Bill Text: MI SB1072 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Taxation; other; reimbursement for revenue lost as a result of personal property exemption; provide for. Creates new act.
Spectrum: Partisan Bill (Republican 11-0)
Status: (Engrossed - Dead) 2012-12-05 - Referred To Second Reading [SB1072 Detail]
Download: Michigan-2011-SB1072-Engrossed.html
SB-1072, As Passed Senate, May 10, 2012
SUBSTITUTE FOR
SENATE BILL NO. 1072
A bill to provide for the reimbursement of certain funds to
local taxing units; to create certain funds; and to set forth the
powers and duties of certain state departments and state officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"personal property tax exemption reimbursement act".
Sec. 2. As used in this act:
(a) "Category of political subdivision of this state" or
"category" includes, but is not limited to, the following:
(i) Counties.
(ii) Cities.
(iii) Villages.
(iv) Townships.
(v) Authorities.
(vi) Local school districts.
(vii) Intermediate school districts.
(viii) Community college districts.
(ix) Libraries.
(x) Other local taxing units.
(b) "Certificated credit" means that term as defined in
section 107 of the Michigan business tax act, 2007 PA 36, MCL
208.1107.
(c) "Commercial personal property" means personal property
classified as commercial personal property under section 34c of the
general property tax act, 1893 PA 206, MCL 211.34c.
(d) "Debt mill loss" means revenue loss associated with debt
mills that were levied in the 2012 fiscal year and that have not
expired or been subsequently renewed.
(e) "Direct integrated support" means research and development
functions, testing and quality control functions, engineering
functions, and warehousing functions necessary for personal
property that is the result of industrial processing.
(f) "Economically distressed local taxing unit" means a local
taxing unit that meets 1 or more of the following conditions:
(i) Has entered into a consent agreement or has an emergency
manager appointed under the local government and school district
fiscal accountability act, 2011 PA 4, MCL 141.1501 to 141.1531, or
any successor statute.
(ii) Has a projected deficit in the general fund for the
current fiscal year in excess of 5% of the general fund revenue.
Senate Bill NO. 1072 as amended May 10, 2012
(iii) Has a bond rating that is less than investment grade
according to a recognized bond rating agency.
(iv) Has had a smaller increase or greater decline in taxable
valuation than the statewide change in taxable valuation in 3 of
the immediately preceding 5 years.
(v) Is determined to be economically distressed by the
department of treasury.
(g) "Eligible manufacturing personal property" means all
personal property that is located on a parcel of real property if
that personal property is used more than 50% of the time in
industrial processing or in direct integrated support. The
percentage of use of personal property in industrial processing or
in direct integrated support shall be determined in the following
manner:
(i) Multiply the true cash value of each individual item of
personal property located on that parcel of real property by its
percentage of use in industrial processing or in direct integrated
support.
(ii) Add the result of calculation under subparagraph (i) for
all personal property located on that parcel of real property.
(iii) Divide the result of the calculation under subparagraph
(ii) by the total true cash value of all personal property located
on that parcel of real property.
<<
Senate Bill No. 1072 as amended May 10, 2012
(h)>> "Fund" means the personal property tax reimbursement fund
created in section 3.
<<(i)>> "General property tax act" means the general property tax
act, 1893 PA 206, MCL 211.1 to 211.155.
<<(j)>> "Industrial personal property" means personal property
classified as industrial personal property under section 34c of the
general property tax act, 1893 PA 206, MCL 211.34c.
<<(k)>> "Industrial processing" means the conversion or
conditioning of tangible personal property by changing the form,
composition, quality, combination, or character of the property for
ultimate sale at retail or for use in the manufacturing of a
product to ultimately be sold at retail. Industrial processing does
not include the generation of electricity for sale.
<<(l)>> "Local taxing unit" means any political subdivision of
this state, including, but not limited to, a county, city, village,
township, authority, intergovernmental entity, local school
district, intermediate school district, community college district,
library, or any other entity that collected ad valorem taxes levied
on commercial personal property or industrial personal property
before January 1, 2016, which commercial personal property or
industrial personal property is exempt from the collection of ad
valorem property taxes under the general property tax act after
December 30, 2015.
