LANSING — State Representative John Kivela (D-Marquette) and state Senator Tom Casperson (R-Escanaba) appeared before the House Tax Policy Committee today as the committee discussed the issue of dark stores and their impact on local government budgets. The committee discussed the issue to educate members on the issue’s critical impact, but did not yet formally take up any of the dark store legislation. 

“Big-box stores move into communities with jobs and products to sell, but then they turn around and use an essentially false argument to lower their tax bill, which blows a hole in the local government’s budget making it hard for them to provide services we all need,” said Kivela. “This is happening in my U.P. district and in communities across Michigan. I’m glad the House Tax Policy is discussing this issue, and I hope we can soon take action on it.”

Big-box stores have taken advantage of a loophole in Michigan’s tax system that allows them to appeal their assessments to the Michigan Tax Tribunal. Many big-box stores operate with deed restrictions that say their building can’t be sold to another retailer or used for retail. They then use these deed restrictions to argue to the Michigan Tax Tribunal that their assessments should be lower. That, in turn, hurts local governments who use that tax money to pay for things such as police, fire protection and road repairs. The tribunal has agreed with the argument these corporations make. Kivela and Casperson have sponsored legislation that would help close this loophole and make local governments whole again so that they have the funding to provide the services that residents, and these stores, need.

“I am so proud of the individuals and groups that came from all over the Upper Peninsula to Lansing to ensure our voice was heard, so that legislators know the devastating impact that this issue is having on residents, businesses and local units of government throughout the U.P. and the state,” said Casperson. “What we heard from U.P. residents stands in stark contrast to what was said by expensive and creative lawyers that testified for big box corporations. These are the same high-priced lawyers that are unfortunately now, thanks to the Michigan Tax Tribunal, the force behind the state’s tax policy. It is a devastating financial policy that is inequitable to local businesses and unfair to residents and local stakeholders. Unfortunately, because of the tribunal’s actions, Michigan is the only state in the country to embrace this dark stores theory, which permits national retailers to receive unfair and unfounded tax reductions at the expense of our schools, libraries, seniors, public safety departments, public transit agencies and residents.” 

“I was very pleased with how today’s hearing went.  I think we helped raise this issue up and have it recognized as a statewide problem,” said Amy Clickner, chief executive officer of the Lake Superior Community Partnership.  “The committee asked a lot of great questions and was extremely engaged in the process.   Chairman Farrington decided to add a second hearing in December which was a pleasant surprise.  Our contingent left feeling it was a big step on the path to finding a solution.”

“I would like to thank Representative Kivela and Senator Casperson for all of their continued leadership on this important issue,” said Joe Derocha, Marquette County Commissioner.  “Also thanks to Amy Clickner of the LSCP, Deb Veiht of MARESA and Jackie Lykins from the County of Marquette for attending the hearing and supporting the effort to establish the legislation that will solve this statewide issue.  I am pleased that there will be continued dialogue within the House Tax Policy Committee to arrive at a fair and equitable tax policy solution for all business large and small.”

“If big-box stores continue to successfully make the dark store argument and win tax reductions, then what is to stop other smaller stores from making and winning the same request,” asked Kivela. “We need to address this issue and talk about what needs to happen to keep local governments whole. These big-box stores increase government expenses because they also use police, fire and road services. Someone has to pay the bill, and it shouldn’t fall primarily on residents when these businesses also rely on these same services.”