Category Archives: SaveMICity

Disabled Vets Exemption Reform Proposal Scheduled for Committee Hearing

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The Senate Finance committee has scheduled a hearing next week on two bills that the Municipal League is supporting that would provide much needed relief to local governments and taxing jurisdictions from the costs associated with the current disabled veteran property tax exemption.

Senate Bills 783–784 (Sen Jon Bumstead – Newaygo) would change the nature of the current benefit for disabled veterans from being a local property tax exemption whose cost is borne by the local taxing jurisdictions, to a Homestead Property Tax Credit benefit equal to the value of the disabled veterans local property tax liability and paid by the state.

Following the passage of the current exemption at the end of 2013, the original cost estimate to local governments has ballooned from $9.4 million to over $50 million and growing every year.  Confusion over administration and eligibility have lead to numerous attempts to change the current exemption and expand eligibility.  The League and other local government groups have defended against these efforts and pushed for a change to the system that would see the state assume the cost for this benefit.

The bills being considered next week by the Senate Finance committee are the result of years of work and support from the sponsor and other legislators to create a new system that provides the same benefit to veterans that they currently enjoy, but without passing the cost on to local governments.

League members are asked to contact their State Senator and members of the Senate Finance committee and urge them to support this common-sense, bi-partisan reform proposal. You can also send them a letter in support using the League’s Action Center here.

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

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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.

 

 

American Rescue Plan Talking Points for Michigan’s Local Governments

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The Michigan Municipal League has received a lot of questions about the recently approved American Rescue Plan from our members. Many of your answers can be found in this blog by the League’s Chris Hackbarth. But we’ve also received feedback from members seeking best practices about how to discuss the American Rescue Plan with the public and media. In response, we’ve prepared the following talking points and common questions and answers to help guide you. Feel free to use these talking points and questions and answers below and adjust them to fit your community’s needs.

Local Official American Rescue Plan Talking Points

  • The American Rescue Plan Act (ARP) represents a historic moment for [insert community name].
  • This financial support is an opportunity to invest in our future by building community wealth.
  • The funds are also a long overdue acknowledgement of local government’s outsized role in the day-to-day services that support a high quality of life.
  • History: This pandemic has put our communities through hell.
  • This fresh hell is on top of more than 20 years of persistent disinvestment and erosion of local control and decision-making ability for our community.
    • We know the story, Headlee, Proposal A, revenue sharing cuts, pre-emption of local control, etc.
    • Since 2000, Michigan communities have lost more than $9 billion to these policy decisions.
  • [Insert community name] has done more with less for two decades, and the American Rescue Plan is a lifeline that will help ensure our community can host, support, and accelerate a robust recovery for all our residents.
  • Crisis after crisis we have stepped up to find creative, innovative ways to serve our residents.
    • We’ve endured through population decline, once in a lifetime flooding, infrastructure failure, social and racial unrest, economic devastation, major demographic shifts, drug epidemics, declining public health—both physical and mental—topped off by a global pandemic that threatened to bring us to our knees, and I wish I could say that was the end of the list.
  • We have risen to the occasion to serve our residents every time while keeping the wheels turning on the basics of local government (public safety, roads and infrastructure, parks, etc.). While the pandemic might be global, its affects are felt locally.
    • Our restaurants and small businesses have suffered tremendously.
    • Our children and schools have struggled to adapt to remote learning.
    • Our trails and parks have hosted neighbors near and far seeking a break from isolation.
    • Our infrastructure has been transformed to set up COVID testing facilities while our ability to perform basic maintenance has suffered.
  • Local government belongs to its residents, and we will work with our residents and businesses to ensure these funds are invested strategically so that our whole community will benefit long into the future.
  • We will take our time. There are several weeks before the U.S. Treasury releases official guidance on our specific allocation and rules for implementation. Beyond that, we have until 2024 to spend these dollars.
  • We will revisit our [master plan/asset management plan/etc.] which will serve as a guideline, but we will also take time to reengage the entire community on our priorities.

Frequently Asked Questions

How much money is your community receiving?

There are various lists of anticipated ARP dollars by community, but these lists have inaccuracies and are incomplete. We’re waiting for more accurate numbers, as well as additional direction and information from the U.S. Department of the Treasury. It’s worth nothing that we can take our time in determining the best uses of this one-time funding because the ARP law gives us until the end of 2024 to use this community investment.

How will you spend this money?

