Government and Real Estate

Local group beats lame duck deadline

A hectic last minute push by coalition succeeds in getting ‘better’ PPT bill.

January 18, 2013
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During the waning moments of the state Legislature’s lame duck session, House Speaker Jase Bolger told a contingent of local government officials and business representatives they had an hour to find 56 votes to ratify a version of the Personal Property Tax phaseout legislation that contained an acceptable revenue reimbursement plan.

If they had failed, an earlier version passed by the state Senate could have come up for a vote. It was a bill that was considered to be the “nuclear option” by most local government observers.

“We felt we were going to lose PPT with no replacement. There were the votes for that,” said John Weiss, executive director of the Grand Valley Metro Council.

Businesses, on the other hand, were concerned the lack of a sufficient revenue replacement plan would scuttle the entire effort to rid the state of a tax they generally disliked. So the two distinct groups, with separate agendas, came together as a unit and succeeded in finding the necessary House votes to get a “better bill” through the Legislature in the bottom of the ninth.

“It was an interesting lame duck,” said Jim Miller of Governmental Consultant Services Inc., a lobbying firm that represents Grand Rapids and Ottawa County in Lansing. “When the emphasis shifted to revenue replacement (in 2011), locals were not happy with those particular plans. We had to get 56 representatives.”

Kent County, Wyoming, GVMC, Grand Rapids Area Chamber of Commerce and Clark Hill municipal attorney Scott Smith joined Miller and his clients in talking with Lt. Gov. Brian Calley about alternative legislation last year. Then they pressured lawmakers last month to accept what they felt was a more reasonable PPT bill.

“The participants in the work group knew how the PPT worked. In some cases, we had 24 hours or less to turn over papers to the lieutenant governor,” said Smith.

With time running out in the session, Smith added that the state Treasury Department only gave the group 30 minutes to change the bill’s language to meet the replacement revenue provision they wanted.

“Tensions were high, as were emotions,” said Grand Rapids Deputy City Manager Eric DeLong. “We knew that some PPT legislation was inevitable. Nobody loved the PTT; it’s hard to administer.”

“It was a fast-moving pace — faster than any other lame duck I’ve covered — and legislators were tired,” said Miller.

Miller said they scurried to get the House votes and followed up with the Senate. “The effort the local group put into getting the bill approved can’t be understated. It was a very interesting process, but they carried the load.”

“It’s more complicated than what we proposed, but it’s workable,” said DeLong. “What we achieved as far as PPT reform is concerned is better than what the Senate had.”

The legislation offers many cities and counties up to 80 percent of their revenue loss when the PPT is erased from the books and gives them the authority to create an assessment to cover the difference. Starting next year, businesses that invest $40,000 or less will have their PPT exempted.

But one apprehension of the legislation’s first phase-out step is that a company may invest, say, $100,000 in taxable equipment next year and then spread that investment across three separate LLCs, with each containing less than a $40,000 investment, in order to avoid the tax completely.

Andy Johnston, the chamber’s vice president of government affairs, thanked the council, the cities and the counties for their roles in helping to get the legislation passed.

“This removes a significant barrier to investment and jobs. This was a big deal,” he said. “We’re going to have to work together to get the vote passed in August 2014.”

The vote Johnston referred to is a statewide ballot measure that will ask citizens to approve shifting the revenue generated by the business use tax from the general fund to a state authority that will distribute the cash to local governments to cover some of the revenue lost from the PPT’s elimination.

If voters don’t approve it, then it’s back to the starting block.

“If the August 2014 vote doesn’t pass,” said DeLong, “we’re back to the nuclear option.”

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