As 2010 ended, the League scored another big victory when Governor Jennifer Granholm vetod SB 77. The bill was substituted during the final late-night session, and the final language would have specified that homes going through foreclosure and owned by banks and lending institutions could maintain the principal residence exemption (the 18 mills of local school tax). Proponents of the bill said it would assist in getting these homes into the hands of buyers more easily since they won't have such high tax bills upon purchasing the homes. However, in a bid to make sure the state isn't on the hook for the reductions in local school funding, the legislature wrote the bill so that the institutions have to pay a PILOT in the amount of the taxes that would be lost. This would create a wave of administration problems for local treasurers, in addition to the numerous technical problems in the legislation. And, more importantly, this would have set a precedent for the State to capture part of the local tax administration fee, as the bill stipulated that the State receive 1/2 of the administration fee on these parcels.
The League sent Governor Granholm a strongly-worded letter requesting that she veto SB 77, which she did on December 22nd. She mentioned in her veto message that local government leaders had expressed opposition. She specifically said, "They assert that while the legislation may be well-intended, the mechanism for implementation is flawed, administrative costs would be imposed on local governments without funding and needed revenue would be diverted from local communities."
Andy Schor is the Assistant Director of State Affairs for the Michigan Municipal League. Contact him at (517) 908-0300 or by email at aschor@mml.org.
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