LANSING – With municipalities like Macomb County “scrapping for every dime we can get,” Finance Director Dave Diegel told the Michigan House Tax Policy Committee is makes sense to look at what economic development incentives aren’t working.

Diegel’s comments came after the Michigan Association of Counties testified Wednesday about the impact tax policy changes in Lansing have on counties.

Unlike other groups which have testified before the committee asking for specific changes in the tax code, MAC Legislative Director Tom Hickson simply told legislators, “whatever direction you go in reforming the tax system; the counties will be affected.”

Diegel said Macomb County has raised its tax rate to the maximum but expects declining taxable values to result in a $43 million drop in its revenues by 2012.

“We are looking for leadership from the state. We really can’t afford to take any more hits,” he said. “We’re here to plead with you to take that into consideration when you are balancing your own budgets”

Rep. Vicki Barnett (D-Farmington Hills) said what has happened with the economy, Headlee mandate and the school funding reform measure Proposal A, has created a “perfect storm” for municipalities.

Diegel said even when home values pick back up, locals will be limited to increases of 5 percent or the rate of inflation, whichever is less, in terms of making up that lost revenue. He said that might take Macomb County 25 years to do.

Chair Rep. Kate Ebli (D-Monroe) then asked about his thoughts on the talk about closing some tax loopholes.Diegel said the county has usually followed the lead of municipalities for promoting economic development within their boundaries, but those decisions have cost Macomb “several millions of dollars a year.”

He went on to say it doesn’t make sense to grant economic development incentives to a company moving from Warren to Sterling Heights and there should be a better auditing system for assessing the benefits of the state’s economic development tools.

“Some exemptions have been well intentioned and have been beneficial,” he added.

Hickson also told the committee the organization has been working with the Legislative Commission on Statutory Mandates to identify what requirements the state has placed on locals without directly paying for them to get done.

But both Rep. Brian Calley (R-Portland) and Rep. Eileen Kowall (R-White Lake) questioned why a local government hasn’t made a “test case” out of their situation to show the ramifications of state mandates and perhaps bring a lawsuit to address their needs.

“Why hasn’t anybody challenged these before?” Kowall said.

Hickson said MAC encourages counties to work out their issues through legislative negotiation and not through the courts. Calley said for those looking to address these budget concerns by perhaps rolling back some of these mandates then it would help to have the problems better defined.

Hickson said a Michigan State University study of 27 counties has shown the state has laid $1 billion in mandates on locals, but only has reimbursed $550 million to them. He said the commission is working with organizations like his and MSU to define the cost of these mandates.

Along the line of lightening the load for locals, Rep. Andy Coulouris (D-Saginaw) asked MAC for its thoughts on a unitary corrections systems, which he said could save money by streamlining where people who break the law go for punishment, while at the same time ending this “tug of war” that goes on between the states and locals when there is talk of changing the sentencing guidelines.

Hickson said with county jails housing 80 percent of the state’s felons, there could be savings from having a uniform system and that’s an idea MAC would like to learn more about.

Calley also questioned MAC about the proposal by House Speaker Andy Dillon (D-Redford Twp.) to pool all public sector employees into one health care system. Mr. Hickson said the idea is “interesting,” but MAC is still talking with counties to see how it could affect them.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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