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Official hopes for windfall repeat

ESCANABA — After Delta County received an unexpected windfall as a result of tax reimbursement legislation last year, County Administrator Ryan Bergman said he is hoping the funding will be fully retained in future state budgets.

In 2012, legislation was passed to provide some personal property tax exemptions for manufacturing businesses. Bergman said revenue from these taxes was important to Delta County, as was the case for several other local governments in Michigan.

“Local governments depend on a lot of that tax revenue, so… the state said they would make up the tax loss to governments by reimbursing us from a portion of use tax revenues,” he said. The use tax is a sales tax applied to purchases made outside the state that were not subjected to a sales tax at the time of purchase.

Fewer manufacturing businesses than the state government expected took advantage of these tax exemptions in 2016, which meant that the state had fewer tax losses to reimburse than they thought they would. However, the percentage of use tax revenues they were obligated to give local governments affected by these tax losses did not change.

“By rule, they had to give it to us,” Bergman said.

According to Bergman, Delta County had expected to receive about $481,502 from these reimbursements in 2016. Instead, they received about $1,132,412 — roughly $650,910 more than they thought they would. The city of Escanaba and Bay College also received about $390,000 and $858,000 in reimbursements, respectively.

Bergman said the county put this unexpected money toward its pension stabilization fund.

“It gave us an opportunity to max that out and protect (us) from service cuts in the future, when our pension funds increase substantially,” he said.

Delta County was not the only area in the Upper Peninsula that received benefits from these reimbursements. Dickinson County received $979,023, which was a larger amount than they were expecting.

“This is a big deal for them, too,” Bergman said.

While Bergman had initially believed this extra money would serve as a one-time boost to the local economy, additional funds related to manufacturing personal property tax exemptions have been included in Gov. Rick Snyder’s initial state budget proposal for 2017. However, this money may not be distributed the same way it was last year.

“(In) the governor’s budget, the extra money is still there, but it sounds like they’re … discussing allocating it throughout the state more evenly,” he said.

Bergman said losing these additional funds would be a blow to the area.

“It would be very negative for Delta and Dickinson,” he said.

Because of this, Bergman said he has discussed the issue with the offices of Sen. Tom Casperson and Rep. Beau LaFave.

“We need to count on our legislators to help us keep as big of a portion of the initial funds as possible,” he said.

As the county did not think they would be receiving more than $481,502 from these reimbursements in 2016, Bergman said losing the additional funds in the future would not result in large-scale budget cuts.

“It’s not like we’re losing significant dollars that we had, so we’re not going to have to make massive cuts or anything,” he said.

In the interest of ensuring that the county budget for 2017 will be balanced, however, Bergman said Delta County will continue to operate under the assumption that they will not receive extra funding from reimbursements this year.

“We have no choice but to budget conservatively and not anticipate the funds,” he said.

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