated Form 5192, for claiming small taxpayer exemption personal property loss reimbursement for a millage levied in July 2015 used to pay debt.  Reimbursement requests are due to Treasury by August 14, 2015.

The form is available at: http://www.michigan.gov/documents/taxes/5192__07-15_fillable_July_2015_494424_7.pdf

with a link to the form available on Treasury’s main Personal Property Tax page: http://www.michigan.gov/taxes/0,4676,7-238-43535_53197-316719–,00.html

Please contact Treasury’s Office of Revenue and Tax Analysis at 517-373-2697 with any questions.

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

Voters Overwhelmingly Approve Proposal 1; HUGE Victory for Michigan Communities!

The League was part of the coalition for Michigan Strong & Safe Communities, which actively supported Proposal 1.

The League was part of the coalition for Michigan Citizens for Strong & Safe Communities, which actively supported Proposal 1.

A huge thank you goes out to all the Michigan Municipal League member communities and supporters backing Proposal 1 on Tuesday’s primary ballot. The measure, which completes the plan to phase out personal property taxes that businesses pay, passed with 69 percent of the voters in support, according to preliminary results reported by mlive.com and the Detroit News with 99 percent of the precincts reporting.

Proposal 1 represented a considerable amount of negotiations and work by League staff and our members. We thank our many members who have publicly supported this proposal by passing resolutions encouraging a YES vote, doing media interviews, participating in news events and writing letters to their local newspapers. Read this article by the League’s Samantha Harkins about this history of this issue and why the League supported this measure.

“What this really means for us is stability,” Harkins, the League’s director of state affairs, told reporter Paul Egan of the Detroit Free Press for an article about Proposal 1’s passage.

Here’s an excerpt from a Michigan Public Radio piece by Jake Neher about voters approving Proposal 1. This report also includes comments by Harkins:

Communities depend on revenue from the tax to pay for things like police, fire, and roads. (Governor) Snyder says the proposal ensures they will be fully compensated for any lost revenue.

Local government groups say they agree. “I think, from the local government level, it really provides certainty for us in a way that the failure of Proposal 1 certainly would not have created that certainty,” said (Harkins). “And we’ve had a lot of uncertainty in the last decade.”

Also in the “good news for communities” category, MIRS News is reporting that 80 percent of the “new money asks” in local ballot proposals were approved by voters. That 80 percent passage rate is consistent with the results from the past several elections. Here’s a chart by MIRS that shows the local ballot proposal results by community.

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