Discriminatory constitutional amendment passes the Senate

LANSING -- Just 24 hours after a proposed constitutional amendment that would have blown a $253 million hole in the budget failed to get the necessary two-thirds vote for passage, Senate Republicans moved to reconsider it, and it passed by a vote of 29-8 on Wednesday.

Senate Joint Resolution H 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, and that would directly hurt local governments that have lost $3 billon in revenue sharing since 2001.

“That’s $3 billion under our watch since 2001,” said Sen. Gilda Jacobs, D-Huntington Woods. “So what we are going to do again today is put another nail in the coffin for local services that are barely able to meet the needs of our constituents.”

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.

Jacobs said Pontiac only has 66 police officers right now, and this will hurt other municipalities as well.

“We must at least try to make whole the services that we need to basically keep our doors open in Michigan,” she said. “In this bad economy, the demand for government services is even greater.”

Sen. Gretchen Whitmer, D-East Lansing, introduced an amendment that would have reimbursed local taxing authorities for the money lost because of SJR H, but it failed 15-22.

“This amendment will ensure that they are protected from those devastating cuts; protecting those who protect us—the cops; and protecting those who need us the most—kids,” she said.

Senate Democrats also opposed the resolution because it’s simply not fair because new homeowners will pay more than someone who has been in their home longer.

“Not everybody in Michigan has been in their home like I have for 30 years,” Jacobs said. “Now again, today, we are going to pass something that will totally benefit me again, but it is not going to benefit the other 50 percent of people in Michigan who really do need their property tax relief.”

Democrats changed their votes after Governor Jennifer Granholm said the proposal deserved to be part of the discussion on the overall fairness of state taxes. The resolution must be approved by the House before it goes on the ballot to be approved by voters.

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.