Opinions vary on state Proposal 1

Times-Herald Newspapers

DEARBORN — The statewide Proposal 1 on the primary ballot would eliminate the personal property tax while still providing funding to each community, but opinions vary on the issue.

The proposal would “reduce state use tax and replace it with a local community stabilization share to modernize the tax system to help small businesses grow and create jobs,” according to ballot language.

If the proposal passes, the state’s personal property tax for businesses would be repealed.

Money from personal property taxes fund essential services to every community like schools, police and fire services, libraries and roads in the state.

If the tax is repealed, communities would have 100 percent of their local funding assurances guaranteed by the state.

Mayor John O’Reilly Jr. said he approves the measure and understands that voters see the word “tax” in a proposal and get weary, but this is a situation where the state will eliminate the personal property tax but still provide local governments and municipalities with 100 percent reimbursement for services.

“We’re the only state in the Midwest and one of the few remaining in the country with the personal property tax and it does suggest that we’re making it hard for companies to invest in technology to be more competitive,” O’Reilly said. “We’re trying to make sure we set ourselves up as targets for investments and we want to attract different companies here.”

O’Reilly said the reimbursement funding will come from a combination of three sources: industrial tax payers will switch from paying personal property taxes to a special assessment to the state, expiring tax credits to businesses, and the state’s Use Tax, a companion to sales tax applied to purchases when the state sales tax is not charged.

“There is no tax increase involved for homeowners or anyone else,” O’Reilly said.

He said the proposal received overwhelming bipartisan support in the state Senate and House of Representatives.

“There were only two ‘no’ votes in the Senate and only four ‘no’ votes in the House, so the majority of both parties supported this bill at a time there really hasn’t been much that they’ve been able to agree on,” O’Reilly said. “That should give voters some confidence because it’s supported by both sides of the aisle and isn’t divisive in any way.”

Ford Motor Co. President of the Americas Joe Hinrichs said the company is supporting the proposal.

“Proposal 1 to reform the personal property tax on manufacturing equipment is a critical issue that the business needs to support,” Hinrichs said. “This proposal will significantly reduce the company’s tax burden in Michigan and is a key part of staying competitive in the industry.”

The police and fire departments in Dearborn and in many other communities have given their support to the proposal.

“Communities have been relying on the personal property tax for revenue to provide local services for years,” Police Chief Ronald Haddad said. “But you really couldn’t find a more unpredictable, unreliable source of revenue. If this proposal fails, community funding for police, fire, ambulances, schools, jails, libraries, roads and other important services would be forced to continue to rely on a source of revenue that we know to be unstable and unreliable.”

Not every individual or group is pushing for the proposal though.

The Wayne County Taxpayers Association is recommended that voters reject the proposal, mainly because approval would create another authority in the state government.

WCTA Chair Rose Bogaert said she had several issues with the proposal, including that it would create an authority that would be appointed rather than elected.

“It would establish yet another authority which would be granted enormous power,” Bogaert said. “The new authority would not be elected by the voters, there would be no true accountability, but they would have the responsibility of handling a huge amount of our money.”

She also said the ballot language is not clear.

“They are trying to explain this difficult proposal in 100 words, which they are required to do, but they picked the worst 100 words,” Bogaert said. “They need to take this back and re-work it into something that makes more sense and isn’t such a mess.”

She said there doesn’t need to be an election if the state just wants to eliminate the current tax.

“Unless they are increasing, shifting or creating a new tax, the state does not need to vote on taxes,” Bogaert said. “They could eliminate or reduce the personal property tax without going to the voters.

“I agree that the personal property tax is a horrible tax on businesses and stunts growth, but the state needs to be more clear on what this proposal is and what the voters will be signing on for because it’s confusing to many.”

(Bob Oliver can be reached at boliver@bewickpublications.com.)