As communities prepare for the next round of personal property tax reimbursements later this month, the Legislature is continuing the discussion over how any dollars remaining after all losses are reimbursed at 100% are to be distributed to local governments. House Bill 6348 was reported by the House Appropriations committee last week and then moved out of the full House to position this issue for consideration during the coming lame duck session after the November election.
Following other PPT changes the League worked on earlier this year, the reimbursement payments scheduled to go out October 20th will cover the 100% reimbursement of essential service losses and up to 100% of “other qualified losses”. Any money remaining in the Local Community Stabilization Authority will then be utilized to adjust for any errors or underpayments and then distributed on a pro-rated basis to all eligible communities through a second payment on May 20th. House Bill 6348 would only impact any pro-rated payments that are available for distribution in that May payment.
Earlier this year, Governor Snyder had proposed distributing any remaining balance (approx $150 million in 2017) on a per capita basis, after allocating each governmental unit type their overall proportion of the remaining balance (48% for cities, 2% for villages, 5% for townships, 30% for counties, and 15% for community colleges). In the House, legislation was introduced to implement a version of this proposal. During action on House Bill 5908, the House modified the Governor’s proposal to have 50% of these remaining funds within each unit type be distributed per capita and 50% based upon the existing distribution method. At that time the League testified in favor of preserving these critical dollars for local governments while also suggesting additional amendments to make these distributions more rational and predictable. During final budget negotiations, the distribution method for any remaining PPT balance was left out of HB 5908, with the understanding that this issue would receive further discussion later in the year.
The language in the new HB 6348 is essentially the same as what was originally proposed by the House in HB 5908. The League maintained its conceptual support of this issue in last week’s House committee hearing and stated our desire to continue working with the sponsor and legislative leaders to protect these dollars from being re-appropriated by the Legislature. There is interest in the Senate in addressing any remaining PPT balance by accelerating the forthcoming “dynamic” formula currently scheduled for a 20-year phase-in under the PPT law. Negotiations on these two proposals are expected during lame duck.
Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and firstname.lastname@example.org.