LANSING – Replacing the revenue generated by the personal property tax will require a variety of approaches to reflect the widely diverging amount of revenue the tax generates for local governments, Governor Rick Snyder said Wednesday.

Snyder, in a wide-ranging interview with Gongwer News Service in his Romney Building office, also said he wants replacement of the tax to be “largely revenue-neutral.” That point has deeply concerned local governments, who receive $878 million from the tax, which generates $1.2 billion overall.

“I’m not sure we’re just going to come out and say there’s a one-size-fits-all solution versus having some options and alternatives to recognize that the personal property tax is relatively small as a percentage of revenue in some jurisdictions and in some places it’s their single-largest source of dollars in terms of absolute dollars and percentages,” Snyder said. “This could be a package of several solutions going together to address the issue, some of which could be fairly straightforward, easy things to do, and others could be more complicated. This is where I view it as a phased approach that could take place over a number of years.”

Snyder said a transition from the current personal property tax to replacements could be phased in over five to 10 years.

During the interview, Snyder also addressed growing controversy on his schools of choice proposal, the struggle to pass legislation authorizing a new bridge connecting Detroit and Windsor, Ontario, his thoughts on whether the state needs more revenue for transportation and life in the Executive Office.

But while Snyder has not set a timetable to unveil his proposal on the personal property tax, that issue clearly is coming to the forefront on his fall agenda. Manufacturers, especially, are pushing to end the personal property tax, which requires businesses to pay taxes on the equipment they purchase.

Some discussion in local circles is focusing on asking the state to loosen restrictions against them raising more tax revenues locally to make up for the lost personal property tax revenue. The theory is it would be better to have local governments responsible for raising the revenue because if the state collects a replacement tax, the state could always take it away.

Snyder was asked about that discussion.

“We’re looking at what local options are available,” he said. “Some of those are constitutionally constrained on what might be available. But at least we want to make sure we have an open discussion as to what the options may be and what’s available. Because again, the goal isn’t to create massive problems for our local partners. We want them to be successful.”

The problem with a uniform replacement is it would not reflect the different amounts of revenue communities receive from the tax.

There are some municipalities, like those in rural areas and bedroom communities, that receive little personal property tax revenue. Of those communities, Snyder said the administration is examining ways to target “some core base of smaller filers to just get out of the system” – a relatively easy change.

Others, like Midland, Kalamazoo, Detroit and Dearborn, receive considerable revenue from the tax because of the industrial operations in their jurisdictions.

“That’s where I’m saying there could be a tiering or a prioritization of issues that are some simple ones let’s get done and now let’s have a thoughtful discussion with those jurisdictions in particular that are really dependent,” he said.

Asked about making the personal property tax geared more toward commercial property than industrial, Snyder said he did not want to speculate, but said that discussion is part of looking at local revenue options as well as state revenue replacement possibilities.

Snyder was asked whether he wanted the replacement of the personal property tax to raise less revenue, the same revenue or more revenue than the current system. Senate Majority Leader Randy Richardville (R-Monroe) told Gongwer recently that local governments should be prepared for less.

“The goal is largely revenue-neutral because again, it’s really to say the issue with the personal property tax is it causes strange economic behavior that can inhibit job growth,” Mr. Snyder said. “And it’s not a very efficient tax in that regard. So the question is how do we resolve those issues without putting a burden on the local jurisdictions that are leveraging it.”

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

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