By Deena Bosworth, MAC Legislative Coordinator

For decades, one political leader or another has sought to relieve the business community of the burdensome personal property tax. It is claimed to stifle business investment and therefore needs to be eliminated in order to spur Michigan’s economy. Unfortunately, this is only half the picture.

A thriving business community provides jobs for Michigan’s residents, but these same residents deserve a certain quality of life that is provided by counties and other units of local government. Law enforcement, public health, the judicial system and a social safety net are all necessary for the quality of life our residents expect, but these services cost money. There are significant financial realities to the local funding situation that must be addressed. Let us examine what the facts really are, shed some light on the fiction out there and make a plan for the future.

The Facts

• Michigan counties provide crucial services on behalf of state government, as evidenced by the delivery of road patrol services, corrections, foster care, clean water, food safety, the judicial system, etc.

• The state has a very poor track record of fulfilling its’ statutory promises for its share of funding for things like revenue sharing, payment in lieu of taxes (PILT), public health, Medicaid reimbursement, and county jail reimbursement.

• The only way to guarantee that future legislators honor the promise of replacing the revenue lost by the elimination of personal property tax is to guarantee it in the Constitution.

• Counties are restricted by the Hedley Amendment in how much revenue they can realize through property value increases in times of economic growth; and there is no safety net in times of recession.

• Personal property taxes make up anywhere from 2% to 27% of a county’s total taxable value. Reliance on PPT varies widely across the state.

• Michigan businesses have already realized a tax cut estimated at over $1 billion.

The Fiction (Common Misunderstandings on PPT)

Fiction 1: Politicians in Lansing and representatives from the business community often call for local governments to tighten their belts and cut unnecessary spending.

• Reality: Counties have been doing this for years. We have consolidated, cooperated and cut. We have renegotiated, become transparent and found efficiencies. It is our job to do that as good public stewards. At some point, Lansing needs to realize that the cuts from the legislature already outweigh our efforts to reduce, consolidate and be more efficient, and now we are cutting back on vital community services. 

Fiction 2: It’s a “revenue-neutral” promise.

• Reality: A “revenue-neutral” promise today does not equal revenue neutrality in the future. We have learned from past experience that promised monies get raided by future politicians. In 2005, counties went off of revenue sharing and agreed to a statutory promise that we would receive full funding when we came back online. Too often the promise has not been kept by subsequent legislatures who were not there to make the promise. Statute can be easily changed, and funding is subject to annual appropriations priorities of the current legislature, regardless of past promises. The only real way to guarantee this revenue is to maintain the local tax, or put it in the state Constitution. 

Fiction 3: Expiring business tax credits will be a consistent and reliable funding source for personal property tax replacement. 

• Reality: It will be years before the state will realize the savings from the elimination of the business tax credits, and depending on the scale of the PPT elimination, will not be enough money to fully fund all the recipients at their current level. In addition, when these funds do come in, they will be general fund monies subject to the same appropriations process that has continually attempted to cut other statutory obligations to local units.

The Future of PPT Repeal

The first and most important challenge faced by the legislature is where to come up with the money to reimburse local governments for the loss of the locally collected revenue. The second challenge is to determine which entities actually receive the funds and how the distribution should take place. Neither challenge is easy to overcome and neither challenge is likely to be met with agreement by all parties affected.

The Michigan Association of Counties has partnered with a coalition of other local units affected by personal property tax with a unified solution of a full constitutional replacement for the repeal of PPT. This coalition is working together and has one united message, that we need a permanent replacement for this funding stream. You can check out the coalition’s work at www.replacedonterase.com.

After briefly mentioning the personal property tax elimination in his State of the State speech on Wednesday, the Governor clarified that the proposal to eliminate the tax is not yet complete, but that he will be looking to local governments to develop the reimbursement model. He also indicated that there is no firm timeline for the issue to be resolved, indicating that there is a chance it may not get done this year. MAC takes the Governor at his word, and looks forward to working with him, the legislature, and other affected local governments on a funding replacement and guaranteeing it through the Constitution, should the personal property tax be eliminated.

For more information on what personal property tax means to your county, talking points and maps, please visit the MAC website at www.micounties.org.

Guest author – Wayman Britt, Kent County

For years, large public systems, school districts, private foundations and non-profit organizations have worked to improve the lives of children and families. For the most part, these efforts have been successful in making isolated impact, changing one life at a time. However, when we look at collective indicators like poverty rates, abuse/neglect rates, over-representation of minority children in the child welfare system, and standardized test scores of students in urban school district students, we see that the overall situation for children is not improving.

Incremental improvements made on an individual level are not enough to overcome the challenges families face, particularly as they struggle to deal with their new reality in a global economy and knowledge-based society.

Recently, the Annie E. Casey Foundation released a study called ‘Double Jeopardy.’ In it, they identify the following:

• One in six children not reading proficiently in 3rd grade does not graduate from high school on time – a rate four times greater than that of proficient readers.

• 22 percent of children who have lived in poverty for at least one year do not graduate from high-school on time, compared to 6 percent of those who have never been poor. This jumps to 32 percent for students who are in poverty for more than half of their childhood.

