(Community Matters 191) A Local Legislative Perspective on The Plan To Cut State Property Taxes In Michigan

Rep. Steve Frisbie (R-Battle Creek) returns to Community Matters to discuss plans to eliminate the state portion of property taxes and what it could mean for homeowners, schools, and local services. Frisbie also discusses the need for budget transparency and why cracking down on waste, fraud, and abuse is tied to protecting taxpayers and the safety net. 

Episode Resources
Rep. Steve Frisbie House Republicans Website

ABOUT COMMUNITY MATTERS
Former WBCK Morning Show host Richard Piet (2014-2017) returns to host Community Matters, an interview program focused on community leaders and newsmakers in and around Battle Creek. Community Matters is heard Saturdays at 8:00 AM on WBCK-FM (95.3) and anytime at battlecreekpodcast.com.

Community Matters is sponsored by Lakeview Ford Lincoln and produced by Livemic Communications.

Transcript

Show Opening And Subscription Tips

Richard Piet 0:01

Community Matters, that's us here Saturdays at 95.3 FM, any day, Battle CreekPodcast.com, or where you get podcasts, search in the search bar, Community Matters Calhoun County. Yeah, add that Calhoun County, otherwise you'll be swimming in Community Matters podcasts. There's a lot of them out there. Uh so add the Calhoun County and you'll find us. And you can follow us that way, and that's probably the easiest way to listen on your device.

July 1 Budget And Transparency

Richard Piet 0:32

Time for another check-in with State Representative Steve Frisbee from Battle Creek. You'll remember when we spoke last, the idea of uh lowering property taxes was spinning, and there's been quite a bit of progress in that regard. In fact, the Michigan House passed a package of bills to that end, some of which Representative Frisbee was heavily involved in, and he joins us today to talk about that, among other things, including the budget, Steve. Always always a budget, right? Yeah. This, of course, uh, we ran right up to the wall last year on this, and maybe just uh toe over the wall. Does that make sense? I think I'm mixing my uh uh metaphors, but well, I would say last year really set us up this year to be able to meet that deadline if we can negotiate in good faith with the Senate and the governor. And I think that's the goal. I don't think I know that's the goal. We all want to have it done by July 1st, as close to that as possible, if not even before, and move along into more important things and other things to be considered. And so I think what we accomplished last year and and how we brought transparency to the legislative directed spending and and those kinds of issues. And this year we added a another wrinkle where we went back and said, we're not just gonna do this same old government way of spending built in budget building. And what happens traditionally is it's kind of the lazy person's way of budgeting. It's like, well, here was our budget last year, we'll just add three to five percent and call it good. Oh, right. Yeah. That doesn't require any thought and it doesn't require any review and oversight, which we wanted we brought into the process. And so what we did is say we're gonna go back three years and look at what was actually spent in every line. Um, and we said, here is the highest spend in the last three years, that's the dollar figure we're going to. So it could have been year one of what we were looking at, could have been year three, but if we're gonna budget that and you don't spend it, those are dollars that we don't need to appropriate to that department. The other thing that's happened is, you know, we identified what we call slush funds, their work project funds, and some of them are acquired through these ghost jobs that we talked about last year that everybody laughed about, and then in the end said, well, hey, maybe you can have 2,000. So we're gonna be going after some more of those, but those work project funds have grown from $10 billion in the last budget process to now $12,000, $12 plus. So I say this all the time. There's plenty of revenue in Lansing, and people that don't want to admit that are uh choosing to look outside of the facts. And we just have to do better prioritization and better control of how those dollars are spent so that we're protecting the the pack taxpayers and they're getting the value uh for what they deserve. If you want to try to make it simple, I guess the thinking there is things will cost more, and so we're adding some buffer to accommodate that. But you're right, there isn't any analysis. And that's important, and that's our role in the legislature is oversight. And we should be doing things like a review of what how things have been spent and what hasn't been spent, and you know what's left over and what can be brought

