House and Senate Reach Agreement on Revenue Sharing Increase in Upcoming Budget

A joint House/Senate conference committee met this morning (June 8, 2017) and approved a revenue sharing proposal for the upcoming 2017-18 state fiscal year.

Lead by former Walker mayor, State Rep. Rob VerHeulen and State Sen. Jim Stamas, the budget report included a 2.5% increase ($6.2 million) in funding for those cities, villages and townships that have been receiving statutory revenue sharing. This increase, alongside the expected improvement in sales tax collections that are estimated to improve Constitutional revenue sharing payments by more than $40 million, would reverse last year’s overall revenue sharing decline and provide the first increase on the statutory side in more than three years.

It should be noted that this morning’s conference agreement on SB 142 (http://www.legislature.mi.gov/documents/2017-2018/billanalysis/House/pdf/2017-HLA-0142-7AA49F7E.pdf) was developed without any input from the Snyder Administration or the Department of Treasury, as the Administration and Legislature continue to haggle over Legislative leadership’s desire to include a closure of the MI Public School Employees Retirement System as a part of the spending for the upcoming budget year.

This means that while both chambers have consistently supported increases for cities, villages and townships throughout this year’s budget development process, the Administration did not originally recommend any increase and could resist the proposed increase if this version is presented for his signature without an overall deal in place on the MPSERS situation.

League members should contact the Governor’s office and urge his support for this proposed increase and for a long-term plan for restoration of the devastating cuts of the past decade.

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

Michigan Municipal League, Chris Hackbarth Named Among Top Lobbyists in State

The Michigan Municipal League and our own Chris Hackbarth, state and federal affairs director, were both recognized this week for being among the top lobbyists in the state.

The recognition of the League and Chris making a real impact in Lansing politics was part of the 2017 Capitol Insider Survey done by MIRS News Service and EPIC-MRA. .

“It’s gratifying to see others recognize what we already know – that the Michigan Municipal League and our excellent staff does an outstanding job representing our members at the state level,” said League CEO and Executive Director Dan Gilmartin. “It takes a lot of hard work, attention to detail and an enthusiastic and supportive membership to be effective in Lansing. Receiving this recognition shows that with the support of our members we are making a difference in Lansing.

The survey ranked the League in the top five in the category of “most effective membership organization” in the state.

In the individual category, Chris was also in the top five in the category of “most effective lobbyist for an association.”

“Chris is a real asset for the League, for our members and for Michigan,” Gilmartin said. “I’m extremely proud of Chris and his team and how we fight on behalf of our communities.”

The 2017 MIRS EPIC/MRA Capitol Insider Survey included completed responses from 479 legislators, lobbyists, staff members and other insiders in and around the state capital. It was conducted online from May 12, through May 19, 2017.

Governor Snyder Signs Recreational Authorities Bill with Support from Big Rapids and League

The League's Chris Hackbarth and League Member and Big Rapids Mayor Mark Warba (green tie) joined Governor Rick Snyder in signing HB 4578.

The League’s Chris Hackbarth and League Member and Big Rapids Mayor Mark Warba (green tie) joined Governor Rick Snyder in signing HB 4578.

Today, the Michigan Municipal League’s Chris Hackbarth and League Member and Big Rapids Mayor Mark Warba joined Governor Rick Snyder in signing House Bill 4578.

The new law clarifies the use of tax proceeds by a recreational authority and is expanded to include school districts. Working in conjunction with officials from the City of Big Rapids, the League was successful in getting the legislation approved with support from bill sponsors Sen. Darwin Booher, R-Evart; and Rep. Phil Potvin, R-Cadillac. View a previous blog about the legislation here.

The legislation, modeled on similar legislation from previous sessions, expands the definition of an eligible municipality to include a school district. This change also allows a city, village, or township to partner with a school district to form a recreation authority allowing broader access to recreation programming and facilities throughout a region.

Thank you to Mayor Warba and other Big Rapids area officials for their support on this bill! We also like to thank bill sponsors Sen. Darwin Booher, R-Evart; and Rep. Phil Potvin, R-Cadillac.

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

OPEB Reform Proposal on Lame Duck Agenda

The League's Anthony Minghine (left) and Chris Hackbarth (right) testify on the OPEB reform effort Thursday in the state House Committee on Local Government.