The short answer is “carefully and strategically.” Local governments have been under funded for decades to the tune of $9 billion since the year 2000. We have crumbling infrastructure needs, public safety needs, human service needs, and our downtowns and parks need improvement and maintenance.

This is an extremely large sum of money. How can the public be assured that it will be spend responsibly and not wasted?

This isn’t [insert community’s] money, this is the public’s money. We are going to take our time to engage the community to ensure the that it goes to where their priorities are. The goal is to ensure these funds are used strategically so that every corner of our community makes a full recovery.

Are there any guidelines on how American Rescue Act funds can be spent?

The Department of Treasury will be issuing guidance detailing its interpretation and implementation of eligible uses, but the statutory language specifically authorizes the following uses of these funds:

  • To respond to the pandemic or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
  • For premium pay to eligible workers performing essential work (as determined by each recipient government) during the pandemic, providing up to $13 per hour above regular wages;
  • For the provision of government services to the extent of the reduction in revenue due to the pandemic (relative to revenues collected in the most recent full fiscal year prior to the emergency);
  • To make necessary investments in water, sewer, or broadband infrastructure

Are there things that the American Rescue Act funds CANNOT be used toward?

Yes, the Act prohibits states from offsetting, either directly or indirectly, a tax cut made since March 3, 2021; and prohibits states and local communities from depositing these dollars into a pension fund.

 

Direct, Flexible Federal Aid For All Local Governments Signed By President

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(Update: To help answer some of the many questions we’re getting from our members, NLC shared two additional documents – Estimated State and Local Allocation Spreadsheet Reference Guide and Notes on File Labeled “State and Local Allocation Output 02.25.21) In addition, NLC has established a Q&A portal for your ARP-related questions. They would also appreciate you sharing your ongoing challenges, successes and questions through this portal.)

Following the US House’s action early last week, concurring in the Senate’s changes from the previous weekend to H.R. 1319, the American Rescue Plan Act federal stimulus was signed at the end of the week by President Biden.

Following months of advocacy by the Michigan Municipal League and our partners at the National League of Cities, we were successful in securing a $350 billion provision for aid to state and local governments.  This appropriation includes $130.2 billion of direct and flexible aid for all 19,000 local units of government across the country, regardless of population.  This aid is split evenly between counties and municipalities, at $65 billion each.

Acknowledging the strict spending limitations and lack of support for most local governments from last year’s CARES Act, Congress and the President inserted this key provision in the American Rescue Plan Act following intense lobbying from NLC and countless meetings, calls, and emails from MML staff, leadership, and member communities to Michigan’s congressional delegation over the past year.

The aid to local governments in the bill is divided into two distribution formulas.  Due to the fact that the federal government has very limited experience providing direct aid to local units and the wide variance in local government structures among the each of the states, the aid to local governments will be split with $45.5 billion being sent directly from Treasury to municipalities generally viewed at “entitlement” communities under HUD’s Community Development Block Grant program formula that uses population, poverty, and housing instability to determine estimated allocations.  The remaining $19.5 billion will be sent to each of the states to distribute to their remaining local governments on a per capita basis. Dollars granted under this $19.5 billion allocation are capped at 75% of the municipality’s most recent budget as of January 27, 2020.  The federal language requires each state to send these dollars to their municipalities within 30 days of receipt, unless granted an extension.  Even under an extension, all of these dollars must be distributed within 120 days of receipt of the state will face a financial penalty.  States are prohibited from changing these allocations or imposing additional requirements. 

All of these dollars will be sent by the federal government in two, equal distributions.  The first is required to be disbursed within 60 days of the bill’s enactment and the second, one year after the first distribution.  Municipalities may use these funds through December 31, 2024.

The Department of Treasury will need to issue guidance detailing its interpretation and implementation of eligible uses, but the statutory language specifically authorizes the following uses of these funds:

  • To respond to the pandemic or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
  • For premium pay to eligible workers performing essential work (as determined by each recipient government) during the pandemic, providing up to $13 per hour above regular wages;
  • For the provision of government services to the extent of the reduction in revenue due to the pandemic (relative to revenues collected in the most recent full fiscal year prior to the emergency);
  • To make necessary investments in water, sewer, or broadband infrastructure

The language explicitly prohibits funds from:

  • Offsetting, either directly or indirectly, a tax cut made since March 3, 2021;
  • Being deposited into a pension fund.

