LANSING – Governor Rick Snyder made clear Thursday that he will not rush a still under development plan to eliminate the industrial portion of the personal property tax, declining to insist it even be passed this year.

Separately, Snyder, in an interview with Gongwer News Service, said his top policy initiative for 2012 is winning approval of a plan to raise $1.4 billion more for road repair, construction and maintenance. And he said in an online town hall that he hopes to increase funding to K-12 schools.

Snyder shed considerable new light on the status of his administration’s work on overhauling the personal property tax, which essentially applies local property tax rates to business equipment. Last summer, the administration seemed to be nearing the unveiling of a plan to address a tax businesses have long loathed as a disincentive to buy new equipment.

But the tax also generates $1.2 billion, about $878 million of which goes to local governments and the rest to the School Aid Fund. That has given Snyder pause about structuring the change to avoid hurting local government budgets.

“Given that it’s such a local question, I’m not there to tell them that it’s got to be done by ‘X’ date or it doesn’t work,” he said. “The way I view it is if we get a solution sometime this year, that’s a good answer.”

Additionally, Snyder gave his blessing to the widely discussed and reported idea of using funds from expiring business tax credits to replace the revenue generated for local governments by the personal property tax. He was careful not to declare that is his plan, but made clear it was a valid option.

“I’m not saying that’s our policy position. I’m saying that’s a reasonable thing that should be on the table that people should look at as part of that process,” he said.

Snyder said the big question is how to take the funds made available from expiring credits and disburse it among local governments. Asked what answer his administration had come up with, Snyder said he wants the local governments to solve that question.

“That’s where I don’t want to tell them what to do,” he said. “I would rather have them be proactive, coming back and saying, ‘We’ve talked about it, here are the things we would really like to look to do.'”

Arnold Weinfeld of the Michigan Municipal League said while MML officials have appreciated the opportunity to work on the issue with Lt. Governor Brian Calley and Department of Treasury officials, the issue is not just about local governments. The MML is part of a coalition with schools, libraries and other organizations calling for guaranteed replacement of personal property tax revenues, something Snyder has indicated he would not embrace.

Weinfeld said the MML appreciates Snyder’s understanding of the need to protect funding for local governments, but the state will have to work with local governments on figuring out how to disburse replacement revenue.

“More than willing and have been sitting down with the administration to talk this through,” he said. “I don’t think it’s going to be as easy as what the governor says he’s thinking when he says he wants the locals to come up with a solution to something that the state is forcing down on locals and that’s the elimination of the tax. The state is saying, ‘we’re going to eliminate your tax, oh, but you figure out how to disburse the replacement of the tax.’ This has to be a collaboration.”

Snyder also made clear his priority is to first phase out the tax on industrial personal property. Commercial and utility personal property are less of a priority.

“The part that really deserves the attention is the industrial piece because that’s where the bad parts of the tax really cause bad economic outcomes in terms of holding back job creation,” he said. “Last night, I talked about industrial equipment. I just didn’t say PPT.”

The governor also appeared to cast a bit of doubt on an idea he previously had trumpeted – setting a threshold of personal property below which businesses would not have to pay the tax. At one point, the Snyder administration was considering a plan to exempt filers below $40,000 in personal property.

Of the threshold concept, Snyder said Thursday, “in a perfect world, we’d also address (it), and I don’t know if that’s possible, but we should be looking at it.”

Mike Johnston of the Michigan Manufacturers Association said his group is urging speedy action to at least get the phase out of the industrial portion of the personal property tax on the books even if it will take years to disappear.

“It is our firm belief that this should be happening now and as soon as possible to get it on the books,” he said. “We believe this is an important business climate issue. Michigan needs to communicate as soon as possible that Michigan is committed to eliminating this barrier to manufacturing investment.”

Manufacturers switching over to the Corporate Income Tax from the Michigan Business Tax lose the tax credit they could claim under the MBT that was equal to 35 percent of their personal property tax burden.

Johnston said he understand the need to get local governments’ input.

“We are consumers of local services, so we’re supportive of the interest that locals have in being able to maintain police, fire and road maintenance,” he said.

Tricia Kinley of the Michigan Chamber of Commerce said eliminating the personal property tax remains a top priority, but was unbothered by Snyder’s lack of a timetable.

“We’re not rattled by the governor’s comments at all,” she said. “This is a complicated issue. Many legislators have tried and failed in the past. But we feel that the Snyder administration and House and Senate Republicans have already set a great track record by repealing the MBT within the first six months of 2011.”

Of Snyder’s emphasis on industrial property, Kinley said a threshold, if one is set, would help businesses with commercial property. And as to whether there would be a threshold, Kinley said she hoped so, but noted it too is complicated.

“Our philosophy is, how do you eat an apple? One bite at a time,” she said.

ROADS: Snyder straddled the fence a bit on the pending introduction of legislation overhauling transportation funding.

Snyder said he will support the legislative package, but was not going to officially endorse, for now, the plan to raise $1.4 billion through a new gasoline tax paid at the wholesale level based on a percentage of the fuel price and an average increase on vehicle registrations of $60.

“We are going to have a bipartisan package of bills going in that we do support, but I would say we’re not taking a policy position on the funding source piece of that,” he said. “Because we have to put in a bill, we’re going to show it split between registration fees and the wholesale fuel tax, but we’re not taking a formal position on that, I consciously don’t want to do that because, I want the public dialogue and not have it get cut off because there’s something that people are going to overreact to too quickly. Let’s have a good discussion on that, come up with an answer and move forward.”

Snyder said he is trying to reframe the debate on transportation funding.

“This is a public sector problem in the United States and a political problem in the United States,” he said. “Too often people look at what’s in one year or what’s in a two- or three-year timeframe, a term kind of timeframe. The right way to frame the funding question should be over literally like a 20-year horizon.”

Snyder said the $1.4 billion raised annually to fix roads would be a big help, but the public and officials need to realize the consequences of not spending that $28 billion over a 20-year period.

“This is that problem I hate, where they dump the problem on the future,” he said. “So you dump this problem on the future, and if you look at wha