• Even among poor children who read proficiently in 3rd grade, 11 percent did not finish high school. That compares to 9 percent of subpar 3rd grade readers who have never been poor.

The condition of children and families has the potential of getting worse before it gets better. Michigan’s families are among the poorest in the nation. State reduction in funding for food stamps, utility payments, and homeless prevention services places a further burden on local governments to deal with the poor.

In addition, the federal budget has become unpredictable with legislators unable to resolve their differences, thus leading to funding uncertainty and reductions in workforce development programs, Community Development Block Grant funding and Temporary Assistance for Needy Families (TANF). Additionally, federal funding is becoming more prescriptive, which impacts local efforts to braid various resources to ensure students are ready to learn. Within this challenging funding environment, local government’s ability to respond creatively will be critical as we grapple with our own unique set of circumstances.

What can or should counties do to help solve this problem? Some might say this is a problem for the State to solve–that counties are burdened enough with balancing their own budgets. Also, with the potential reduction of personal property tax revenue, how can we possibly take on such a problem as complex as solving poverty?

It is critical that counties take this time to create a shared agenda and vision for working with the State of Michigan. Counties must utilize their collective leadership position to increase State support for local communities and counties must work together to alleviate the effects of poverty so that every child has the opportunity to compete in the global economy.

MAC Service Corporation is constantly working on finding new ways to assist counties and with it’s newest member program, Abilita, we are saving Michigan counties two of their most important (and dwindling) resources – time and money.

Abilita, as a telecommunications consulting leader, offers cost savings by cutting out the middle man and putting your savings first. Here are some facts about our newest member program:

• MAC members can save on average 29 percent off all telecom expenses (local, long distance, Internet and cellular) regardless of switching or staying with your current provider.

• Abilita is an independent consulting company and is only compensated from your actual savings – if no savings are realized there is no fee for their work. In addition, all recommendations are subject to your approval.

• Abilita frees up staffs’ time by proactively monitoring rates and telecom technologies. They will contact you when better rates are available or to increase savings without sacrificing service.

• As one of the largest independent telecommunications consulting firms in America, Abilita has the experience needed to help members by not just identifying savings, but by managing the implementation of recommendations you approve.

Counties are already taking advantage of this great resource. Participating counties include Branch, Ionia, Montcalm and Tuscola. Be the next to join in on this easy cost savings program.

To hear about what Abilita can do for your county call Dan Aylward at (888) 910-2004 ext. 2303 or at mac@abilita.com.

Guest author: Attorney Peter Cohl, Cohl, Stoker, Toskey, P.C.

In 2010, law enforcement agencies in Michigan seized over $21 million in cash, vehicles, jewelry, real property, and other assets related to illegal controlled substance transactions. Those assets, or the proceeds of their sale, were forfeited to the seizing agencies to be used exclusively to enhance controlled substance law enforcement efforts, as required by law.

This statutory restriction on the use of drug forfeiture funds gave a strong financial incentive to law enforcement agencies to engage in stringent drug enforcement efforts. However, some agencies amassed large amounts of forfeiture funds. Their proposed uses of the funds for more general law enforcement purposes often conflicted with the statutory restriction on use.

In recognition of the need for County Sheriffs and local Police Departments to make greater use of drug forfeiture funds, the Michigan Legislature recently amended the Public Health Code to specifically allow a seizing agency to use drug forfeiture funds only for law enforcement purposes. (See HB 4349 (2011 PA 161), effective October 4, 2011)

This statutory amendment does not change the laws regarding property subject to forfeiture, or the forfeiture process. Rather, it impacts only how local governments can use forfeited property and the proceeds of its sale. Instead of being limited to using forfeiture funds only to enhance controlled substance law enforcement efforts, the seizing agency may use the funds only for law enforcement purposes, as appropriated by the entity having budgetary authority over the seizing agency. (See MCL 333.7524(1)(b)(ii), as amended by 2011 PA 161)

Thus, a County Board of Commissioners may appropriate drug forfeiture funds for any law enforcement purpose, including personnel, programs and equipment that are unrelated to controlled substance enforcement efforts. However, drug forfeiture funds may only serve as a supplement to, and not a replacement for, funds otherwise budgeted for law enforcement purposes.

If you have any questions or concerns, please feel free to contact us:

Peter A. Cohl
Timothy M. Perrone
Cohl, Stoker & Toskey, P.C.
601 North Capitol Avenue
Lansing, Michigan 48933
(517) 372-9000

2011 brought a new fervor to Lansing and for better or worse there was change in state government. We saw a very fast pace from the Governor and legislature bring sweeping fundamental and programmatic changes through the process from start to finish at a volume and speed that has not been seen in my 14 years at the Capitol. So, after such a year as 2011, what can we look forward to in 2012 and what areMAC’s priorities moving forward?