Clear guidance from US Treasury will be critical to helping local governments determine eligible expenses, but there is no doubt that revenue backfill needed for Michigan’s cities impacted by lost income tax revenue, parking revenue, parks and recreation and event revenue, and the potential coming impacts from expected property tax appeals, among other revenue losses, will all be covered by the critical funding support.  In addition, the language allowing for the investment of these funds in water, sewer, and broadband infrastructure will provide our communities an opportunity to invest in infrastructure that has taken a back seat to other critical budget needs over the past decade.  These dollars provide a historic opportunity for local government to invest in its residents and small businesses and work with community partners and non-profits to promote community wealth building and lift up all areas within our communities.

Coupled with the aid the State of Michigan is estimated to be apportioned under the Act, the state and Michigan’s local governments (counties, cities, villages, and townships) are scheduled to receive approximately $10.3 billion of federal aid under this section. The State of Michigan is estimated to receive approximately $5.655 billion and Michigan local governments an estimated $4.4 billion split between counties ($1.937 billion), metropolitan cities utilizing the modified CDBG formula ($1.782 billion), and all other cities, villages, and townships ($686 million).  The National League of Cities has posted a link to the Congressional committee estimates of the distributions by community in each state.  It should be noted that these figures are purely ESTIMATES developed by congressional staff utilizing the data they had available at the time and are NOT final actual allocations.  The US Treasury and other federal agencies will be responsible for developing final allocation estimates and those are not available at this time.  MML staff have identified concerns with some of the data estimates, especially around the lack of allocation estimates for Michigan’s villages.  We have communicated these discrepancies with our Congressional delegation and directly to Sens. Stabenow and Peters offices and the staff at NLC.  It is our understanding that numerous state issues have been identified and that congressional research staff are reviewing and investigating the various concerns, including those raised by MML.

In addition to the direct, flexible aid to states and local governments described above, the stimulus proposal also provided an additional $10 billion in aid to states to fund critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency with respect to the Coronavirus Disease (COVID–19).  Michigan is estimated to receive an additional $250 million under this provision and early indications are that these dollars will be targeted at further buildout of broadband capacity throughout the state. More details will be forthcoming as US Treasury develops their guidance in the coming weeks.

The League will highlight this issue during our Capital Conference March 16-17, so be sure to register and tune in for the latest updates!

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

That’s A Wrap – 100th Legislative Session Finalized

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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 676 & 1137 (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 1215–1218 (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 1149–1150) 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 1

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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 1105–1106 – 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 1215–1218 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.

Headlee/Proposal A Reform Bill Introduced

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As a part of the League’s long-term commitment to municipal finance reform and following the League’s recent press conference promoting critical policy changes needed during the current lame duck legislative session, State Representative Jim Ellison (D-Royal Oak) introduced House Bill 6454 aimed at addressing one of the key reform measures needed to protect local government from debilitating drops in property value.

Ellison, a former Royal Oak mayor and co-chair of the Legislative Municipal Caucus, has been a long-time supporter of Municipal League and the need to fix our broken municipal finance system.  His understanding of the impact that the Great Recession had on his community’s budget prompted him to work with the League to sponsor this piece of legislation.

The timing of this legislation could not be more important given the upcoming December 31 Tax Day.  With the COVID-19 pandemic causing the permanent closure of businesses and reducing occupancy for retail and commercial office space across Michigan, local governments will be facing pressure to reduce property values — and incur cuts to property tax revenue.

As we learned from the Great Recession, the fiscal impact to local governments that result from declines in property values caused by the pandemic will become permanent due to the unintended interactions between Proposal A and Headlee.

This broken system has caused the crisis of the Great Recession to continue for over a decade for local governments while other sectors were able to rebound alongside the economy. Without a resolution, like what is provided in HB 6454, communities’ ability to respond to the needs of citizens and businesses will be severely impacted.

The provisions within HB 6454 focus on two main issues:

  • The first will allow millage rates to adjust both up and down depending on the relationship of property value growth or decline to general inflation. It is important to note that a millage rate could never increase above charter limits, maintaining
    the upper limit on millage rates. Additionally, for parcels that do not have a change in ownership, the maximum charter tax rates will not increase by more than inflation.
  • The second component fixes the rollback formula so cities, schools and other taxing authorities can benefit from the deferred growth from property sales. This fix would remove the “popped up” values from the calculation of the Headlee rollback which currently works to negate that growth. This is especially important for fully developed communities because these sales are their only opportunity to benefit from a growing economy.

This bill has been referred to the House Local Government and Municipal Finance committee where it awaits consideration.  League members are encouraged to contact the committee chair and the other committee members to urge that the committee support this important reform.

