The Michigan Senate on Thursday evening adopted amendments to S.B. 943 by a 22-13 vote, then passed the amended bill by a 27-11 vote. The bill's changes, which include decreasing the types of properties eligible for relief, followed the House tweaking the measure in July, believing it cured constitutional concerns Democratic Gov. Gretchen Whitmer raised in vetoing similar legislation.
The bill, primarily sponsored by Sen. Peter MacGregor, R-Rockford, would allow certain property owners who have experienced economic hardships from the pandemic to apply for a payment deferral of summer 2020 property taxes — those levied in 2020 that become a lien before Dec. 1 — until Feb. 15, 2021.
The amendments adopted Thursday reduced the scope of the types of properties that would be eligible for relief and would have the state reimburse localities for penalties and interest owed on eligible delinquent properties, said Deena Bosworth, director of governmental affairs at the Michigan Association of Counties. The bill narrows the types of eligible businesses to four categories: entertainment venues, exercise facilities, food service establishments and recreation facilities or places of public amusement.
"The Michigan Association of Counties supports the substitute, given that the state is absorbing the costs and it assists our struggling businesses," Bosworth said.
The House is expected to take up the bill next week, during the last week of its lame duck session, Bosworth said.
The Michigan Municipal League, which advocates for legislation on behalf of local governments, had raised several objections to the House bill, including its lack of a mechanism for municipalities to backfill their coffers while the property tax payments are deferred.
Chris Hackbarth, director of state and federal affairs with the league, told Law360 on Friday that while the group hasn't taken an official position on the amended bill because it was just introduced Thursday evening, there's been some positive feedback from members.
Businesses within the four eligible categories that had been shut for extended periods of time due to COVID-19 and were unable to pay property taxes for the summer period and are delinquent could qualify for retroactive deferral until Feb. 15, Hackbarth said.
According to the bill, the state treasury would pay localities for penalties and interest on tax payments waived under the bill, but only up to the amount appropriated for the program. Hackbarth said the appropriation would likely come in the state budget bill, which is expected to be taken up before the end of the year.
In July, the House removed provisions from the legislation requiring counties to finance advance payments to cities and towns that matched the amount of deferred property taxes. In vetoing similar property tax relief bills on July 8, Whitmer said such provisions could run afoul of certain state constitutional provisions, limiting the government's ability to borrow money.
After Whitmer's office communicated its objections about the previous property tax bills to the sponsor of the vetoed measures, lawmakers began crafting S.B. 943 to create a retooled version of a property tax relief measure that the governor could support.
Hackbarth said COVID-19 struck after property tax values were set for 2020 and therefore didn't affect those values. But after Dec. 31, property owners could claim an impact on their values from the pandemic, which could drop property values and affect communities broadly, he said.
"The bigger conversation, when we're talking about local government property taxes, is what happens to property values in Michigan next year?" Hackbarth said.
The offices of Senate Majority Leader Mike Shirkey, R-Clarklake, and MacGregor didn't immediately respond to requests for comment Friday.
The office of House Democratic Leader Christine Greig, D-Farmington Hills, didn't immediately respond to requests for comment Friday.
Whitmer's office didn't immediately respond to requests for comment Friday.
--Editing by Neil Cohen.
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