Council To Look At Tax Policy

February 2, 2007
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GRAND RAPIDS — The Michigan Senate held a hearing last week on the Business and Economic Stimulus Tax (BEST) proposal, an idea that came from the chamber’s Republican members a few weeks ago.

Soon the Grand Valley Metro Council will host a forum on the state’s taxing future. But this one will analyze all the proposals in play, and will tell participants how the state got into its financial crisis. Both topics will be pursued by someone who has insight into the current state of affairs and historical knowledge of the state’s taxing policy.

Tom Clay will be the featured speaker at the council’s half-day session scheduled for Feb. 14. A former state budget director, Clay will soon be packing up his three decades of toiling in public finance and will retire as the state affairs director for the Citizens Research Council of Michigan.

“He has spent 30 years in state government, almost all of those years in the Department of Treasury. He was state treasurer at one point, director of the Department of Management and Budget at another point. His knowledge of the historical perspective of state taxation policy is something we need to hear,” said GVMC Executive Director Don Stypula.

“He is also going to discuss the alternatives that are out there,” said Stypula.

The forum is an extension of the work the council’s Legislative Committee tackles on a monthly basis. State tax policy and local fiscal stability are priorities for committee members this legislative year. The top two issues under those banners are getting the state to restore revenue sharing to counties and fully fund those dollars to municipalities, and restructuring the state’s business tax so it meets the needs of local governments.

“We are going to bring the whole Metro Council family together — as many participants as possible — to delve into this in depth and in detail,” said Stypula. “We’ll have a lot of diverse opinions from people with diverse backgrounds.”

In the meantime, many Republicans in the Senate have already thrown their support behind the Business and Economic Stimulus Tax, which they see as being better than the Single Business Tax that ends at the end of the year. BEST gives business owners a choice of which tax they wish to pay, based on their gross receipts, and cuts overall business taxes by close to $300 million a year.

Senate Republicans said BEST will bring $1.5 billion in revenue to the state, less than the SBT’s last draw of $1.8 billion. And despite fewer dollars to the state from the tax, Sen. Mark Jansen, R-GainesTownship, said BEST was the best choice to replace the SBT.

“I have confidence that this plan will help change the course of our economy so that my daughter and my soon-to-be son-in-law can stay in the state and make Michigan their home,” he said.

Senate Majority Leader Mike Bishop, R-Rochester, said BEST was the culmination of four years of hearings and testimony from hundreds of individuals, along with input from members of both state chambers.

“BEST takes the good features of several recent proposals, improves upon them, and delivers an economic development plan that positions Michigan for the future,” he said.

State Rep. Michael Sak, D-Grand Rapids, said an SBT replacement had to be a “fair and equitable” tax that “doesn’t punish” business owners. When he spoke with the Business Journal, he said he wasn’t leaning toward any of the proposals.

“What plan will eventually emerge? What I would consider will probably contain sections or parts of each one of the plans that have been floated out there,” said Sak.

Stypula, who keeps in contact with legislators on a regular basis, said none of the tax plans has established itself as an early favorite with a majority of lawmakers.

“I don’t think at this stage that there is a solid leaning toward any one of the proposals or one idea,” he said.

What the Metro Council is most concerned with is that a new tax plan replaces all state revenue, so revenue-sharing payments don’t drop any further. Stypula said the city of Grand Rapids is facing a deficit of $5.5 million for the next fiscal year. If the city’s share of sales tax receipts falls again, he said the city’s shortfall could easily rise to $7 million, and that services, such as police and fire, could get cut again.

Stypula expects there will be some disagreements among forum participants as to what the state should do for a business tax. But at the same time, he is hoping the meeting establishes some consensus the Metro Council board can unanimously support.

“What I hope comes out of this is a recommendation from that forum group, which in effect is our Legislative Committee, to the Metro Council at our next meeting in March that would have a set of broad principles,” he said.

If that happens, those principles would take the form of a resolution the Metro Council will forward to everyone involved in replacing the SBT and setting the state’s taxing policy for the immediate future, including Gov. Jennifer Granholm.

The forum will be held from until at the CascadeTownship offices, 2685 Thornhills SE.    

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