2018 BERRIEN COUNTY ANALYSIS OF SENATE BILL 1031

Transcription

1 2018 BERRIEN COUNTY ANALYSIS OF SENATE BILL 1031

2 ANALYSIS OF SENATE BILL 1031 The bill would amend the General Property Tax Act to exempt qualified utility personal property from the collection of taxes under the Act. Qualified utility personal property would mean property that meets both of the following: Is the following utility personal property: electric transmission and distribution systems, substation equipment, spare parts, gas distribution systems, water transmission and distribution systems, gas storage equipment, and transmission lines of gas or oil transporting companies. Was initially installed in the State after December 31,

3 ANALYSIS OF SENATE BILL 1031 EFFECT ON BERRIEN COUNTY Berrien County stands to lose $21,594,173 of new Taxable Value no longer being added to the tax rolls each year. In addition, older utility personal property will disappear from the tax rolls when it is replaced with new exempt qualified utility personal property. The annual taxable value lost each year will be $11,142,150 using a historical 5-year average. New Taxable Value Not Invested Each Year: Taxable Value Dropping Off Each Year: $21,594,173 $11,142,150

4 EFFECT OF SENATE BILL 1031 ON BERRIEN COUNTY

5 EFFECT OF SENATE BILL 1031 ON BERRIEN COUNTY

6 $0 -$50,000 ANALYSIS OF SENATE BILL 1031 BERRIEN COUNTY S LOST CURRENTLY EXISTING REVENUE Berrien County Operating Revenue Lost From Existing Property Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 1, -$53,174 -$100,000 -$150,000 -$200,000 -$250,000 Year 2, -$106,347 Year 3, -$159,521 Year 4, -$212,695 Year 5, -$265,868 -$300,000 -$350,000 -$400,000 -$450,000 -$500,000 -$550,000 Year 6, -$319,042 Year 7, -$372,216 Year 9, -$478,563 Year 8, -$425,389 Year 10, -$531,737

7 ANALYSIS OF SENATE BILL 1031 BERRIEN COUNTY S LOST FUTURE TCV INVESTMENT The last 5 years were analyzed to determine an average annual investment of qualified utility personal property in Berrien County. The conclusion approximates an annual qualified personal property investment amount of $45,131,000. Year Equipment (B) Gas Distribution (H) Electric Transmission (I) Gas Transmission (J) Fluid Pipeline (K) 2017 $439,817 $4,074,713 $20,006,831 $313,939 $65, $319,688 $6,183,389 $34,513,418 $355,829 $797, $553,989 $4,341,123 $31,905,683 $313,449 $2,763, $970,382 $3,837,611 $45,120,098 $313,449 $1,072, $211,088 $4,080,692 $62,676,496 $270,580 $157,005 Average Annual Investment by Utility Type (True Cash Value Equivalent) Equipment (B) Gas Distribution (H) Electric Transmission (I) Gas Transmission (J) Fluid Pipeline (K) Average $439,817 $4,074,713 $20,006,831 $313,939 $65,374 Total Annual Investment $45,131,374

8 400,000, ,000, ,000, ,000, ,000, ,000, ,000,000 ANALYSIS OF SENATE BILL 1031 BERRIEN COUNTY S LOST FUTURE TCV INVESTMENT Year 2, 84,867,181 TCV Investment Not Realized From Proposed Bill Year 4, 163,432,166 Year 3, 125,059,598 Year 6, 234,782,752 Year 5, 199,989,876 Year 8, 299,103,369 Year 7, 267,818,920 Year 10, 357,609,717 Year 9, 329,029,263 50,000,000 - Year 1, 43,188,347 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

9 ANALYSIS OF SENATE BILL 1031 BERRIEN COUNTY S LOST FUTURE INCREASED REVENUE Increased Operating Revenue Not Realized From Proposed Bill $300,000 $250,000 Year 5, $211,337 Year 7, $266,840 Year 9, $306,550 Year 8, $288,316 Year 10, $321,574 $200,000 Year 6, $241,185 $150,000 $100,000 $50,000 Year 1, $49,880 Year 3, $138,890 Year 2, $96,158 Year 4, $177,279 $0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