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

Treasury Releases Updates on CARES Funded Programs Impacting Local Units

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The Michigan Department of Treasury released the following updates  this afternoon on federal CARES Act programs aimed at supporting local units of government.  These programs include the $150 million in replacement funding for the suspended August 2020 statutory (CVTRS) revenue sharing payments, the $100 million hazard pay premium allowance for first responders, and the $200 million public safety/public health payroll reimbursement program for eligible April and May payroll expenses.

In addition to the August CVTRS replacement award amounts for each community, Treasury’s Revenue Sharing web page should be updated ahead of the August 31, 2020 CRLGG payment date to also include payment details for the August disbursement of Constitutional revenue sharing.

Update on Local Government CARES Act Programs

Coronavirus Relief Local Government Grants (CRLGG) Program.

Information is now available on the Michigan Department of Treasury’s website regarding the Coronavirus Relief Local Government Grants (CRLGG) Program.

Cities, villages, townships and counties that would have received an August 2020 payment under the City, Village and Township Revenue Sharing (CVTRS), County Revenue Sharing (CRS), or County Incentive Program (CIP) will receive a payment under this program on Monday, August 31st. A listing of CRLGG qualified local units and payment amounts can be found on the CRLGG website.

First Responder Hazard Pay Premiums Program (FRHPPP)

The first round of First Responder Hazard Pay Premiums Program (FRHPPP) advance payments were not issued on August 24, 2020, as planned. Unfortunately, the review process has required more time than anticipated. Treasury has dedicated additional staff to complete the reviews, which should allow Treasury to issue the advance payments in early September.

Treasury will announce the award amounts as soon as the reviews are completed allowing time for applicants to issue hazard pay premium payments to their employees by September 30th.

Please monitor the FRHPPP website for award announcements.

Numbered Letter 2020-4

The Michigan Department of Treasury issued Numbered Letter 2020-4, to assists local units of government with the receipting of revenues related to the Public Safety and Public Health Payroll Reimbursement Program (PSPHPR), First Responder Hazard Pay Premiums Program (FRHPPP) and the Coronavirus Relief Local Government Grants (CRLGG) Program. This guidance advises entities on how to record and accrue funds granted under 2020 Public Act 144.

Additional Information

The Michigan Department of Treasury has developed a webpage with numbered letters, memorandums, webinars, and resources regarding COVID-19 updates for local governments and school districts. This web page was created to ensure that Michigan communities have access to the most up-to-date guidance and is updated frequently with information and resources as they become available. 

For questions please contact the Revenue Sharing and Grants Division at:

Phone: 517-335-0155

Email: Treas-CARES@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.

Summer Property Tax Deferral Package Heads to Governor-Outlook Uncertain

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Given the limited calendar for legislative action last week, the Senate moved quickly to report House Bills 5761 and 5810 through committee and then overwhelmingly passed the bills, along with a potential trailer bill (SB 943) intended to address any continuing clean-up language that is expected to be needed.  The House Bills went back to the House where they were unanimously concurred in and prepared for enrollment.  The bills are still awaiting presentation to the Governor, where the prospects for her signature are currently uncertain.

Over the course of the last month, this proposal has gone through numerous rewrites, with new versions being reviewed by the League and other interest groups on an almost weekly basis.  The proposal adopted by the House and then modified in the Senate would allow for individuals and businesses that meet certain COVID-related hardship criteria to apply for a hardship deferral to their local unit of government by August 28th of this year. The Senate changes also included individuals and businesses impacted by the flooding in Midland County to be eligible for this one-time property tax deferral program.  This deferral opportunity would relate solely to real property taxes associated with the Summer 2020 property tax bill.  Individuals and businesses currently escrowing their property taxes or participating in another deferral or property tax relief program would be excluded from this program.  Property owners qualifying under this program would have until February 28, 2021 to pay their Summer 2020 property tax bill or the local unit would turn the parcel over to the county along with all other normal delinquent parcels.

Following the property owner’s submission of the hardship affidavit, the local tax collecting jurisdiction would forward the affidavits to the county treasurer by September 11th.  The county treasurer would then provide an advance payment for all of the local taxing units for any eligible summer 2020 property taxes that were deferred under this program in that county.  The county treasurer could utilize existing funds or borrowing under their individual Delinquent Tax Revolving Funds or serve as a conduit borrower from one larger, pooled borrowing done by the state through a mechanism like Treasury’s Municipal Finance Authority.  This advance payment for the deferred parcels must be made to all local jurisdictions by December 1, 2020.

