LANSING – The easing of the Personal Property Tax burden will put pressure on the General Fund as a result of redirecting a portion of use tax revenues to local governments and making sure the tax changes do not cost the School Aid Fund money, according to the Michigan Senate Fiscal Agency.
A SFA report said that by the 2016-17 fiscal year, the hit to the General Fund would be $302 million. And by the 2022-23 fiscal year, the hit would be $410 million.
Under the legislation signed into law last year by Governor Rick Snyder, businesses with $40,000 or less in commercial or industrial personal property in any one jurisdiction will be exempt from paying the tax. And the tax for businesses with industrial personal property above that threshold will phase out from 2016-22.
To compensate local governments for much of the lost revenue the Personal Property Tax provides them, a portion of the use tax would be redirected to an authority that would make payments to qualifying local governments. But that requires voter approval in the August 2014 election. If voters reject it, then the Personal Property Tax returns essentially as it was.
“Assuming the ballot measure passes and both the exemption provisions and reimbursement mechanisms are effective, the legislation is likely to have a significant impact on the state budget,” the SFA paper says. “Legislators likely will face decisions on how to address the impact of these changes on the General Fund and School Aid Fund budgets.”
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