Legislation reimburses local governments for state-mandated tax exemptions

LANSING, Mich. Oct. 4, 2023 — The Michigan House of Representatives passed House Bills 4553 and 4554 today, sponsored by state Reps. Denise Mentzer (D-Mt. Clemens) and John Fitzgerald (D-Wyoming). The bills establish a fund in the treasury to repay municipalities the revenue they lose from personal property tax exemptions in state law.

“We need an improved process that supports local businesses’ continued growth in our state, while also protecting the ability of our local governments to provide vital services,” Mentzer said. “This bill package does just that, by implementing the necessary procedure to make a difference in our communities and support flourishing businesses and local governments.”

HB 4553 amends the Michigan Trust Fund Act to create the Local Government Reimbursement Fund in the state treasury and to allow the department to disburse funds to compensate municipalities for revenue lost under the small business taxpayer personal property exemption. HB 4554 amends the Use Tax Act to require $75 million in use tax revenue to be deposited into the Local Government Reimbursement Fund each fiscal year.

“I am happy that these bills passed out of the House,” Mentzer continued. “I served as a local elected official for many years before coming to the state Legislature. I know the important role local governments play in our constituents’ daily lives. Our municipal governments take care of our parks, develop our downtowns and provide key public safety services. We must set aside funds so that these important services can continue uninterrupted. With the passage of these bills, we are one step closer to making this a reality.”