Gov. Rick Snyder rolled into town Nov. 1 in some highly visible wheels: a colorful bus covered tip to tail in advertisements urging Michiganders to vote yes on Proposal 1 and no on the remaining five ballot issues.
His morning stop in Sterling Heights was part of a four-day bus tour to combat what he deemed rampant misinformation on the proposals.
The Sentry sat down with the Republican governor at Penna’s of Sterling, prior to a town hall meeting attended by local leaders and residents, to talk about some recent issues relevant to Sterling Heights.
Asked what he’s seen in his travels statewide in terms of how Sterling Heights and other large cities are faring, Snyder expressed optimism.
“We’re the comeback state in the United States; we should be really proud of that,” he said. “Unemployment’s down almost 5 percentage points. Personal incomes are up in Michigan for the first time in years. Our economy — we’re the sixth fastest growing state in the nation this last year. Homes are selling again; home prices are up.
“Those are all good things. And we need to keep it up,” Snyder said. “What I would say is that’s great, but it’s not good enough — I want to keep going.”
An issue particularly troubling for Sterling Heights is the potential elimination of the personal property tax for industrial businesses, which could have a significant impact on the city, due to the quartet of sizeable automotive plants within its borders.
“My view is it’s a really dumb tax because what it does is discourage capital investment, manufacturers from adding equipment and such,” said Snyder.
But he said he’s not blind to the concerns of the municipalities that rely on the tax as a revenue source.
“Local governments are our partners, and so we need to do it in a way where we don’t create undue hardship on local governments,” said Snyder. “So the question is, is how do we do it in a fashion where we create a replacement revenue stream so they can continue to be successful?”
Snyder said the reform is “taking a fair amount of time” because officials are working with the industrial community, as well as municipal government leaders, to find a solution that’s palatable across the board.
“This is something that we’d like to move forward with after the election,” he said. “It could be still this year, or hopefully the first part of next year, that we get this done.”
While Snyder indicated that there are several solid ideas for providing local governments reassurances on a reliable revenue source, he declined to elaborate because he said a state team is currently bouncing the idea off local leaders for feedback.
“It’s sort of in the research phase, but it’s fairly far along,” he said.
PPT reform will not occur overnight. If it moves forward, the tax will be phased out over an extended period, he added.
Sterling Heights City Manager Mark Vanderpool agreed that there has been dialogue with cities, but he hinted that legislators may be hesitant to implement PPT overhaul pre-election because many residents are leery of the change.
According to Vanderpool, Sterling Heights is guaranteed to lose at least $14 million over a nine-year phase-out, under the proposal as it stands. If that occurs, there would have to be either additional police and fire personnel cuts or a local millage increase, he said.
“The state says it’s all for the greater good, it’s all to bring in business,” he said. “It’s our position in Sterling Heights … that businesses choose to locate in communities for many reasons, and taxes are just one of those reasons.”
Ticking off examples such as safety, a qualified workforce, transportation, dependable public services and quality schools, Vanderpool argued that there needs to be “a proper balance between pro-business/low taxes and all these quality-of-life factors.”
Vanderpool also noted that the last few years have been some of Sterling’s best in securing large-scale business investments, and it’s happened under the current tax system.
“We stand ready and willing to work with our state legislators on coming up with something that is much more desirable regarding the personal property tax and replacement, and there probably is some common ground — we just simply haven’t found it yet,” he said.
Tax abatements have been the source of some contention among Sterling Heights City Council members of late, and Snyder said he leaves local abatements to the discretion of the municipalities but feels the state has historically “overused” tax credits as incentives.
He said he believes it’s wiser to embrace the concept of “economic gardening,” helping companies already in Michigan grow and thrive, versus big incentive packages to lure out-of-state firms.
“We do that, not by tax credits, but by creating a better environment overall for all business,” he said, citing elimination of the Michigan Business Tax, regulatory reform and support for training programs as examples. “My view is we’ve shifted our emphasis away from tax credits and more toward a great level playing field.”
Sterling Heights City Council has typically approved tax abatement requests, but the topic has triggered more discussion in recent months than in the past, as Councilman Paul Smith has repeatedly insisted that companies — many with budgets far larger than the city’s — should pay the full taxable rate, especially considering the current financial climate.
His colleagues have countered that the abatements secure sizeable investments and solidify Sterling Heights’ business-friendly reputation among companies looking to expand or relocate.
Council’s most recent abatement approvals involved around $170 million in new investments at Ford Motor Co.’s two Sterling-based plants, which involved abatements of more than $4.5 million in taxes across 12 years.
Snyder has made consolidation of programs and services among municipalities one of the cornerstones of state revenue sharing allocations, and he praised Macomb County’s efforts in that vein.
He specifically noted a pending $11 million plan to consolidate the county’s Department of Roads, Sheriff’s Office and Emergency Management and Communications Department into a single center as a prime illustration.
Sterling Heights administrators have been quick to tout their consolidation efforts throughout the last few years, with the most recent example involving a partnership with Macomb County on emergency management versus having an in-house staffer dedicated to the task.
After individual interviews with media, Snyder transitioned downstairs to a ballroom, where he spent an hour fielding questions from the audience about the six ballot proposals.
Snyder insisted that five of the proposals, which entailed amendments to Michigan’s constitution, “could stop this reinvention, this comeback,” and noted that several of them had the potential to nullify other portions of the constitution, as well as a slew of laws.
According to Sara Wurfel, Snyder’s press secretary, the governor visited 13 communities and nearly three dozen sites during the four-day bus tour, which included stops in Lake Orion, Pontiac, Livonia and Detroit.
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