Michigan homeowners would see their property taxes go down under bills that passed in the state House of Representatives Wednesday night.
For House Speaker Matt Hall (R-Richland Twp.), it's part of a Republican plan to shrink Michigan's budget and trim excess spending from state programs.
The bill package would repeal the state education tax and taxes on property sales, and place further limits on how much property taxes can increase on a home between sales.
The bills would also create more exemptions for personal property taxes. Public utilities would be allowed to claim those new exemptions, but they’d have to lower rates in exchange. There would be a two-year freeze on rate increases.
Hall said he expects to see the proposals included during budget talks.
“It’s part of the negotiation. I mean our plan is to get property tax cuts, and to do a budget that doesn’t raise taxes and doesn’t take money from the rainy-day fund,” Hall told reporters during a press conference following House session Wednesday night.
The nonpartisan House Fiscal Agency estimates the changes could cost state and local governments billions of dollars. School funding would see the biggest hit, but revenue for other local services would also feel the impact.
State Representative Stephen Wooden (D-Grand Rapids) said the tradeoff isn’t worth it.
“Any savings that every day Michiganders will feel with this tax cut are not go far when they’re going to have to pay more for their car repairs because our roads are falling apart, when they have to pay for higher home insurances because we’ve defunded public safety services, and when you’re going to have to higher tutors for your kids because our classes are underfunded,” Wooden said.
While the House passed each of the bills to lower property taxes, it did not take up a bill to replace that budget gap with taxes on what Republicans describe as luxury services.
The existing bill doesn’t define what those services would be. But Hall has described them as taxes on things like lobbying, telemarketing, and limousines.
Hall said he wanted to wait to get input from the state Treasury on how to make sure the tax cuts would be revenue neutral. He assured reporters that would be the only way to get it across the finish line.
“You’re not going to get a deal on this property tax reform unless you have a balanced deal in divided government, with a Democrat governor and a Democrat Senate. It will be balanced,” Hall said.
But Wooden said he didn’t see how.
“The only way we’re going to expand our sales tax on services in a way that fills a $5 billon hole is if we start taxing services that aren’t luxuries,” Wooden said.
All but one Democrat voted against each of the bills. The lone Democratic vote came from state Representative Karen Whitsett (D-Detroit) in a rare appearance at the state capitol.
Speaking alongside Hall at the press conference, Whitsett said she felt the property tax cuts would help her city.
“We’re trying to move people into Detroit, we want more people there, we want to have more people who are homeowners," Whitsett said.
The bills now go to the Democratic-led state Senate.
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