BRIAN DICKERSON: Lansing continues to reform taxes the irresponsible way

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Brian Dickerson

Brian Dickerson

ould you buy something without having any idea what it costs?

I last posed this question a few months ago, not long after Michigan legislators adopted a bill sharply limiting who the state can go after for payment of delinquent corporate taxes.

I noted that Public Act 3 had won nearly unanimous approval even though the nonpartisan agency responsible for putting price tags on legislative proposals conceded that it had no earthly idea what the bill would cost to implement.

It was only three months later, long after Gov. Rick Snyder had signed P.A. 3 into law, that his Treasury Department got around to calculating that the changes mandated by the bill would cost the state a cool $280 million in lost tax revenue.

Oops!

Déj… vu?

Now, incredibly, the state Senate has teed up another so-called tax reform package with an equally uncertain price tag.

Introduced earlier this month by state Sen. Bruce Caswell, R-Hillsdale, and referred to the full Senate last week by a party-line vote in the Senate Finance Committee, Senate Bills 1038, 1039 and 1040 would make it easier and cheaper for businesses unhappy with their property tax bills to appeal their local tax collectors’ decisions about property classification and property tax exemptions.

The bills would also adjust the jurisdiction of an assortment of state and local entities that decide tax appeals, making it easier for some taxpayers to file appeals with the state Tax Tribunal and Tax Commission (whose members are appointed by the governor), and the state Court of Claims (whose judges are appointed by the Republican-controlled state Supreme Court).

How much tax revenue would Michigan lose each year if lawmakers eager to throw taxpayers a bone before the November elections adopt Caswell’s bills?

As in the case of P.A. 3, no one wants to hazard a guess.

Uncharted territory

The Senate Fiscal Agency, whose job it is to estimate what every piece of legislation proposed by state lawmakers would cost to implement, allows that Caswell’s bills “would tend to reduce state and local property tax revenue, and increase the cost of state school aid payments to local school districts,” but adds in its report to senators that “the size of these effects is unknown.”

Among those whose tax collections may be substantially reduced, the report says, are “local governments, local school districts, intermediate school districts, and community colleges.”

The fiscal agency said the amount of tax revenue various units of government stand to lose depends on “the number and magnitude of additional appeals” filed by unhappy taxpayers, which it declines to guess at. But, the agency notes, the state Treasury Department has estimated that the adoption of Caswell’s bills will generate an additional 20,000 additional tax appeals each year.

That sounds like a lot to Samantha Harkins, the Michigan Municipal League’s top lobbyist, who said Caswell’s initiative is part of “a continual chipping away” of the tax revenues that Michigan’s cities and counties depend on to provide basic services.

“The problem is that people still expect the police to come when they call 911,” Harkins said. “And they still expect the sewers to function in a big storm.”

Streamlining

Caswell says his initiative began taking shape a couple of years ago, when Snyder administration officials suggested that he draft legislation to “streamline” the property tax appeals process.

“I’m not trying to hoodwink anybody, and this isn’t coming from any special-interest group,” Caswell told me. A former tax assessor, Caswell says his only objective has been to make the tax appeal product more efficient and consistent.

But what about the cost, I asked him. How can any responsible lawmaker vote for this without knowing whether it will cost the state $1 million in annual tax revenue or $250 million?

“Well, I can’t speak for other lawmakers,” Caswell responded. “But if this results in taxpayers coming in with more appeals because they feel more comfortable doing it, is that a bad thing?”

As far as I know, all the changes Caswell proposes to make are swell ones. (“It’s my understanding,” he says, that the Snyder administration supports his bills, although Treasury officials have never testified in favor of them, and the department didn’t respond to my repeated inquiries.)

But in a state that struggles to fund basics like roads and schools, it’s irresponsible for lawmakers to embrace any initiative without knowing what it will cost.

And when the best financial advisers the Legislature has figure a bill is bound to cost somebody a lot of money but can’t say who or how much, it’s time to go back to the drawing board.

Brian Dickerson is a columnist for the Detroit Free Press.

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Posted by Tribune News Services

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