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Thursday, September 16, 2010

Official Wants College Property Taxes Exempt From Renaissance Zones

LANSING - With the state moving to end a 14-year policy of reimbursing community colleges for the property tax revenues they lose because of renaissance zones, college property taxes should be exempt from renaissance zones, a leading college official said Wednesday.

The comments from Mike Hansen, executive director of the Michigan Community College Association, came after a House-Senate conference committee and then the full Senate and House approved a budget for the state's 28 community colleges that eliminates the reimbursements (SB 1151 ). The budget now goes to Gov. Jennifer Granholm for her signature.

Colleges have been reimbursed for lost revenues from renaissance zones, which relieve taxpayers of property taxes in certain urban and rural areas, since renaissance zones were created in 1996. In the current 2009-10 fiscal year, the reimbursement equaled $3.5 million. The elimination of the reimbursements is equivalent to an overall 1 percent reduction in state aid to colleges.

"They felt that schools and libraries and community colleges were pretty reliant on that revenue," said Mike Hansen, president of the college association, of why the reimbursements were created. "It seems to me that if that's still the thinking, then maybe the right course of action would be to amend the Renaissance Zone Act to let these entities opt out."

When then-Governor John Engler and the Legislature created renaissance zones in 1996, with the goal of creating big tax incentives for businesses to locate in poor and some rural areas, they agreed to reimburse community colleges, libraries funded through a dedicated millage and schools for lost property tax revenue.

Some 97 communities or library districts will lose reimbursement for the property taxes they forego because of renaissance zones, said Gretchen Couraud, executive director of the Michigan Library Association. The loss totals about $3 million, and Couraud said she agreed with Hansen that libraries should now no longer give up the revenue they lose in renaissance zones.

"This is a real hit. Communities budgeted for this money, and now they're going to have to come up with it or make some major cuts," she said. "We are seeing a trend as the state talks about economic development, they are diverting more and more money from local government without any tracking any oversight or any accountability. It's shocking what's going on."

The library funding issue will be handled in the Department of Treasury's budget, which is part of the general government budget bill (HB 5880 ). The Detroit Public Library will lose $1.2 million, Grand Rapids' library $300,000, Jackson's $150,000, Saginaw's $190,000, among many others.

Granholm spokesperson Katie Carey said the decision to eliminate the reimbursement was simply about the lack of money in state government.

"It just basically boils down to the current state revenue situation and the fact that the state can no longer afford those payments," she said.

Schools will receive some protection though. While the general fund will no longer reimburse the School Aid Fund for the lost State Education Tax property tax revenue, schools will see no cut as a result.

Elimination of the reimbursement will have a disproportionate effect on those colleges whose districts include areas with renaissance zones, particularly Montcalm Community College, the Wayne County Community College District, Grand Rapids Community College, Kellogg Community College and Lake Michigan College. For Montcalm, the $341,039 reduction is the equivalent of an 11 percent cut in the state aid it receives. For Wayne County, it's a 4.3 percent cut.

In total, 23 of the state's 28 community colleges would see a reduction.

Had Granholm and the Legislature instead opted for a 1.1 percent reduction to all colleges, Montcalm's cut would have been 90 percent smaller.

The bill cleared the conference committee on a 5-1 vote with Sen. Irma Clark-Coleman (D-Detroit) casting the lone no vote.

"To see this kind of a cut ... it is just hard for me to even envision supporting this," Clark-Coleman said. "I'm just sorry we couldn't work out an agreement where we could have spread the pain."

The full Senate passed the bill 32-5 with Senate Majority Floor Leader Alan Cropsey (R-DeWitt), Ms. Clark-Coleman, Sen. Tupac Hunter (D-Detroit), Sen. Martha Scott (D-Highland Park) and Senate Minority Floor Leader Buzz Thomas (D-Detroit) voting no. The House passed the budget 56-49, just two more than the minimum needed for passage.

It was a rare break from the Republican caucus for Cropsey, but his district includes Montcalm Community College. The four Democrats who voted no represent districts that include Wayne County Community College District territory.

Sen. Bill Hardiman (R-Kentwood), the conference committee chair, said he had hoped to phase in the elimination of the reimbursements over a period of time or to spread the reduction evenly among all colleges, but legislative leaders had insisted on ending the renaissance zone reimbursement policy.

"Leadership gave us a pretty specific direction that this is where the cuts would be," he said.

While Hardiman voted for the budget, he seemed less than pleased with it, thanking Sen. Ron Jelinek (R-Three Oaks), the Appropriations Committee chair, for his patience with him on the budget in recent days. The closest Hardiman could come to endorsing the bill was, "This is what we have before us."

In the House, several Democrats were permitted to change their votes to opposition after the minimum was reached.

Rep. Tom Pearce (R-Rockford) said the Legislature should at least change the renaissance zone law before adopting the budget. "We are voting on a budget that isn't in harmony with the statute that is currently on the books," he said.

But Pearce said the effects of the bill would also go beyond the current target. "This not only will impact community colleges, it will impact local school districts, it will impact libraries and it could impact local governments," he said. "Let's figure out some better way than taking money that we promised to people away from them."

In terms of operational aid to the colleges, there is no change from current year funding, in line with what Granholm and the Democrat-controlled House wanted. The Republican-controlled Senate had passed a 3.1 percent cut in its version of the budget.

The budget contains $295.9 million ($204.9 million general fund).

SENATE OKS STATE POLICE, EDUCATION, MILITARY BUDGETS: The Senate also granted final passage to budgets for the departments of State Police, Education and Military and Veterans Affairs.

The State Police budget provides $529.2 million ($260.4 million general fund), a 3.9 percent increase over current year (2.9 percent increase in general fund). The Senate passed it (HB 5888 ) 35-2 with Sen. Mike Nofs (R-Battle Creek) and Sen. Bruce Patterson (R-Canton Twp.) the lone no votes.

Among the changes is shifting $1.4 million for the Law Enforcement Information Network from local fees to general fund and $1 million for victim's services from the expiring Crime Victims Rights Fund to general fund.

The conference committee also kept the seven security guards at the Capitol and increased funding for them to $624,800. The conference also gave them authority to patrol legislative buildings and grounds as well as the Capitol.

In the Military and Veterans Affairs budget (HB 5885 ), the bill would spend $150 million gross, a 0.1 percent increase, and $36.4 million GF, a 0.5 percent increase. The Senate passed the bill 36-1 with Senate Minority Leader Mike Prusi (D-Ishpeming) the lone no vote.

The primary increase is $3.4 million in economic adjustments, but that includes a 3 percent reduction to state employee compensation lines.

The conference also cut $8,200 from headquarters and armor

Author: Staff Writer
Source: Gongwer News Service

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