Personal Property Tax:

PPT repeal will surely rear its ugly head again in 2012. MAC and its coalition partners have pledged to oppose PPT repeal unless the revenue is replaced in full and guaranteed for the future. Most state officials agree that the revenue must be replaced, but shy away from a guarantee through the Constitution. Counties and other local units have had too many promises broken (revenue sharing, PILT, court funding, jail reimbursement, etc.) to buy into a promise for shared revenue this time. We need a guarantee. Many machinations of the repeal have come and gone over the past year, thanks to the demand by local units to be kept whole in the process. If the state legislature wants a tax policy change, then it needs to foot the bill.

Revenue Sharing:

Revenue Sharing isMAC’s number one budget priority. Sixty-two counties are slated to be back in revenue sharing in fiscal year 2013, at a cost of between $170 and $180 million. It is clear that the legislature is likely to try to include counties in the Economic Vitality Incentive Program (EVIP), which requires cities, villages and townships to jump through state hoops to get what used to be their statutory revenue sharing dollars. Counties gave up taxing authority years ago in exchange for revenue sharing, andMACdoes not agree that counties have to earn it again.

County Road Commission Consolidation and Reform:

The bills to allow county commissions to consolidate their county road commission’s duties into the county board of commissioners or as a department of the county will likely be finished up in 2012. The bills (HBs 5025 and 5026) are in the House for a concurrence vote and are not likely to change again. The bills allow a county board of commissioners to eliminate an elected county road commission by putting the question on the ballot, eliminate an appointed county road commission by resolution of the county board of commissioners, requires two public hearings (for either elected or appointed) before action is taken, and sunsets the provisions after three years (January of 2015). MAC was able to make sure authority over the process was kept at the elected county board of commissioners. We hope that the bill package to allow for districting of road commissioners, should the county board deem it necessary, will also pass in 2012.

Dual Eligibles:

The state applied for a special waiver from the federal government to place funding for those who are dually eligible for both Medicaid and Medicare in the same pot. Basically a block grant system for this population would be set up by the federal and state government, mixing the two revenue sources together and reducing the amounts spent. The theory is that by managing care for these individuals, efficiencies and dollar savings will be attained. MAC is concerned that quality care be maintained, and is working with county partners to ensure their stability as quality care providers. Counties would be impacted through long-term care (county medical care facilities), mental health, and public health programs for duel eligibles.

Indigent Defense:

The Governor has appointed a Commission to look at the issue of indigent defense and make recommendations for changes to the current system. MAC has the only appointment for local government on the Commission, and will work to make sure any recommendations made will hold the county harmless.

911 Rewrite and Consolidation:

The state statute governing 911 sunsets at the end of 2014, so while there is still one more session before this issue presses to the forefront, it is not too early to start discussing county needs in the rewrite. In addition, there may be efforts made to consolidate 211 and MAC will fight any plan that forces consolidation rather than incentivizes it.

Additionally, MAC will seek to find creative solutions to alleviate the state’s mandated services including tackling our most egregious unfunded mandate, the courts, thereby aiming to peel away the layers of counties most difficult financial burden. MAC also wants to work on reform of DDA/TIFA legislation that will give counties a voice in the economic development initiatives within their borders; fitting with Governor Snyder’s efforts at a more regional approach to economic development.

MACwill also be pushing for legislation to change statute to formally allow mental health to spend its general fund dollars in jails, which is currently only allowed through budget boilerplate. MAC’s dedication to reformation of PILT, including reforms contained in SB 248 (Sen. Casperson, R-DeltaCounty) that would cap the amount of land the state can own at any given time, will continue in 2012. [MP1]

This should provide you a flavor of the items MAC will be pursuing on your behalf this year. As always, we want to hear from you, if you have questions or concerns with any of the upcoming legislation you can contact me at bodkin@micounties.org

A Happy, Safe, and Prosperous New Year to you and yours!

Dear MAC Members,

It seems that a day doesn’t go by without the headlines beckoning us to respond to the unthinkable – the report of a missing child. According to the U.S. Department of Justice, nearly 800,000 children are missing each year. Approximately 58,000 of these innocent children are victims of non-family abductions and more than 200,000 are victims of family abductions.

Fortunately, there are organizations such as the National Center for Missing & Exploited Children (NCMEC), which serve as a resource in helping to prevent child abduction and exploitation. They also provide assistance in finding missing children and those who have been sexually exploited. Because of the education of families and national network provided by the NCMEC, the recovery rate of domestically missing children has grown from 62% to 96%.

Some counties have taken an active role in partnering with local government, law enforcement, schools, community-based organizations, and families in sharing information on how to protect against child abduction and exploitation.  This includes informing families about the importance of internet safety because we all recognize that increasingly social contact, especially by youth, is conducted online.

Each county in Michigan can play a vital role in making our youth and parents aware of the real dangers that exist.  And, most importantly, how to be safe.  Easy to use resources for child safety programs are available online at www.missingkids.com and www.netsmartz411.org. I hope you will take a moment and share this vital information with your local communities, law enforcement, schools, organizations and families.

Let’s make 2012 a year of caring and purpose! Wishing you a healthy, happy and prosperous New Year!

Mattie Hatchett
President, MAC Board of Directors
mattiehatchett@aol.com