Plymouth and Northville could feel the pinch of lost revenue from the phased-out elimination of the Personal Property Tax, leaders from both cities said Monday during a joint meeting in Northville between the municipalities' leadership and state legislators.
In Michigan, the PPT refers to a tax on commercial and industrial equipment and furniture that is captured by municipalities. Gov. Rick Snyder signed a lame-duck session bill in 2012 to repeal the PPT over 10 years, but the law will take effect for small businesses—which constitute much of Plymouth and Northville's respective business bases—in 2014. The phase-out begins in 2016 for larger manufacturers.
By repealing the tax, towns such as Plymouth and Northville are left wondering how to make up the lost revenue.
Northville faces a loss of $59,113, while Plymouth stands to lose $38,580 in PPT revenue in 2014, officials told Rep. Kurt Heise and Sens. Patrick Colbeck and Mike Kowall on Monday at Northville City Hall.
The state legislators all agreed the PPT places a burden on businesses.
"(The PPT) disincentivizes businesses investing in equipment," Colbeck said.
"I think that everybody is in agreement that the PPT is a burdensome tax," Rep. Kurt Heise, R-Plymouth, told the local leaders. "It thwarts job growth, deters business expansion."
Heise said details still need to be worked out in replenishing the revenue lost by the PPT phase-out, and voters will decide in August 2014 on the creation of a statewide authority to allocate the replacement funds, while local municipalities can impose an essential services assessment—to help fund police, fire and EMS services.
Heise said the loss of PPT funds also will affect downtown development authorities, public library districts and, to a smaller extent, school districts.
City officials from both Plymouth and Northville said that well-funded DDAs have been crucial in fostering vibrant small business climates in downtown Northville and Plymouth, and said neither town could afford to cut much more from their respective budgets.
"We're really concerned when we see numbers in our situation," Northville Mayor Chris Johnson said. "We're not able to cut police and fire anymore."