Repeal of personal property taxes to hurt city budget

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Tecumseh could lose an estimated $18,000 to $25,000 for the 2014 tax year due to the repeal of personal property tax according to the City Manager Kevin Welch’s report presented to Tecumseh City Council on Monday, Feb. 4. Welch predicts that the city would lose this amount regardless of whether voters approve the new law during the November 2014 election.

“2014 is the first year of the phase-out for commercial,” said Welch. “One way or the other, we will lose that.”

Welch said if voters approve this change, the projected amount would be “forever lost” to the city’s budget. He added that the city is working on calculations for the loss to industrial properties in the future as well. There is a mechanism by which municipalities could potentially receive a part of that back.

“Even if we lose 20 percent of the industrial and the commercial portion, the loss will be a major impact on our already struggling budget,” Welch reported. He noted that the city could also lose an additional $75,000-$100,000 each year when the legislation affects industrial prospects.

“We agree that personal property tax should go away, but all the municipalities have said all along that the state needed to replace 100 percent of the loss,” Welch said, but added that’s not the way the law was written.

If voters do not approve of the new law during the November 2014 election, state legislators would have to come up with a different way of dealing with the repeal of personal property taxes.

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