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Local Gov't Budgets Bogged Down By Loss Of State-Paid Swamp Tax

The Ongoing Budget Battle Means Less Funds For Rural Communities

Wetland | Michigan DNR

For Michigan's local governments, not draining their respective swamps could end up draining their bank accounts thanks to the ongoing budget impasse between Gov. Gretchen Whitmer and legislative Republicans.

That's because the so-called "swamp tax" the state pays to local governments to keep swampland undeveloped is due in December, and the $15.3 million allocated for that purpose was one of Whitmer's vetoes in the Fiscal Year (FY) 2020 budget.

There's been a number of veto-related impacts on local governments flagged since the budget was signed, such as the state's payment in lieu of taxes (PILT) it owes the locals to compensate them for the taxes they can't earn on state-purchased land in their jurisdictions.

But the state doesn't have to pay those PILT bills until February 2020. Treasury spokesperson Ron Leix aid the official date is Feb. 14.

A more immediate tax deadline for the state is for the swamp tax, which local governments are expecting in December, specifically Dec. 14, Leix said.

And if that doesn't come through, "that will hurt us big time," said Rebecca Ragan, the treasurer for Roscommon County, who said her county counted on $365,000 in 2018 in swamp taxes, which she said made up a "significant" part of the Roscommon County budget.

Ragan said the swamp tax is paid directly to her and then she divvies it up based on a determined dollar-per-acre amount -- roughly $4 an acre last year -- split among townships, the county and schools.

Asked what the county's contingency plan is if the revenue doesn't come in December, Ragan said she didn't think the county had one, yet.

"I'm sorry that your gas tax didn't pass, but, you know, don't take it out on us," Ragan said, referencing Whitmer's 45-cent gas tax increase proposed as part of her road funding fix.

In nearby Crawford County, Treasurer Kate Wagner said her county would lose $338,000 if it doesn't get its swamp tax revenues. The swamp tax revenue is dumped into the county's general operating funds, which essentially pays for everything the county does, she said.

"I don't think they see the urgency we do," Wagner said. She added later, "We're hoping it's going to get solved. I think if it doesn't, everybody's going to have a lot to answer for down in Lansing."

In addition to the $15.3 million for the swamp taxes and the $8.7 million in PILT payments for locals, Whitmer vetoed another PILT program for the commercial forest reserve, totaling $3.7 million. The program is designed to provide an incentive to private landowners to maintain forestland for long-term timber production, Leix said.

For more, visit www.MisrNews.com.

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