What do Cooley High School, jet fuel and boner pills all have in common?
GOP lawmakers in Michigan want them all to be tax free, largely at the expense of public education.
Last week we reported about a number of bills pending in the legislature that will negatively impact Michigan’s School Aid Fund, among them was House Bill 4831, introduced back in June by Lisa Posthumus-Lyons, the chair of the House Committee on Education. On the surface, the proposed law appears to have nothing to do with school funding. It would exempt over-the-counter and prescription medications from sales tax. Yet, the House Fiscal Agency found that the tax break would rob the SAF of approximately $6 million. That bill passed the House last Tuesday and now moves on to the Senate.
Another bill (HB-4121) was just passed this week by the Michigan House which would give a handsome five-year property tax break to buyers of public school properties. Detroit Public Schools currently have about 120 properties they wish to unload. The current version of the proposed legislation has a caveat that allows “local tax-collecting units” (such as libraries, counties…) to individually opt-out of the tax give away. The House Fiscal Agency noted that the Department of Treasury is in opposition to the bill, primarily due its negative impact on the SAF:
Critics of the bill, notably the Department of Treasury, have said that while the school district selling the property benefits from a tax exemption under the bill (because it both increases the value of the property and helps the property sell), all other districts pay the cost because the state School Aid Fund will have to make up for the revenue that is lost but would have been collected without the exemption. They also say that to the extent property remains unsold because of the need for environmental remediation, then that should be dealt with by other state programs rather than a tax break. Concern was also expressed about the messiness of allowing individual taxing units to opt out, with the result that the property would be exempt in some jurisdictions and not exempt in others.
The fiscal impact of this legislation is difficult to quantify, but it would just be piling-on when added to other pending legislative assaults the Michigan Education Association has identified that will deplete the SAF:
- Senate Bills 89-90 and House Bill 4234, which would eliminate the sales and use taxes on the difference between the value of a trade-in and new vehicle, resulting in a $152 million loss in school aid
- Senate Bills 142-143, which would eliminate sales and use taxes on prewritten software, causing up to $11 million in lost school revenue
- House Bill 4135, which would eliminate the requirement to pay local school operating mills on foreclosed properties and result in up to $42 million in lost school funding
- House Bill 4572, which would eliminate the sales tax on aviation fuel and reduce school funding by up to $41 million
That adds up to a quarter billion dollar impact on the SAF alone, and a deepening of the manufactured crisis in Michigan’s public education. So much for being fiscally responsible.
Amy Kerr Hardin