LANSING — Legislation sponsored by state Representative Andy Schor (D-Lansing) took its final step yesterday through the legislative process, passing the Senate unanimously, and after being concurred in the House will go to the governor’s desk for his signature. Schor’s bill, House Bill 4580, allows local units of government to revoke a previously granted personal property tax credit if the business does not comply with the written agreement made when the credit was issued.
“Local governments should have the ability to protect taxpayer dollars, and to allocate those dollars for economic development,” said Rep. Schor. “So when a business violates a contractual agreement, local governments should be able to revoke those tax credits.”
Most tax incentives, whether state or local, have revocation provisions for when a business does not follow through on its commitments. Yet through a recent situation in Lansing, it was discovered that the personal property tax abatement provisions of the General Property Tax Act, when written, inadvertently omitted language for revocation, resulting in the Michigan Tax Tribunal preventing the city of Lansing from revoking a credit.
The legislation would also require businesses and a local unit of government to create a written agreement stipulating both potential tax breaks and the actions required on the part of the business to receive it. The law will not be retroactive, and will only affect abatements created moving forward.
“Despite revocation clauses in almost two dozen other similar tax credit programs, this one was lacking,” said Rep. Schor. “This bill will allow local units of government, including that of Lansing, to hold bad actors accountable. The new clarity my bill provides protects both business owners and the local government by spelling out expectations for both parties, and giving them legal weight.”