Warren— After voters handily passed Proposal 1 this week, Mayor James Fouts said he will legally challenge its implementation, saying he wants to protect the honesty and integrity of the ballot process.
Fouts said the wording on the ballot initiative to eliminate the personal property tax businesses pay on equipment was “confusing” and “blatantly unlawful and fraudulent.”
“People aren’t aware of the fact that by voting for this, they took the personal property tax revenue away from every city in Michigan,” Fouts said. “Some cities are going to be hurt more than others. Warren depends on personal property tax.”
Fouts said Warren will lose at least $400,000 annually with the passage of Proposal 1.
The mayor has directed Warren’s city attorney to a file a lawsuit Friday with the Michigan Court of Claims to invalidate the vote. He said state law requires ballot language “shall not create prejudice for or against the issue or proposal.”
Fouts said Proposal 1 used language that the tax would help “small businesses and grow and create jobs,” provide “aid to local school districts.” He said the proposal avoided using words such as “tax cuts for large manufacturers” because it may not have passed.
Proposal 1 passed by a more than 2-to-1 margin. The money collected is a big part of the budgets for local governments, paying for such services as police and fire. The money local governments lose will be replaced by disbursements from the use tax, which the state collects.
John Pirich, an election attorney who has represented Rep. John Conyers and former Wayne County Sheriff Warren Evans who is running for Wayne County executive, said while he is unfamiliar with Fouts’ lawsuit, its filing is bad timing.
“It was ratified by the people. The process was that it was placed on the ballot through the legislative mechanism that is available under the constitution,” Pirich said. “If one had any objection or complaints, one should have brought those procedural issues before the question was placed on the ballot, before the campaign occurred, before the vote occurred.”
Colleen Pero, the Republican chairwoman of the Board of State Canvassers, which approves initiative language for proposals pushed by citizens, said she is unsure how Fouts’ lawsuit would affect the certification process.
“This got there through the Legislature, usually these proposals come to the board before they get to the ballot,” Pero said. “We were not involved with the language.”
Repeal of the tax had deep and broad support among Democrats and Republicans in the Legislature.
The measure passed with 863,953 — or 69 percent — of voters supporting it and 382,407 — or 31 percent — opposed.
The Governor’s Office said the proposal “surpassed the scrutiny of lawyers (and) numerous and diverse stakeholder groups.”
“The bottom line is that this is a bipartisan proposal that creates a system that is fairer, doesn’t penalize companies for investing in the state and protects communities by providing them a stable revenue source to help provide essential services — all without raising taxes for Michiganders,” said Sara Wurfel, the governor’s spokeswoman.
Fouts said he’s concerned about the creation of what is called a Local Community Stabilization Authority, whose members he said will be appointed by the governor. That was not made clear in the ballot language, he said.
“The authority will now govern the money and determine what each city gets back,” Fouts said. “An unelected body, not responsible to the taxpayers, people or the voters but responsible to only one person, the governor. It is dangerous to have a new tier of government, a new bureaucracy in charge of the money that each city hopes to get back.”
The authority “doesn’t get to pick and choose where the money to communities goes — that's set and determined by the formula outlined in state law,” Wurfel said.
While Fouts was one of a few civic leaders who did not support the proposal, business groups raised millions to convince voters to approve the repeal.
Karen Holcomb-Merrill, policy director for the Michigan League for Public Policy, said her group supported Proposal 1 primarily because it provides a way to reimburse local governments for the loss that would come from eliminating the personal property tax.
“Our concern was that if Proposal 1 failed then a Legislature down the road would eliminate the PPT but wouldn’t have a funding source to reimburse local government,” Holcomb-Merrill said.
Many people were concerned the proposal would fail because of the technical and confusing language, Holcomb-Merrill said. She said she didn’t hear suggestions the language would cause people to vote for it.
“I think it is kind of interesting that Fouts is speculating that,” Holcomb-Merrill said. “A vast majority of people who voted in the primary supported it by quite an overwhelming margin.”