Slush Funds And Unclaimed Millions

Speaker 4:04

back in. And we finished off a deal. There was a lawsuit between the governor and the speaker of the House over that $645 million clawback. Yeah. And she decided that she wanted to take a step and just end it, and pretty much just said, okay, you can keep, I think it was 300, it's over 300 million that was never claimed by others in these work project funds to reclaim and say, okay, we're going to put this through the the heat process, the open process where you have to bring in, you have to put your name on it, you have to bring it into a committee, it has to be posted for 45 days on a website, and then you have to bring in it to a committee and do a public hearing and explain the public benefit of it. Well, nobody was willing to put their name on three over $300 million worth. Wow. So when people say, oh, that's just a game they're playing, no, the game we're playing is oversight, and it's not a game. That's our that's really our job in the legislature, and that's to protect the taxpayers and really recipients of services, because if we have so much money that we can stuff $12 billion into work projects, again, there's plenty of revenue in Lancing. Don't fret. So what's the thinking with that? Here we have plenty of revenue, as you say, and nobody wants to put it through the appropriate process to put light on it, put their name on it, and identify where it should go. What's the thinking with that? The thinking is it just continually makes us understand that there is plenty of revenue and that we don't have to make major cuts in services and keep moving along and provide things like the safety net that for folks that really need it and are qualified to have it.

Waste Fraud Abuse Protects Services

Speaker 5:54

You know, we met with the nonprofit uh group at a legislative day a few weeks ago, and I talked about waste fraud and abuse, and those groups are rightfully concerned about dollars coming to them that they apply locally and honestly they do it the best way that's available to the taxpayer because it's less cost usually than government. Government never does anything cheaper, and they can't build it for temporary, they build it for long term and uh you know never goes away once it starts, kind of thing. But if we don't focus on waste, fraud and abuse, the legitimate use of taxpayer dollars by local nonprofits is going to be in jeopardy long term. So what I was encouraging was to embrace that approach of waste, fraud, and abuse identification so that we can continue to meet the needs of the citizens of Michigan in the services that they provide. Because again, if we don't identify, continually identify waste, fraud, and abuse, at some point there's gonna be a reckoning of we just don't have any more money. And you know, the reconciliation of that for one party is well, we're gonna have to tax you more. Well, that's not my party, right? So we just have to keep doing our job. And some people get upset with that, but I'll keep going. It's the way that we're supposed to do our job, and I don't feel bad about it when we identify waste, fraud, and abuse. I feel pretty satisfied that we're able to identify that and take action and bring taxpayers the representation they need. So we're on track for July 1st, then are we? I believe so. I you know, everybody wants it done. There's this thing called an election in November that they want to everybody want on both sides want to focus on, and that's important too. So in a two-year term, it almost never ends, the election cycles. But the focus is get this budget done, get it done right. You know, I ran into the governor twice yesterday and had conversations, and she may mention too that she wants to have it done by July 1st. So we'll do our part. There's opportunity there. It's probably uh I'm presuming, I don't know, but it's probably easier for her. She's out, so some of the political pressure is different, I would say. But also can she exert as much political pressure now that she's you know in her lame deck year? So that's yet to be seen. But I think she's been very effective at getting what she wants to get done done. If you doubt that, just stand back and look at the body of work that she's been said she wanted to do and what she's accomplished. You don't have to agree with it, but I think she's a very skilled in what she's been able to do. And the funny thing is, you know, last year we had a wide gap coming into the budget uh deliberations, and um everybody thought, oh, it's never gonna get done. And she's the one that exerted all the political pressure and got it done and and got people off dead center. Both sides gave a little bit, and there we go, we got it done. A little bit of compromise. Yeah.

