Potential tax losses worry GVMC members

August 13, 2011
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Members of the Grand Valley Metro Council have a major concern about future transportation funding from the federal government. The current method of funding and the federal gas tax, which is 18.4 cents per gallon, both expire Sept. 30, which marks the end of the current fiscal year.

“I think everyone has to be aware that there may be some changes,” said Michael De Vries, Grand Rapids Township supervisor, of the council’s upcoming transportation budget.

The federal gas tax is the major source of funding for highway and bridge projects, along with other transportation and transit items. The board’s biggest concern is there may be a battle in Congress soon over reauthorizing the tax because the anti-tax group Americans for Tax Reform has come out against reinstating the tax once it expires. ATR is headed by its Executive Director Grover Norquist, who recently urged Congress not to include revenue additions in negotiations during the debt-ceiling crisis.

“At this time they don’t have an agreement between the good folks in the House and Senate to extend it,” said Don Stypula, GVMC executive director, of the gas levy. Stypula, who is leaving the council in a few months, said he felt confident the tax would be reauthorized. But if it isn’t, he said a few hundred thousand jobs would be lost if there wasn’t a federal funding source for road work.

“We are on top of this and we are watching it every hour of every day,” said Stypula.

ATR claims 236 current House members and 41 senators have signed the group’s pledge not to raise taxes of any sort, unless an increase is accompanied by a spending cut of an equal amount. The no-tax pledge includes any reform to the code that would eliminate credits, subsidies, or deductions, which ATR views as tax increases instead of spending decreases. Some have estimated the code gives away $1 billion every year.

Eleven Michigan congressional representatives are listed on the group’s website as having signed that pledge, and all are Republicans: Dan Benishek, Bill Huizenga, Justin Amash, Dave Camp, Fred Upton, Tim Walberg, Mike Rogers, Candace Miller and Thad McCotter. Michigan’s two senators, Democrats Carl Levin and Debbie Stabenow, aren’t on the pledge list.

The future of another tax also has council members worried, but this time it’s at the state level. “The issue is going to be the Personal Property Tax — the abolition of the Personal Property Tax,” said Richard Root, Kentwood mayor and chairman of the GVMC Legislative Committee.

Discussions regarding the PPT may get going as early as next month, and indications are the tax will either be eliminated or phased out over a number of years. As Root explained, revenue from the PPT is money many municipalities count on heavily, and cities with commercial and industrial districts will face a further loss of revenue if the tax is erased.

What complicates the issue for municipalities is Gov. Rick Snyder has said any tax that replaces the PPT can’t be a tax on businesses, which only leaves individual taxpayers to pick up the missing revenue. “Where is the money going to come from?” asked Root. “This is going to be a robust debate.”

As far as the Metro Council financial health is concerned, Stypula said the third-quarter figure shows the fiscal-year budget to be on track. “We anticipate we will be right on track as the fiscal year comes to a close,” he said. The council’s upcoming budget, which goes into effect Oct. 1, has revenue of $2.05 million and a preliminary surplus of $17,000.

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