10 ANALYSIS OF SENATE BILL 1031 BERRIEN COUNTY S LOST FUTURE INCREASED REVENUE & BERRIEN COUNTY S LOST CURRENTLY EXISTING REVENUE Overall Budget Swing From Proposed Bill $300,000 $200,000 $100,000 $0 -$100,000 -$200,000 -$300,000 -$400,000 -$500,000 -$600,000 Overall Effect on Budget from Proposed Bill Revenue Lost From Proposed Bill Revenue Not Realized From Proposed Bill

11 ANALYSIS OF SENATE BILL 1031 WHAT S THE BOTTOM LINE? What new benefits will Berrien County not receive if Senate Bill 1031 passes? $45,131,374 in New Investments will not be realized every year. Or $357,609,717 over 10 years. $10,452,023 increased Taxable Value will not be realized every year. Or $67,383,355 over 10 years. $49,880 increased Operating Revenue will not be collected every year. Or $321,574 over 10 years.

12 ANALYSIS OF SENATE BILL 1031 WHAT S THE BOTTOM LINE? What existing benefits will Berrien County lose if Senate Bill 1031 passes? $11,142,150 in existing Taxable Value will disappear every year. Or $111,421,500 over 10 years. $53,174 of previous Operating Revenue will no longer be collected every year. Or $531,737 over 10 years.

13 ANALYSIS OF SENATE BILL 1031 EFFECT ON OTHER VOTED SERVICES OR MILLAGE Millage Purpose Effect Year 1 Year 10 Lost Future Increased Revenue $4,703 $30, Lost Currently Existing Revenue -$5,014 -$50,140 ( Mills) Overall Budget Swing From Proposed Bill $9,717 $80,462 Millage Purpose Effect Year 1 Year 10 Lost Future Increased Revenue $3,658 $23,584 Law Enforcement Lost Currently Existing Revenue -$3,900 -$38,998 ( Mills) Overall Budget Swing From Proposed Bill $7,558 $62,582 Millage Purpose Effect Year 1 Year 10 Lost Future Increased Revenue $3,136 $20,215 Senior Citizens Lost Currently Existing Revenue -$3,343 -$33,426 ( Mills) Overall Budget Swing From Proposed Bill $6,478 $53,641 Millage Purpose Effect Year 1 Year 10 Lost Future Increased Revenue $1,045 $6,738 Parks Lost Currently Existing Revenue -$1,114 -$11,142 ( Mills) Overall Budget Swing From Proposed Bill $2,159 $17,880

14 ANALYSIS OF SENATE BILL 1031 THE TAKEAWAY Senate Bill 1031 will mean a reduction in future revenues as new qualified utility personal property will be exempt. As taxable property is replaced with exempt property, existing revenue sources will also be lost. Unlike other recent personal property exemptions, Senate Bill 1031 does not include any reimbursement for lost revenue. The estimate used approximates that 85% of all the Utility Personal Property value in Berrien County meets the criteria to become exempt under Senate Bill 1031.

15 2018 BERRIEN COUNTY ANALYSIS OF HOUSE BILL 6049 AND SENATE BILL 1025

16 Intent of the bill. IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 Specify and set minimum quality standards that every assessing district must meet, on their own, in cooperation with other local units, or through the County The quality standards primarily focus on Ownership of the assessing function Capacity to perform Organization and transparency Compliance with the law, policy and assessing standards

17 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 REDUCES WHO CAN SIGN AN ASSESSMENT ROLL Level 2 or MCAO assessors will no longer be able to sign their own assessment roll There are currently 764 level 2 (MCAO) assessors in the State About 270 actually sign an assessment roll Supervisors will no longer be able to sign their own assessment roll Regardless of their certification level It wasn t that long ago that the STC said that level 1 assessors could no longer sign assessment rolls. So we have already done this experiment and have shown removing the lowest certification doesn t work

18 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 CREATES ASSESSING DISTRICTS In order for a Twp or City to be considered an assessing district it must; Be at least 5,000 parcels And, generate at least $12,000,000 in property tax revenue annually In Berrien County that means a district would need a minimum taxable value of roughly $330,600,000 If a Twp or City does not meet these requirements they can join with another Twp or City to create an Assessing District If a Twp or City chooses not to create an assessing district, the County will automatically be required to become the assessor of record. Provides for 80% of the 1% admin fee to cover the cost