Eliminating The State Property Tax

Speaker 8:54

This whole thing about property taxes, when you look at the idea of lowering taxes, was this the easiest angle? Was this the one you could look at and say, you know, we could probably get some consensus here? The set this is the only part of your property tax bill that's levied by the state. So, you know, when you get into local property taxes, you're talking about school taxes and millages and bonds and you know, your fire departments and your police departments and special operating things like the you know, the veterans and the seniors millage at the county and and road millages locally. So it gets really complicated when you try to get into those uh scenarios of local, and that's local control. So you gotta be careful how you deal with that. But what we control, we said we can remove that. You know, there's there's enough revenue here that we can backfill that, and that's part of our promise is to backfill fully local revenue sources for county and and townships and villages and cities, as well as education. And if people want to question that I'm after, you know, gunning public education, I can tell you right now, that's not going to happen. In the committee hearing, I was asked that question by one of my colleagues, and he said, I'm really concerned about education. I said, I am too. And I'll tell you right now, if public education is not funded in our budget, I think we all agree upon, Senate, governor, and the House all agree upon, it's about a $300 increase per pupil for this coming year. Again, a significant amount. And if we don't fund public education like it should be, then my exact quote was there be hell to pay. And I agree with that. You have to have a strong public education system, and it's weaved into what we want to achieve. We need a better education outcome. We've sank to 44th now in many respects. There are schools that are failing as a result of not doing their jobs and doing them well. Many are doing just fine, but others are struggling. And you know, there's 130,000 less students in the public school system right now than there was as little as five years ago. The birth rate's half of what it was. Uh people are electing to do homeschool and private schools. And I think at some point we got to think about how do we reshape public education to meet the needs versus our long-standing this is the way we've always done it. We're not getting what we need for students, and I don't think we've looked at that in a long time to say, does it fit with what's going on with the public? The House Government Operations Committee advanced the bill, including your part to uh eliminate the state property tax, and then the House went ahead and approved it. So that's about $900 a year that could be saved for someone who has a home with a taxable value of about $150,000. So that's just part of the deal. This could even eliminate the pop-up tax, if I've read correctly, which makes a lot of news when it happens. Yeah. The pop-up tax, and you know, there's a few people that it could potentially affect a little bit negatively if they bought a house in the last few years, but I wouldn't say it affects them as negatively as some people might think.

Pop Up Tax And Housing Affordability

Speaker 12:18

The market's going to be the market, and if you can remove the pop-up tax, and just to go back and say what that is, when you buy your home, it's dependent on the price you paid to helps and sales in the area and the value price you paid and uh comparable sales, those all go into figuring out your taxable value, and that's what your taxes are sent at. If you owned your home, let's say you're an elder coming into your elderly years, and you've owned a home, your home that you've lived in, let's say you've lived in it 40 plus years, the taxable value started very low and it's crept up, and Prop A has done its job in keeping those property taxes lower, 5% or the rate of inflation, whichever is lower, is the maximum you could do since 1994 with Prop A. Yeah. But the reality is if you had 5% for 20 years of inflation, guess what? You've doubled your taxes in 20 years. So people are starting to see, and when you've been in it for 40, 50 years, you've seen that happen. The reality is people are not moving out of those homes now and creating that turnover, that natural market churn in real estate, because the reality is that when they sell their home, they're gonna have to go buy something new if they're staying in Michigan, and they're gonna buy, they're probably gonna downsize, but they're gonna buy a smaller piece of property, uh a less valued home, typically, but their property taxes are probably gonna double from where they're at right now, you know, up to doubling or more, depending on how much they pay, of course. But why would you go double your property taxes heading into your senior years versus staying put? So that's the choice a lot of people have made is I'm just staying put. And we're our aim is to return that natural churn to the market where people say, hey, I'm gonna downsize. And they don't worry about that pop-up tax whacking them because it's several thousand dollars or in percentages, it's big. So they just want to avoid it. And then when you buy that house, now you paid a higher price because it's up in value. You know, some folks don't understand when they buy a house, they look at the property taxes now, but they forget what the owner of 40 or 50 years has paid for it and what it's based on when it started, and now they're gonna pay, you know, a much higher price. Well, next year that thing gets uncapped. Look out. Yeah. But you have to figure that into what you can afford. You know, and I have people in the district telling me, listen, I have my property taxes now exceed my principal and interest on my mortgage. Yeah. That, and I've said it in my floor speech, that is not sustainable. And you will make homeownership for young couples and uh others unachieval. So the pop-up tax, the property tax, sales tax on property transfers at the state level, you take a couple thousand dollars out of that, you eliminate the property tax uh of six mils in the set and the pop-up. Now you start driving costs back down that are inherent government costs in a process where you're trying to achieve the American dream. And and I think that's a good thing that we're trying to do to help with returning the housing market back to an achievable dream for young people.

