The debate over the repeal of the state Personal Property Tax (PPT) has been going on for some months now. How taxes work is often murky and complicated.
How the repeal will raise your taxes is pretty straightforward. Taxes collected via the PPT go to help repay bonded debt to investors.
Because districts promise to repay bonds at a defined interest rate, local property taxes would automatically increase in communities with school districts that are repaying bonded debt.
In simple terms, as taxable value goes down, via PPT elimination, your millage rate will go up to cover the fixed cost of bonded debt.
The repeal of the tax will lower bills for the businesses that pay it and raise taxes on home and property owners.
Our area relies heavily on the Personal Property Tax.
The PPT generates nearly $1,282,098 a year in Dickinson County with the top three cities being Iron Mountain, $438,883, Kingsford, $230,038 and Norway, $84,684.
A portion of this revenue is used to secure and repay bonded school debt. Since School Bond Loans are guaranteed through the Department of Treasury, revenue lost from eliminating the PPT must still be repaid.
The only option is a property tax increase for thousands of homeowners.
Dickinson-Iron ISD, which serves all six school districts in Dickinson and Iron counties, will lose approximately $504,321 annually from their general education, special education, and technical education budgets.
Unlike the local school bonds, the elimination of the PPT for ISDs would not impact the local tax payers, but it would impact the services provided to Dickinson-Iron students and put increased pressure on the local schools already strained budgets.
The Personal Property Tax (PPT) is paid by local Michigan businesses.
The revenue from the PPT goes directly to local communities to fund municipalities, ISDs, school debt retirement, and other local services.
Essentially, the PPT currently keeps local tax dollars under local control, keeping the funding out of the mercy of state-wide legislative appropriations process in Lansing.
A repeal of the state Personal Property Tax (PPT) has major implications on the funding streams for local municipalities, libraries, our Intermediate School District, and other local services. The PPT is a significant funding stream for these entities. An elimination of this tax will trigger a reduction of services provided to our communities.
We are concerned that the increased taxes on local property owners and homeowners and the likely reductions in school programs and city services will make the elimination of the PPT far more damaging than any hoped for gains.
This article is a collaborative effort by Craig Allen, Tom Jayne, Wendy Warmuth, and Louis Steigerwald, who are the superintendents of Breitung Township Schools, Iron Mountain Schools, Dickinson-Iron ISD, and Norway-Vulcan Area Schools, respectively.
The article represents the opinions of the authors and is not intended as the opinion of any district, their school board, or any other district employee.