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Senate OKs bills so cities don’t lose revenue

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LANSING, Mich. (AP) - Bipartisan legislation designed to ensure that local governments' budgets would not be harmed when manufacturers and small businesses get a tax cut won easy approval Tuesday in the state Senate, five months before a statewide vote on the tax overhaul.

The 10-bill package, passed on 36-2 votes, goes to the House - where it also is expected to face no hurdles.

Gov. Rick Snyder and legislators in late 2012 phased out taxes on industrial machinery starting in 2016 and small businesses' equipment beginning this year but left unresolved a way to ensure counties, cities and townships - some of which rely heavily on the revenue - are made whole. The legislation would fully replace their lost revenue with a portion of Michigan's 6 percent tax on out-of-state purchases and a special state assessment on businesses that benefit from the tax cut.

The bills supported by the Snyder administration, business interests and local officials could ensure that the ballot proposal - needed to dedicate revenue specifically to local governments - faces no organized opposition.

Though the legislation has broad bipartisan support, it was opposed by two Democrats.

Minority Leader Gretchen Whitmer, D-East Lansing, questioned if the tax cut could lead to cuts in state services. She also raised concerns that the plan could run afoul of tax-limiting provisions in the state constitution and inappropriately tell the state elections board how to write the ballot question.

Majority Republicans blocked Democrats' attempts to tie the bills to legislation that would force online retailers to collect the 6 percent sales tax in hopes of leveling the playing field for brick-and-mortar businesses.

"There is a real potential and likelihood (that) despite the new law, the new tax in this package, that there will be a loss to the state," Whitmer said.

Supporters contend Michigan can afford the tax cut as generous economic development incentives and tax credits for advanced battery facilities expire in coming years.

Sen. Jack Brandenburg, a Republican from Macomb County's Harrison Township and a sponsor of one of the bills, ticked off a long list of groups backing the legislation.

"In my 10 years in the Legislature, I have never seen a package of bills have this much bipartisan support," he said.

Businesses will save roughly $77 million in the 2015-16 fiscal year and more than $560 million a year a decade from now, according to the nonpartisan Senate Fiscal Agency.

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Online:

Senate Bills 821-30: http://1.usa.gov/1fFqPNW

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Follow David Eggert at https://twitter.com/DavidEggert00 .

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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