GRAND RAPIDS – Local officials have called on Governor Rick Snyder and the Legislature to guarantee full replacement of personal property tax revenue if they repeal the tax, but Snyder said Thursday that he does not see such a plan as workable.

In September, a coalition of local government officials, school groups and unions proposed constitutionally earmarking current revenue to ensure those groups get full reimbursement from eliminating the $1.2 billion locals and schools receive from the personal property tax, which taxes business equipment.

During a question-and-answer session with local officials at the Michigan Municipal League’s conference, Snyder was asked how he would guarantee replacement of the revenue local governments receive from the tax.

“To be blunt, we can’t do a program that would guarantee every single dollar to every single jurisdiction in that way in perpetuity,” he said.

But Snyder reiterated that he wants to replace most of the revenue local governments and schools receive from the tax. However, he said the formation of that plan remains in the early stages.

“We’re still studying that issue and that’s why we haven’t made a proposal because it’s important to have a dialogue,” he said. “We need to have that discussion together. We’re going to make it a joint discussion, and hopefully we’ll come up with a better answer and make us more competitive.”

Another local official submitted a question for Snyder asking about his position on whether to use reform of the personal property tax to also force local governments to merge.

Senate Majority Leader Randy Richardville (R-Monroe) and Sen. Jack Brandenburg (R-Harrison Township), the Senate Finance Committee chair, have both raised that idea.

“That’s not been part of our agenda or plan to tie it in to that directly,” Snyder said. “My view is we’ve got an uncompetitive tax that is discouraging people from establishing businesses in a number of your communities and why don’t we make it go away without creating a revenue hole.”

Snyder said, as he has in recent weeks, that eliminating the personal property tax will take five to 10 years, but also added “and it might not even start for several years.”

Dan Gilmartin, executive director of the Michigan Municipal League, said he didn’t think locals’ proposal for constitutionally guaranteeing revenue to local governments and schools if the personal property tax is repealed was a nonstarter for the governor.

“I don’t think he said yes or no to any answer,” he said. “What he did say yes to was having an open dialogue about it. That’s positive. We’re going to continue to talk about guarantees because of the history of the Legislature – and not just this legislature.”

From the start of his remarks at the Amway Grand Plaza, Snyder seemed to sense he was walking into something of a lion’s den. Many local officials are still smarting over the slashing of discretionary revenue sharing in the 2011-12 budget and reconfiguration of it to require them to meet certain thresholds to obtain their share of the money.

Snyder told the audience he assumed if there was a poll of hands about how many would like to get him in a room and “straighten me up,” he bet he could get most hands to raise, prompting some chuckles.

“That’s why I wanted to come today is to actually have an open dialogue about the challenges we do face,” he said.

Snyder said he suspected many local officials would like to ask him, “What did you do to us on revenue sharing?” That prompted some murmurs and applause.

The governor said he empathized with what local officials are facing as the demand for services intensifies and available revenues continue a 10-year plunge.

“I couldn’t think of a more challenged group of people across our state in terms of facing challenges in your lives, your duties and your profession,” he said. “There’s a lot of stress out there.”

Later, he said: “I do understand your situation. My situation is not that much different.”

Of the contrast between Snyder’s comments and his budgeting, Gilmartin said, “A few months ago, I said I feel like we have a very good friend in a very high place. The problem is that the friend is broke.”

GRANT FOR CONSOLIDATED SERVICES: The Department of Treasury announced the first recipient of a grant from the $5 million pool the state created to encourage local governments to share services. The state awarded $550,000 to Grand Rapids for an interlocal agreement it has struck with Flint and Lansing to combine their income tax processing and tax payment systems.

DRUG INDUSTRY IMMUNITY: Asked during a session with news reporters what his position is on the state’s law that immunizes the prescription drug industry from litigation if the U.S. Food and Drug Administration approves the product in question, Snyder said he has too many other issues to tackle. The Supreme Court recently refused to hear an appeal by the Department of Attorney General of its attempt to sue Merck over Vioxx to reimburse the state’s Medicaid system.

Democrats have called for repealing the law.

Of the possibility of pursuing changes to the law, Snyder said, “That is something over time that could potentially be on the list to consider.”

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

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