LANSING – In separate press conferences across the state Monday, House Democrats said their legislation enacting an 18-month moratorium on the pop-up tax that occurs when a home is sold should be sent to the governor’s desk in order to spur the housing market. Conversely, House Republicans said their plan to restrict property tax hikes when a home’s value goes down is a better way to go.

Whether the two sides will reach an agreement, along with the Senate, on how to help struggling homeowners and potential homebuyers is still anyone’s guess.

In reaction to the stunning number of home foreclosures in the state, all sides have almost reached the finale to getting bills signed into law that provide mortgage refinance assistance through the Michigan State Housing Development Authority and require the licensing of mortgage loan officers in the state, but what has been elusive for lawmakers is figuring out what to do with the tax side of the equation.

The House Democratic plan, approved by the chamber almost a year ago, would establish a moratorium on assessing a recently purchased home by its state equalized valuation, which is 50 percent of the home’s cash value. Under current law, an assessment can increase by inflation or 5 percent, whichever is less, but that is uncapped when ownership of a property is transferred. The package (HB 4440 and HB 4441 ) also increases the real estate transfer tax from $3.75 to $4.25 for every $500 of a home’s value, which would be given to local units of government specifically for public safety.

The bills are tied in concept, not formally, to another bill still pending on the House floor (HB 4442 ), which would exclude the pop-up of taxable value in the equation of determining Headlee rollback millages. Under current law taxes are rolled back if taxable values of homes increase faster than inflation, even if that increase is from property sales, unless voters agree to an override.

According to the fiscal analysis from last year, state and local property tax revenue would decrease by $149 million to $219 million in the current fiscal year under HB 4440, while HB 4441 would have brought in $42 million between May 2007 through December 2008. HB 4442 would also have increase local revenues by an indeterminate amount.

Democrats have argued the legislation provides an incentive for senior citizens to downsize their home and for younger residents to purchase their first home, while not striking a blow to the local communities whose residents depend on services like police and fire.

“We do know this is a piece of what we could be doing to boost the housing industry,” said Rep. Joan Bauer (D-Lansing).

But Republicans, including state Republican Party Chair Saul Anuzis, have framed their opposition on the argument that the legislation increases taxes.

On Monday, House Minority Leader Craig DeRoche (R-Novi) reiterated that a tax increase is not going to fly in the Senate, and that it probably wouldn’t happen again in the House given the votes on increasing the income tax and establishing a surcharge on the Michigan Business Tax happened later on as a way to balance the budget.

DeRoche said he believed the Republican proposal would get wings in the House as long as it got fair shot at a hearing. He called the plan “a complete and structural solution” to the “No. 1 issue for residents.”

Some of the components of the GOP plan are still in draft form, but what has been introduced are constitutional amendments limiting property tax assessments when housing market values fall (HJR LL and HJR MM ) and legislation equalizing tax rates across a community and requiring single-year sales study instead of two-year (HB 5647 ), providing more information and time for homeowners to appeal their assessment (HB 5646 ), requiring an example of tax burden to be included in millage ballot questions (HB 5641 ), allowing for written protests with the Board of Review (HB 4624 ), banning mortgage fraud and providing penalties (HB 4409 , HB 4410 and HB 4411 ) and requiring voter approval for community-wide assessments (HB 5642 , HB 5643 , HB 5644 and HB 5645 ).

Legislation still being drafted as part of that package would hire more mortgage investigators in the Office of Financial and Insurance Services, provide deed fraud protection, tackle appraisal fraud and provide incentives for people to purchase foreclosed homes.

Republicans have also argued the real estate transfer tax, which brought in $51.3 million during the first quarter of the current fiscal year (down 11.2 percent from a year ago), should be eliminated, but no bill has been drafted to accomplish that goal.

House Majority Floor Leader Steve Tobocman (D-Detroit) said given that some Republicans voted for the pop-up and real estate transfer bills, he believes there is common ground to work on the issue. Mr. Tobocman said he hadn’t seen the Republican plan, but added, “the question is whether people are willing to come to the table and deliver for Michigan voters.”

Robert Campau, vice president of public policy for the Michigan Association of Realtors, said because the Michigan housing market is getting worse there is more impetus to have a discussion on legislative action.

Campau said the House and Senate must negotiate on short and long-term solutions to the issue. While his association thinks the pop-up measure is too temporary, if discussing it produces agreeable solutions then that’s a good thing, he said.

While House Democrats criticized the Senate for not acting on its own plan at least, Campau said much of what the Senate is currently involved in is vetting ideas behind the scenes.

In a statement to the press, Senate Majority Leader Mike Bishop (R-Rochester) said his caucus has been working with House Republicans on the real estate transfer tax issue and capping assessments when market values fall. But he emphasized that “permanent solutions” not “temporary fixes” need to be the bedrock for an agreement between the chambers.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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