Senate Negotiations And Revenue Questions

Speaker 15:49

All right. So the House passed this package. The Senate will have to take it up. I understand there's a Senate version. So now the hammering out is going to happen. Yeah, and that was the opportunity, and the speakers made it clear he wants this part of the budget discussion. And uh he thinks it's a perfect, you know, the governor said in her state of the state she wanted to address property taxes. Now, she only said something about, you know, giving seniors property tax relief. I'm all for giving seniors property tax relief, but I'm really more for giving everybody property tax relief. So I talked about it last time. There's common ground that she talked about and things that we can latch on to and go, you have a goal, we can work with you to get this done. And so that gives me hope that we can get something done. Of course, the uh chatter right now is replacing that revenue that we would lose. And there was discussion of uh what is it, sales tax on some luxury items, I don't know, jets and things like that, to try and find that money. But you just got through saying there's plenty of revenue in Lansing. So some of that could take up the slack, no? Absolutely. I think by the time you cut back and where you'd budget more appropriately versus the lazy person's way, get rid of these slush funds and bring those dollars back. I think we're more in line with a $60 billion budget that we were in 2019 versus an $83 billion budget when I came into office in 2024. So somewhere in there is probably the sweet spot. You certainly it's gonna go up. Cost of providing services goes up every yeah. I'm not silly. But we can't keep relying on taking money from citizens' wallets at a rate of a over 40% growth. We've never should have had that level of growth. And people want that money to stay in their wallet. It's theirs to start with. We shouldn't be asking for more than we need. Have you heard from any local governments about concerns over this? Yes. Yeah. All have expressed concerns about you know the revenue sharing uh for local county, township, city, village. And that's okay. I I share those concerns. You know, they send they collect those property taxes, they go to Lansing, they come back. So we got to make sure that they can maintain local services.

Axe My Tax And Local Control

Speaker 18:10

And I want to reset the whole discussion in that if you go back uh several months and recall a a drive called Axe My Tax. Yeah. I'm a firm believer that Axe My Tax probably had enough signatures. I don't know that they had collected them appropriately and documented them appropriately and had people trained well enough to be able to get that done within the scope of the law that you need to do, and they definitely met didn't meet the time frame. But I believe there was enough signatures to put that on the ballot. And if that made the ballot, it killed every piece of property tax. And that likely on the ballot passes. You would think so. I think it would, because I I think people are saying, you know, I pay too much now. But the danger of that, and while it may appeal to some, I mean my conversation was with people, I said, be careful about that, because if you do that, that means that it's all going to get replaced with different taxes at the state level, and at least enough to make government function. And you're going to take local control and consolidate it into Lansing, where all the revenue and all the decision making is made for your local fire department, your schools, you name it. And that sounds some people go, we don't care. That sounds fine, until you bring them the reality of politics and say, okay, until Detroit, Oakland County, Macomb County, Flint, Grand Rapids all outvote you to say, we get more than you do. Yeah. And that's the danger. So, and it's a political reality. It shouldn't be, but that's what happens on occasion. We've seen it happen in the past. We see drives, uh, pushes, uh, they've been unsuccessful to get more road funding to go to these larger counties. And it's like smaller counties have roads too. So believe me, with that amount of revenue, it would be a fight. So I don't necessarily like the fact that we would consolidate that power if that happened. I think it could be dangerous. So I'd rather have local control. But how do we take what we have control of and say we're going to eliminate it and start driving that down? It's also one of those things, if you if they come back to the ballot and and try to get it, get training done and and do the signatures correctly, X my tax could come back. It would be better to transition out of that than it would be to just drop dead, here we go. It's like old man, hold on. And so if this is part of the budget discussion, the budget that we expect to be hammered out in the next month, then the Senate's gonna take this up and this is gonna get worked out. Yeah, I expect some form of relief. I I really do, because I think the governor's gonna push it. All right.

Closing And How To Connect

Speaker 20:58

Well, we'll stay in touch and uh we'll look forward to the next steps of this. And if folks have thoughts on this they want to share with you, your website is there, your office uh has a phone. Absolutely. You they can let you know. Email, phone, in person. If you see me, don't be afraid to reach out. All right. Representative Steve Frisbee from Battle Creek. Thanks for the update. Thank you, Richard.