Legislation to repeal and replace a tax on business equipment has cleared the state Senate with overwhelming bipartisan support. The bills seek to make sure local governments are not hit hard by a repeal of Michigan's Personal Property Tax (PPT).
The tax is widely unpopular. But cities, towns, and counties rely on it to provide basic services to residents such as police, fire, and snow plowing.
Only two senators voted against the legislation, which requires the state to make up the lost revenue to Michigan communities. They were Senate Democratic Leader Gretchen Whitmer, D-East Lansing, and Sen. Coleman Young II, D-Detroit.
Whitmer worries the state will have to make cuts in other areas in order to compensate local governments.
“Considering the history of this legislature and the Republican control here at the Capitol, I think there’s a likelihood it could come from exactly from those same groups that are applauding this as keeping them whole,” she said.
Whitmer says she’s also concerned the state will simply not make good on its promise to communities.
But Sen. Rebekah Warren, D-Ann Arbor, who helped craft the legislation, says she is not worried about those things.
“The bills are actually very clear in laying out what the revenue per year is going to be,” said Warren. “And so I felt pretty confident with the kind of support that this package had that the revenue will be there for our locals.”
Supporters of the bills say the state would use an expected “windfall” from expiring tax credits to help pay for the PPT repeal. It would also redirect money from the state’s “use tax” on out-of-state purchases.
Michigan voters will be asked to approve the plan to repeal and replace the PPT in August.
The legislation now goes to the state House.