MCC Board and guest talk taxes

By Emilee Nielsen • Last Updated 11:05 am on Thursday, April 13, 2017

President of the Michigan Community College Association Mike Hansen talked about legislation and budgets during Tuesday evening’s regular meeting of the Montcalm Community College Board of Trustees. — Daily News/Emilee Nielsen

SIDNEY — Personal property taxes, incometaxes and legislative updates were the talks at the table Tuesday evening.

The Montcalm Community College (MCC) Board of Trustees heard an update from Mike Hansen, president of the Michigan Community College Association (MCCA). Hansen talked about Gov. Rick Snyder’s budget, the failed initiative to do away with income tax in Michigan and equity in student opportunity.

Hansen said the MCCA doesn’t get too involved in arguing tax policy with the Legislature, but it’s clear to the organization that any changes to tax policy need to revenue neutral. If there is going to be a tax cut and income loss, there needs to be a plan to replace those funds elsewhere.

“That was essentially how we weighed in on this proposal and we’ll continue,” he said. “Don’t say you’re going to cut revenue and we’ll figure out the cuts later.”

Hansen said the governor’s budget played a role in the income tax rollback vote dying because legislators were unsure about funding tax cuts.

“The House and the Senate are passing budgets, are moving budgets through their various committees, with cuts in them to sort of prove that we can actually fund a state budget that has enough room for tax cuts by cutting programs that are unnecessary,” Hansen said.

According to Hansen, the Senate’s proposed budget was kinder to community colleges than Snyder’s budget was.

Hansen also discussed personal property tax reform for small businesses which Michigan voters approved in 2012. The reform was approved to give small business owners a break. The state created a fund to reimburse community colleges for the revenue loss from the personal property tax.

The problem, Hansen said, is the way reimbursements are structured.

“The formula did not account for growth. In other words, if your revenue loss between 2016 and 2012 was $500, but you had a Meijer store move in and create new personal property tax of, let’s say $250 … they (legislators) said, ‘Now your net loss is only $250 because you had the growth. So instead of your loss of $500, it’s really a loss of $250.’”

Following this formula, the hypothetical community college would only be reimbursed $250 instead of the full $500 loss.

Board Chairwoman Karen Carbonelli said she found the idea “scary” as did other members of the board.

While the formula does make up for revenue loss, it doesn’t go above that to account for the growth so community colleges are missing out on funds.

“It’s a little scary,” Hansen said. “It was pointed out when the law passed by some of the analysts looking at the legislation that said, ‘Your formula is fine if you assume no growth.’ In 2012, we were in the throws of recession. Businesses were closing and consolidating and leaving. The last thing anybody thought about was all this growth.”

According to Hansen, due to growth and extra revenue, the account created to reimburse community colleges has had more money than expected. Those funds are to be redistributed based on percentages of loss.

“If you had no loss, you got nothing redistributed,” he said.

Hansen said there was a certain threshold of property tax loss community colleges in the state needed to met and there are three community colleges who fell in the “unfortunate place” of having some personal property tax loss but not enough to qualify for redistributed funds. MCC falls into that category.

Funding for community colleges will take a hit if the governor’s proposed budget goes through as-is, according to Hansen. He said the governor didn’t want to funnel funds through appropriation increases to state community colleges this year because many colleges have reimbursements coming for loss.

Hansen said this didn’t fly with State Sen. Darwin Booher.

“He said, ‘No, no, no, that was money that was already coming to them. It’s for reimbursement for loss,’” Hansen said. “That’s like saying, ‘Oh Bob (Ferrentino, MCC’s president), you’re getting a federal income tax return this year? Well, we don’t have to give you a pay raise then.’ It’s the same kind of issue.”

Hansen also briefly addressed student success and equity among students and the importance of offering students opportunities equally. He said it seems to him when people talk about student equity, it becomes about race and that’s not what he meant.

“Equity and inclusion are about a lot of things. One little example is the Pell program (which offers financial aid to lower-income students),” he said.

Hansen pointed to North Central College in Petoskey, which has the third highest number of students on Pell assistance among colleges in Michigan.

“I think we have to always make sure … we have a conversation around all of the diversity and equity issues and not just a race thing,” he said.

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