<<(m)>> "Lost tax capture" means a reduction in captured tax
increment finance revenues to the extent that the amount of the
reduction does not exceed the authority's debt service obligation
for that fiscal year for obligations issued in or prior to the 2012
Senate Bill No. 1072 as amended May 10, 2012
fiscal year.
<<(n)>> "Tax increment financing authority" means an authority or
other entity that captures taxes under 1 or more of the following:
(i) 1975 PA 197, MCL 125.1651 to 125.1681.
(ii) The tax increment financing authority act, 1980 PA 450,
MCL 125.1801 to 125.1830.
(iii) The local development financing act, 1986 PA 281, MCL
125.2151 to 125.2174.
(iv) The brownfield redevelopment financing act, 1996 PA 381,
MCL 125.2651 to 125.2672.
(v) The corridor improvement authority act, 2005 PA 280, MCL
125.2871 to 125.2899.
(vi) The historical neighborhood tax increment finance
authority act, 2004 PA 530, MCL 125.2841 to 125.2866.
(vii) The neighborhood improvement authority act, 2007 PA 61,
MCL 125.2911 to 125.2932.
(viii) The water resource improvement tax increment finance
authority act, 2008 PA 94, MCL 125.1771 to 125.1794.
(ix) The private investment infrastructure funding act, 2010 PA
250, MCL 125.1871 to 125.1883.
<<(o) "Voter-approved qualified mill loss" means revenue lost associated with voter-approved qualified mills.
(p) "Voter-approved qualified mills" means a millage levied
in the 2012 fiscal year or that will be levied in a subsequent fiscal year for a specific purpose or activity as stated in the question presented to and approved by the voters prior to the 2013 fiscal
year and that is not a general operating millage for a county, city, village, or township.>>
Sec. 3. (1) The personal property tax reimbursement fund is
created within the state treasury.
(2) The state treasurer may receive money or other assets from
any source for deposit into the fund. The state treasurer shall
direct the investment of the fund. The state treasurer shall credit
to the fund interest and earnings from fund investments.
(3) Money in the fund at the close of the fiscal year shall
Senate Bill No. 1072 as amended May 10, 2012
remain in the fund and shall not lapse to the general fund.
(4) The department of treasury shall be the administrator of
the fund for auditing purposes.
(5) The department of treasury shall expend money from the
fund, upon appropriation, only to reimburse local taxing units and
tax increment financing authorities for any reduction in revenue
resulting from the exemption of certain personal property from the
collection of taxes under the general property tax act.
Sec. 4. (1) Beginning in the 2013 fiscal year and each fiscal
year thereafter, subject to subsection (2), the department of
treasury shall determine the debt mill loss <<and voter-approved
qualified mill loss>> for each local taxing
unit as a result of an exemption initially effective after December
30, 2012 of industrial personal property, eligible manufacturing
personal property, and commercial personal property.
(2) In order to be eligible for reimbursement under this act,
each local taxing unit shall submit to the department of treasury,
within 180 days after the end of its 2012 fiscal year, in a form
prescribed by the department of treasury, the number of debt mills
levied in fiscal year 2012 <<and the number of voter-approved
qualified mills approved by the voters prior to the 2013 fiscal
year that are levied in fiscal year 2012 or will be levied in a subsequent fiscal year>>.
(3) The department of treasury shall submit the total amount
of debt mill loss <<and voter-approved qualified mill loss>>
determined for all local taxing units in this
state to the chair and minority vice-chair of the appropriations
committees of the senate and the house of representatives.
Sec. 5. (1) Beginning in the 2016 fiscal year and each fiscal
year thereafter, subject to subsection (2), the department of
treasury shall prepare an estimate for each category of political
subdivision of this state of the aggregate amount by which revenue
Senate Bill No. 1072 as amended May 10, 2012
lost in that fiscal year by each individual local taxing unit in
that category as a result of an exemption initially effective after
December 30, 2012 of industrial personal property, eligible
manufacturing personal property, and commercial personal property
exceeds 2% of the <<general fund>> revenue in the 2012 fiscal
year of that local taxing unit, plus the aggregate amount of lost
tax capture for each tax increment financing authority in that
category in that fiscal year as a result of the exemption. However,
in the case of an economically distressed local taxing unit, the
department of treasury may consider the amount by which revenue
lost in that fiscal year as a result of an exemption initially
effective after December 30, 2012 of industrial personal property,
eligible manufacturing personal property, and commercial personal
property exceeds 1% of the <<general fund>> revenue in the 2012
fiscal year of that economically distressed local taxing unit. In
preparing the estimates under this subsection, the department of
treasury may consolidate 1 or more categories of political
subdivisions of this state if the department of treasury determines
that there is a logical basis for consolidation of those categories
and that consolidation of those categories is reasonable and
necessary for the effective administration of this act.
