Senate Committee Reports Utility Personal Property Exemption

Posted on June 5, 2018 by Dene Westbrook

The League, Treasury, and other local government organizations testified today in opposition to Senate Bill 1031.  As introduced, this bill would exempt all new electric, gas and water transmission and distribution system equipment from being subject to local taxation.  As drafted, the Senate Fiscal Agency estimates the total fiscal impact on local government and schools at $576 million.  Unlike the existing manufacturing and small taxpayer personal property exemptions, this new proposal does not currently include a local reimbursement mechanism.

The sponsor, however, opened his testimony with a statement that he views this bill and the committee’s consideration as the first step in a long-term discussion about how to address this issue…balancing investments in the utility network with the need to preserve local services.  He continued by stating that he looks forward to working with local governments and utilities over the summer to see if the groups could find some common ground.  Later testimony from industry supporters reiterated this position.  No immediate action is expected on the bill and further discussions will likely occur over the summer and fall months.

While the committee ended up reporting the bill this afternoon, there was extensive discussion among the legislators on the committee about the potential impact from a full exemption and the need to address the revenue concerns raised by local governments.  Sen. Marty Knollenberg (R-Troy) singled out that the legislation would need major changes to earn his support on the floor and he spoke passionately about the importance of preserving local services and the communities that rely on these dollars. The League will be fully engaged in any discussions on this topic and will continue working to protect local communities from additional revenue reductions.

Committee testimony from today’s hearing can be viewed here, starting at about the 11:30 minute mark.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].

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