Proposition 1 on the Aug. 5 ballot finally achieves a longtime state goal to eliminate a barrier to business investment in Michigan without harming local services and education.
Proposition 1 eliminates the personal property tax (PPT), which is paid by businesses only, and guarantees full replacement of PPT revenues to provide stable, reliable funding for local services to Michigan communities.
Local government leaders know the 121-year-old PPT discourages investment in Michigan in the 21st century. It needs to be replaced so that investing in Michigan makes sense to businesses’ bottom lines, but it must be done in a way that ensures local communities continue to have reliable services.
Now we have a solution that does both: Proposition 1, which changes the way local governments are reimbursed for providing important local services such as police and fire protection.
Proposition 1 solves two problems, without a tax increase:
■ It ends the disadvantage Michigan suffered in comparison to most neighboring states that don’t tax equipment and technology investment by business year after year; and
■ It stabilizes local communities by replacing 100 percent of the estimated PPT revenue lost for all local services such as police, fire, schools, ambulances, jails, roads and libraries.
The best part of Proposition 1 is this: It is not a tax increase for anyone. It is paid for by eliminating special corporate tax breaks that the Michigan Legislature has already voted to end, and by establishing a special statewide essential services assessment paid only by manufacturers receiving a PPT reduction.
It’s understandable that the business community supports Proposition 1, but it also helps Michigan communities. Proposition 1 eliminates the administratively cumbersome personal property tax while keeping communities whole. This is critical to allowing Michigan communities like mine to provide essential services.
Without raising taxes, the ballot proposal also allows cities like Dearborn to focus on creating vibrant communities where people want to live, work and play, and where businesses can attract and retain talented workers.
In recent years, local governments and businesses could never predict how much a business would pay in personal property taxes. That has been especially true if those taxes were challenged and brought before a state tax tribunal that had to render an opinion. It is a bad way to plan and deliver important services to you.
This proposal fixes a piece of that revenue puzzle with a local community stabilization fund. The funding is specifically dedicated for local community services and, unlike most of our funding, will not be subject to the uncertainty and politics of annual state budget battles.
Proposition 1 helps local communities as well as local small businesses — without a tax hike.
Proposition 1 is also not a constitutional amendment. It is on the ballot because the Michigan Constitution requires voters to approve certain changes in the way taxes are distributed.
Dearborn and communities like it across Michigan need your yes vote on Proposition 1.
Jack O’Reilly is mayor of Dearborn.