GREENVILLE — After the Greenville city manager presented information to the Greenville Area Chamber of Commerce about the potential impact of personal property tax changes at the state level, city council members asked him to present at a council meeting.
On Tuesday, City Manager George Bosanic updated council members on how personal property tax changes ntroduced in December could negatively impact the city.
“It’s our bread and butter,” Bosanic explained. “This is where we get our revenues.”
Bosanic said personal property tax currently generates about $407,000 a year, which is 15 percent of property tax revenues. He said it is difficult to collect and especially difficult to administer as it is time consuming, cumbersome and confusing, but it shouldn’t be erased.
“Yes, fix it, but if you replace it, please don’t erase it,” Bosanic said.
According to Bosanic, the city is starting to struggle even more as one of its biggest industrial companies, United Solar Ovonic, filed bankruptcy and the city is no longer collecting personal property tax on the property.
Greenville was receiving more than $350,000 in payment in lieu of tax from the company.
“If personal property tax is not replaced, it will be a substantial loss for us,” Bosanic said.
Small cities, Bosanic said, do not collect from industries like bigger cities do — such as Greenville.
“We have always been blessed with an industrial development and a commercial development,” Bosanic said.
Through the proposed changes, those claiming $40,000 or less in personal property taxes do not have to pay it.
“When we ran the numbers, I said ‘well, what does that mean?’” Bosanic said. “If we look who is currently paying $40,000 or less to the city, how much revenue to the city does that yield? Coincidently it’s $39,000.”
The replacement revenue will be capped at 80 percent, Bosanic stated, pointing out that 80 percent of the 2013 revenues less the $39,000 would leave $286,600, which would continue to go down, but not up.
“(We are) looking at a loss to the city that can be significant in years ahead,” Bosanic said.
The city may seek reimbursement for essential services only from industries through the essential services assessment, which is not likely, Bosanic said.
Bosanic believes the essential services assessment might drive away businesses that contemplated moving to Greenville.
“We want industries to come to the area,” he said.
With the essential services assessment, industries may be compelled to relocate to communities that do not impose it.
“This is very concerning for Greenville,” Bosanic said.
Suggestions have been made to make up for the loss in revenue from the proposed personal property tax changes, such as real property tax, but Bosanic said it won’t be enough. He said more than $20 million of new investment with no tax abatements is needed to replace personal property tax revenue loss.
“It is highly improbable given current and future development space and market,” Bosanic said. “It would take years to replace it.”
The personal property tax changes might be pushed to a ballot proposal in August 2014. Bosanic said if it fails, everything will go back to the way it is. If it passes, the city is out revenue.
Council members thanked Bosanic for his presentation, saying it was helpful for them to better understand the changes.
“Thank you for putting this together,” said Mayor John Hoppough. “This is a huge issue for us and the community, so thank you for shining light on this.”
In other business, the council approved:
• A traffic control order to establish a stop sign at the intersection of Yellow Jacket Drive and Hillcrest Street.
• Contracting with MDOT for the acquisition of a transit bus in the amount of $122,400.