19 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 CREATES ASSESSING DISTRICTS Most Townships and Cities are assessed by individuals who assess multiple units which would allow them to create their own assessing district. However, there are 5 local units that may need to be assessed by the County if a waiver is not granted Bainbridge Twp (1% = $20,033) Coloma Twp (1% = $63,080) Oronoko Twp (1% = $65,553) Pipestone Twp (1% = $14,125) Buchanan City (1% = $34,013)

20 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 CREATES ASSESSING DISTRICTS Total revenue to the County if conducting assessing services for Bainbridge, Coloma, Oronoko, Pipestone and Buchanan would be; $196,804 or equivalent to 2.6 FTE staff The bill also dictates staffing levels at 1 staff member for every 4,400 parcels. These units comprise of 12,512 parcels Meaning that we would need an additional 3 staff members As seen above we would only receive enough revenue for 2.6 If the above units are not part of a district by 12/31/2021 or have not been granted a waiver, the County would have no choice but to take over the assessing function If all assessing units were to contract with the County we would need an additional 20 employees

21 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 ADDITIONAL COUNTY REQUIREMENTS A County providing assessing services shall employ a director who is certified as an MMAO. This means even the smallest County in Michigan assessing a tiny 500 parcel unit would need to employ a Master level assessor The Law does allow for a County who does not wish to provide assessing services to contract with another County for those services. However, a contracting county can only contract with up to 1 other County. STC will be developing and implementing an audit program to determine compliance with the new standards.

22 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 ADDITIONAL COUNTY REQUIREMENTS A County providing assessing services shall also establish and maintain a County Assessing Office This office shall be overseen and administered by a County Assessor certified as an MAAO or MMAO County Assessing Office MUST; Use a computer-assisted mass appraisal system Follow policy approved by STC for public inspection of its records Maintain reasonable office hours (physical presence of at least 8 hours per week) Provide online access for parcel information, land value maps, land adjustments and economic condition factors

23 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 ADDITIONAL COUNTY REQUIREMENTS Provide assessment change notices to taxpayers Provide a pre-bor meeting with the County Assessor to attempt to resolve assessment valuation disputes before the MBOR Meet IAAO staffing standards (1 assessor for every 4,400 parcels) Require its support staff and BOR members maintain their certification levels Dedicate ALL revenues from its portion of the 1% admin fee to assessment administration.

24 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 ADDITIONAL COUNTY REQUIREMENTS The County shall provide 3 specialized Boards of Review Commercial and Industrial BOR Exemption BOR Transfer of Ownership BOR Additionally we must maintain at least one BOR to hear general issues for the units that we would be providing assessing services. All BOR members will be required to By education, experience, or both, possess a substantial level of property tax expertise as prescribed by the STC And, be certified by the STC to serve as a member of the particular type of BOR for which he or she is selected

25 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 UNINTENTIONAL IMPACTS OF THE BILL 1% admin fee is not a stable source of revenue Millage rates change A local unit could decide not to levy their maximum allowable rate and change it from year to year. Some townships currently don t even charge the 1% admin fee Some townships benefit from large taxpayers (EG. Cook power plant) where others do not

26 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 UNINTENTIONAL IMPACTS OF THE BILL Currently there 149 Master Level Assessors in the State At least 21 of which are retired or in private practice Of the 83 Counties in Michigan only 20 currently require a master level assessor If this bill passes there is the potential that all 83 Counties will need a Master level assessor This could mean that we will need at least an additional 32 master level assessors. This is assuming at least half of the Counties contract with another County to provide their assessing services

27 IMPACTS OF HOUSE BILL 6049 AND SENATE BILL 1025 UNINTENTIONAL IMPACTS OF THE BILL This bill will force some assessors into retirement thus expediting the silver Tsunami currently occurring in the assessing profession. Berrien County will not have enough office space or resources such as: computers, cars, cameras, clipboard, measuring wheels, lasers etc. for 20 new employees. The legislation will create assessing monopolies As written, the proposal removes local control Potential conflicts of interest exists between the Equalization Department and the Assessing Department