2014-05-08 / Front Page

Values drop in county

New report shows hit from personal property tax loss

MANISTIQUE – New legislation phasing out the state’s personal property tax has negatively affected the county’s tax revenue. The issue, along with an overall drop in the taxable value of county property, was discussed during a recent meeting of the Schoolcraft County Board of Commissioners.

According to Paul Wood, county equalization director, the equalization report reflects a lessthan rosy picture of the county’s taxable position.

“The numbers pretty well speak for themselves,” he said.

For example, Wood explained the county experienced a drop of approximately 2.5 percent, or around $11 million, in assessed property value for 2014. Around 62 percent of this loss was due to changes in the personal property tax laws.

“As you know, the state has enacted some new laws which have adversely affected our values – they’ve taken a lot of our values away,” Wood said.

Public Acts 401, 402, and 403 of 2012 reduce property taxes on different types of personal property depending on several factors, according to the Michigan Legislature’s website. Public Act 402 exempts all commercial and industrial personal property owned by a single taxpayer and contained within a local tax collecting unit, if the total value of the industrial and commercial personal property is less than $40,000. The exemption was available beginning Dec. 31, 2013.

Both PA 401 and PA 403 eliminate personal property taxes on industrial and commercial personal property if the property meets the definition of “eligible manufacturing personal property. Public Acts 401 and 403 will eliminate taxes on affected personal property over a period of years.

Despite the loss in potential revenue to entities, such as the county, the legislature also passed Public Acts 404, 406, 407, and 408 to provide various mechanisms to potentially replace a portion of revenue lost.

According to Wood, the loss of personal property tax revenue was not the only factor negatively affecting the county’s report.

“One of our major utilities … the state tax commission granted them a 60 percent exemption,” he said. “I have no idea why.”

Though Wood would not name the utility receiving the exemption, due to confidentiality issues, he noted the move resulted in a loss of approximately $2-2.5 million for the county.

In addition to the personal property tax loss and the utility exemption, Wood explained the county lost due to another legislative action.

“We lost, the last count was over $600,000, to the veteran’s exemption,” he said.

According to the Legislature’s website, Public Act 161 of 2013 provides totally disabled military veterans an exemption from property taxes on their primary residence and extends that exemption to a disabled veteran’s spouse, if the veteran dies before the tax break is granted.

Real property value in three of the county’s township increased, and if any township experienced a decline, Wood said they only did so “marginally”.

“That wasn’t where the problem was,” he added.

Beside the outlying county property values, he noted that attention should be directed to properties within the city.

“The city of Manistique property continues to decline,” Wood said. “It just doesn’t seem to end.”

At this point, Wood said the county is looking at an overall drop of 1.4 percent in taxable value.

“That’s not as bad as it sounds for us,” he said. “It may not be a drop at all, because a lot of that value lost is in the DDA (Downtown Development Authority) and we don’t collect on that anyway.

I don’t think you need to be overly concerned about the taxable value right now,” he added.

Return to top