The League’s Anthony Minghine (left) and Chris Hackbarth (right) testify on the OPEB reform effort Thursday in the state House Committee on Local Government.

The bills, House Bills 6074-6086 went before the House Local Government committee today – Thursday (Dec. 1, 2016) at 10:30 a.m.

League staff were given an opportunity to testify on the bills this morning and supported the concept of what the bills aim to do. League staff were briefed on this proposal just prior to the bill introduction and it may move through the process during lame duck.

Governor Snyder’s administration, while preferring to deal with this issue next year as part of a comprehensive conversation, recognizes that this is a major issue and is likely to support it. View a Detroit Free Press article about the hearing here.

During the hearing, the League’s Chris Hackbarth and Anthony Minghine were given an opportunity to testify. The hearing recessed Thursday with no vote cast and resumed later in the afternoon and Hackbarth and Minghine were able to finish testifying. The Michigan Association of Counties and Michigan Townships Association also testified in the afternoon in support of the OPEB reform effort in concept. At the end of Thursday’s hearing, the committee chair, Lee Chatfield, R-Levering, urged people to read the package of bills over the weekend. Chatfield indicated the committee would likely continue the discussion on the issue next week.

“This is a great first step and we look forward to continuing the discussion,” said Hackbarth, director of state affairs for the League. “We support giving additional tools to our communities. (These bills) will allow additional local control.”

Minghine, the League’s COO and associate executive director, added: “We need a model that is sustainable. At first blush we are encouraged by where this package goes.”

The League has expressed concerns about dealing with this in such a short window, and expect that if this proposal is adopted there may be a need for follow-up legislation in the next session to address any issues that arise.

In summary:

The League's Chris Hackbarth testifies on the OPEB reform package of bills discussed in a state House committee Thursday.

The League’s Chris Hackbarth testifies on the OPEB reform package of bills discussed in a state House committee Thursday.

  • The proposal consists of 13 bills, solely focused on retiree health care. There is no proposal to address municipal pension systems.
    • 4 main bills and 9 trailer bills that will simply refer back to the changes made in the initial 4 bills
    • 4 main bills will provide for a new act that specifies allowable retiree health benefits, a transparency/reporting bill, a PERA bill, and an amendment to PA 312 binding arbitration
  • PERA amendment would state that retiree health benefit offerings are a prohibited subject of bargaining.
  • PA 312 amendment would prohibit an arbitrator from issuing an order that includes retiree health benefits.
  • There is a trigger mechanism in the proposal so that it would only impact municipalities with a GASB-defined actuarially funded level for OPEB below 80%.  No requirement for pre-funding for any community, regardless of current unfunded liability.
  • Package would address retiree health offering according to the type of employee
    • New hires after effective date could only be offered an employer contribution of a maximum of 2% of compensation towards a retirement health savings account. This offering is at the employers discretion.
    • Existing employees who do not retire before expiration of current contract would be subject to a minimum cost share of 20% of their retirement health benefit. The specific cost share would be set by the city. Extensions or renewals of existing contracts could not include retiree health benefit offerings outside of the 80/20 cost share.
    • For existing retirees, this same 80/20 cost share would be in effect, to the extent that the agreement they retired under does not offer a “vested” right to that benefit. This is a concept that is based in current case law and would allow changes to some, but not all retirees.
  • Once a retiree qualifies for Medicare, the municipality could only offer to cover a Medicare supplemental insurance product at the same 80/20 cost share level.
  • Retirees would be ineligible to receive health insurance coverage from the municipality if health insurance coverage is available from another employer subsequent to their retirement from the municipality.
  • Based upon the remaining session schedule, a bill introduction on 11/30/16 would require committee action immediately following introduction with floor action in the House not eligible until 12/6/16 at the earliest.  If the House moves the bills during the session week of 12/6-12/8, the bills would not be eligible to move in the Senate until the following week…12/13-12/15.
  • The bill package would have an effective date starting May 1 of 2017.

The League’s Board of Trustees was briefed on this proposal and while we continue to review the legislation the issue of OPEB reform has been a central component of the League’s municipal finance initiative and we testified in committee today in support of the concept of such reform.

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

Escanaba Assessor Daina Norden also attended the hearing.

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

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

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

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

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

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

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

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

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

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

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

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

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

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