(2) The estimate of the aggregate amount of revenue lost by
each category of political subdivision of this state or
consolidated category under subsection (1) shall not include debt
mill loss<<, voter-approved qualified mill loss,>> or revenue lost from
the levy of school operating mills
under section 1211 of the revised school code, 1976 PA 451, MCL
380.1211.
Senate Bill No. 1072 as amended May 10, 2012
(3) In order to be eligible for reimbursement under this act,
each local taxing unit shall submit to the department of treasury,
in a form prescribed by the department of treasury, the following:
(a) Within 180 days after the end of its 2012 fiscal year, the
ad valorem and specific taxes levied on and the revenue collected
from commercial personal property and industrial personal property
by that local taxing unit in the 2012 fiscal year.
(b) Within 180 days after the end of its 2012 fiscal year, the
dollar amount equal to 2% of that local taxing unit's <<general
fund>> revenue in the 2012 fiscal year.
(c) Beginning in 2013 and each year thereafter, the amount of
ad valorem and specific taxes levied on and the revenue collected
from commercial personal property and industrial personal property
by that local taxing unit in that year.
(4) In order to be eligible for reimbursement under this act,
each tax increment financing authority, within 180 days after the
end of its 2012 fiscal year and each year thereafter, shall submit
to the department of treasury, on a form prescribed by the
department of treasury, all of the following:
(a) The amount of ad valorem and specific taxes levied by each
local taxing unit on commercial personal property and industrial
personal property that is captured and retained by the authority in
the fiscal year.
(b) The amount that the authority's tax increment revenues in
the fiscal year are insufficient to make the required payments due
in that fiscal year on obligations incurred before the end of its
2012 fiscal year.
Senate Bill No. 1072 as amended May 10, 2012
(5) In preparing the estimates for each category of political
subdivision of this state or consolidated category under subsection
(1), the department of treasury shall apply best practices. The
department of treasury shall consider all relevant data available
at the time the estimate is made, relevant historical data, and any
other factors the department reasonably determines to be relevant
to its estimate.
(6) The department of treasury shall include on its website a
summary of the methodology used to make the estimate under
subsection (1).
(7) The department of treasury shall submit the estimate to
the chair and the minority vice-chair of the appropriations
committees of the senate and the house of representatives.
Sec. 6. Beginning in the 2013 fiscal year and each fiscal year
thereafter, the legislature shall appropriate to the personal
property tax reimbursement fund an amount equal to the total amount
of debt mill loss <<and voter-approved qualified mill loss>> determined
by the department of treasury under
section 4.
Sec. 7. Beginning in the 2016 fiscal year and each fiscal year
thereafter, the legislature shall appropriate to the personal
property tax reimbursement fund, at a minimum, an amount equal to
the estimate prepared by the department of treasury under section 5
for each category of political subdivision of this state, including
consolidated categories. The legislature may appropriate to the
personal property tax reimbursement fund an additional amount as
determined by the legislature to reflect any additional factors
determined relevant by the legislature.
Senate Bill No. 1072 as amended May 10, 2012
Sec. 8. The department of treasury shall annually pay from the
fund all of the following:
(a) Beginning in the 2013 fiscal year and each fiscal year
thereafter, the amount of debt mill loss <<and voter-approved qualified
mill loss>> determined under section 4
to each local taxing unit in this state.
(b) Beginning in the 2016 fiscal year and each fiscal year
thereafter, an amount determined by law to each local taxing unit
and tax increment financing authority. The total amount paid to all
local taxing units and tax increment financing authorities within a
category of political subdivision of this state or consolidated
category shall equal the amount appropriated for that category or
consolidated category under section 7.
Sec. 9. It is the intent of the legislature that the amount
appropriated to the personal property tax reimbursement fund under
sections 6 and 7 will be derived from an anticipated revenue
increase resulting from the elimination of certain tax expenditures
upon the expiration of certificated credits.