The League submitted testimony in both the House and Senate that throughout the negotiations, we have maintained our desire to balance affordable and sustainable relief for main street and downtown small businesses, while protecting the critical revenue stream that the summer property tax collection provides for our local governments and schools.  Without the necessary financing to support the advance payments to our municipalities, in as close a time-frame to the normal summer tax collection dates as possible, we run the risk of harming our front line services and personnel and potentially forcing a number of local units and schools into deficit.  We advocated that any such program should be crafted to be as easy to administer as possible and be easily understood by the taxpayer.

Due to the compressed nature of negotiations with the limited legislative session calendar and the fact that summer tax bills were already being sent to taxpayers, both House Bills were moved through the process with the expectation that any additional technical or structural issues necessary to ensure the viability of this program would be adopted within Senate Bill 943 and passed when the legislature returns in late July.

During Senate committee testimony, the Michigan Department of Treasury went on record opposing the bills and cited a number of concerns related to the timelines in the bills for state action and concerns about the state’s ability to comply with the short-term borrowing required by the bill.  Based on this opposition, the future of the bills is not clear at this time.  Additional work group meetings have been scheduled for later this week to determine if changes can be made within SB 943 to address Treasury’s concerns and gain the Governor’s support.  The League will continue to update our members as additional information becomes available.

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

Major Changes Discussed for Summer Tax Bill Proposal

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The House Local Government & Municipal Finance committee took testimony from business groups, the MML, and other local government organizations on a recently introduced proposal to provide relief for residents and businesses experiencing financial hardship from the current COVID-19 pandemic.

As originally introduced, House Bill 5761 would have waived penalties and interest for unpaid property taxes in 2020.  The League expressed significant concern over the impact that this original proposal could have had on local governments and schools and explained the need for any COVID-related relief proposal to ensure the uninterrupted flow of critical tax revenues for local units from the summer tax bill.

As a result of these conversations, the bill’s proponents subsequently introduced  House Bill 5810 and Senate Bill 943 that add a new component to the taxpayer relief effort.

In this week’s House committee hearing, a substitute version for HB 5761 was brought before the committee alongside HB 5810.  Together, the direction being discussed as part of the continuing development of these two bills would allow a taxpayer who meets certain COVID-related hardship eligibility criteria to delay the payment of their summer 2020 tax bill until March of 2021 while providing the local taxing jurisdictions with equivalent revenues to match what is being delayed.

Following discussions with League members and submitting their feedback/comments to the bill sponsor, we expressed the need for any relief proposal to maintain the vital summer flow of revenues for local units of government and schools, focus relief on small/downtown businesses to help preserve vibrant downtowns and communities, ensure that any new program is simple to administer and understand with clear, unambiguous eligibility standards, and would only apply to the summer 2020 tax period.

Under the new version still being drafted, an eligible taxpayer, who is not subject to having their property taxes escrowed, would be able to file a hardship affidavit with the local unit by August 28th and have their summer tax bill delayed without penalty or interest.  The local unit would then turn these eligible parcels over to the county treasurer as part of a special, early tax settlement process.  The county would then utilize its existing Delinquent Tax Revolving Fund to provide a separate, early settlement for all of the local taxing jurisdictions within a specified (still being negotiated) time frame after those parcels have been turned over to the county.  All existing tax deferment or installment programs for taxpayers would remain distinct from this hardship program and taxpayers in those programs would not be eligible to participate in this new program.  All other taxpayers/parcels remain with the local unit and are subject to the normal tax collection and/or delinquency and settlement process in early 2021.  Taxpayers who qualify for this early settlement program will still be subject to their local unit’s normal winter 2020 tax bill and that bill’s current payment deadlines.

Parcels turned over to the county under this program would be required to pay their summer 2020 property tax liability by March of 2021 unless they request additional assistance and the county would then place those taxpayers on an installment payment plan from that point forward.

To cover the costs of this penalty/interest free early settlement, the proposed language also requires the state to appropriate sufficient funds to the county to reimburse for their administration.

The committee took testimony only during their hearing this week and is expecting to take the bills up again next week with new, still-being-drafted language.  We continue to engage with  the legislative sponsors and bill proponents to address the issues being raised by communities.  It is likely these bills will continue to be refined in the coming weeks and the Administration has not weighed in with their feelings on the proposal.  More information and substitute bill language will be provided here as it becomes available.

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