Mar 18, 2009
Senate Republicans continue budget-busting moves to curry favor with voters
LANSING – Michigan Senate Republicans continue to give the store away with no regard for the state of the current budget in a thinly disguised move to curry favor with voters when they campaign for election in 2010.
This time they introduced Senate Joint Resolution H Tuesday that would amend the state Constitution to ban a property's taxable value from increasing any year its assessed value decreases. According to the nonpartisan Senate Fiscal Agency, it would cost state and local governments $253 million in revenues and local schools $75 million. This is money used for police, fire, keeping streets cleared of ice and snow and many other things.
“This is coming from the party that says that we care about law enforcement,” said Sen. Gretchen Whiter, D-East Lansing. “Well, we can’t enact sentencing reform because we don’t want to look soft on crime. Do you know what makes up the largest portion of municipalities’ budgets? Police—public safety.”
Some homeowners have complained that their property taxes are increasing while the value of their home is falling. However, under Proposal A passed in 1994 when property values were rising so fast that many senior citizens could no longer afford to stay in their homes because of the increasing property taxes, property tax increases were capped at the rate of inflation or 5 percent, which ever is less. Proposal A represented a very large cut in the property taxes of homeowners, and continues to protect homeowners from exorbitant increases. Unfortunately, while property values might decline, inflation has continued, so taxes have continued to rise at that rate, currently about 3 percent.
Clearly, proposal A contains important provisions to protect property owners from excessive increases in taxes when property values are increasing. Similar protections do not exist, however, to ensure property taxes do not increase when values are declining.
Senator Deb Cherry, D-Flint, said the resolution perpetuates inequity because Proposal A has held taxes down for people who have owned the home for years, but when the home is sold the taxable value pops up to meet the assessed value, and those people who buy the home are paying a higher tax than people who have owned a home for many years.
“Senate Joint Resolution H offers tax benefits to property owners who are already seeing reduced taxation compared to their neighbors due to Proposal A,” she said. “Senate Joint Resolution H seeks to disrupt the natural economic market and create an artificial barrier to change.”
For a Constitutional Amendment to be approved, it requires a two-thirds vote, which is 25 votes. It failed on a 23-11, but three Senators were absent and the Republicans moved to reconsider the vote at another date.
This budget-busting and showy move that was introduced solely so that Republicans can get on the stump and say they are tax-cutters comes on the heels of a similar move last week by Senate Republicans to bust the budget to make themselves look good.
They approved a bill that would amend the Michigan Business Tax (MBT) to make it easier to receive a tax credit against the MBT, and it increased the income limits affecting eligibility of CEOs who can get the credit from $180,000 a year to $210,000. The bill could reduce state revenues by $47 million. They also approved two more bills that will cost the state $80.6 million and at least $144 million in lost tax revenue, including another $106 million from the School Aid Fund.