LANSING (AP) – Fresh off lowering Michigan’s overall business taxes in a bid to boost economic growth, Republicans will aim to eliminate or phase out a state tax paid on business equipment in 2012.
Lawmakers are scheduled to return to the state Capitol on Wednesday to start the final year of a two-year legislative cycle. No voting is expected Wednesday, but Republicans this year plan to build on legislation passed in 2011 that changed Michigan’s tax code and aimed to reduce some of the state’s long-term financial obligations.
They’ll be working with Republican Gov. Rick Snyder, who is scheduled to give his second annual State of the State address on Jan. 18 and detail his latest budget proposal in early February.
Republicans have a 62-46 edge over Democrats in the House with two vacancies. All House seats are up for election in November. Republicans hold a 26-12 advantage in the Senate, with the next round of elections set for 2014.
Changes to the state’s personal property tax system for businesses will be a priority for Republicans, who say it could help improve the state’s climate for employers.
Republicans would like to eliminate or phase out the tax paid on property such as equipment, furniture and computers. But they aren’t yet sure how to possibly replace or offset the $1 billion raised annually by the tax, which supports local governments and schools. It’s also not clear how utilities might be addressed through personal property tax reform.
“Personal property tax reform is something we have to do to be competitive in the Midwest and nationwide, so that will be one of our priorities,” said Senate Majority Leader Randy Richardville, a Republican from Monroe.
House Speaker Jase Bolger, a Republican from Marshall, calls the personal property tax “a horrible tax that provides essential revenue.”
Sen. Gretchen Whitmer of East Lansing, the top-ranked Democrat in the Michigan Senate, says any revenue lost from the possible elimination of the personal property tax must be replaced.
“If they choose to simply eliminate the personal property tax without finding a way to restore the money it provides our communities, they will be sending a clear message to our cities and townships that essential services like public safety are not a priority,” Whitmer said in a statement.
Michigan lawmakers last year approved changes aimed at saving money in the state employee retirement system. The changes include requiring state employees who want to stay in a defined benefit pension plan to contribute 4 percent of their compensation toward the system.
A similar plan could be used to help shore up the public school employee retirement system in 2012.
Republicans and Democrats alike are hopeful that public school funding won’t have to be cut in the fiscal year that starts next October. That process will begin to unfold with Snyder’s upcoming budget proposal.
Funding for roads and other transportation improvements is likely to be a hot topic in the Legislature this year, but it’s unclear how or if a proposed second bridge between Detroit and Canada will be included in the debate. Snyder wants a new bridge but the proposal stalled in the Senate last year.
Republicans likely will push for changes to Michigan’s no-fault auto insurance laws, particularly as the issue relates to coverage for people seriously injured in accidents.
Some Michigan Republicans are likely to push for right-to-work legislation, although the proposal isn’t backed by Snyder.
Richardville is among the lawmakers pushing for changes that could lead to improved insurance coverage for certain autism treatments. That proposal fizzled in the Senate in 2010 but is likely to come up again in 2012.
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