State Rep. Steve Frisbie, R-Battle Creek, is the sponsor of a sweeping property tax relief package that passed the Michigan House of Representatives last week. The eight-bill package would eliminate the state's 6-mill State Education Tax, repeal the real estate transfer tax, end so-called pop-up taxes on home sales, and remove personal property taxes on utilities.

The legislation now heads to the Democratic-controlled Michigan Senate, where it faces significant headwinds.

The numbers behind the cuts

According to nonpartisan House Fiscal Agency analyses, the combined tax cuts would result in a revenue loss that could progress from $5.5 billion to $7.5 billion a year.

The breakdown includes:

  • $3.1 billion to $3.2 billion lost from the School Aid Fund due to elimination of the 6-mill State Education Tax
  • $475 million to $488 million lost from repealing the 0.75% real estate transfer tax
  • $200 million to $250 million in the first year from eliminating the pop-up tax, increasing to up to $2 billion in revenue by fiscal year 2035
  • $1.7 billion to $1.9 billion lost from eliminating the personal property tax on utilities

Frisbie says homeowners need relief now

Frisbie argued during House floor debate that Michigan families are struggling under rising tax burdens.

"This tax is the only property tax assessed by the state," Frisbie said. "Michigan residents realize that our property taxes are too high and they demand that we take action now."

He cited a constituent whose property tax bill had exceeded his principal and interest mortgage payments.

"Recently, a constituent informed me his property tax bill had now exceeded his principal and interest payments," Frisbie said. "That's not a sustainable trend."

Frisbie also said the package would repeal personal property taxes on utilities, tied to what he described as $1 billion in annual ratepayer savings over two years through required rate freezes from companies like Consumers Energy and DTE Energy.

Democrats warn of school funding crisis

Democratic lawmakers strongly opposed the legislation, warning it would undermine funding for schools, local governments, and public safety.

"We have seen this play before," said Rep. Stephen Wooden, D-Grand Rapids. "A massive tax cut that will be spun as a benefit to everyday Michiganders, but will ultimately simply be a windfall to the wealthy, paid for by cutting services regular folks rely on."

Wooden said the proposal could reduce school funding by billions of dollars.

"These bills would mean a $3.2 billion reduction to school funding," Wooden said. "Schools are already being underfunded enough and they cannot take another hit."

Senate Majority Leader Winnie Brinks, D-Grand Rapids, criticized the House action.

"Now House Republicans have something to brag about at their Memorial Day cookouts: Defunding schools," Brinks said.

The missing revenue replacement

The House passed the eight-bill package 57-46, but skipped a vote on a companion bill that would impose a 6% sales tax on luxury services to replace some of the lost revenue. That bill remains in committee and has not been revealed in detail.

House Speaker Matt Hall, R-Richland Township, said the luxury tax would target services such as private jets, lobbying, limousines, robocalls, and newspaper publishing.

"It's our intent to negotiate the details of that with the Whitmer administration during budget negotiations," Hall said.

Rep. Jaime Greene, R-Richmond, was the only Republican to vote against the package. She said the legislation goes far beyond simple tax relief.

"This package is being sold as property tax relief, but when you read the bills, it is much more complicated than that," Greene said. "That is not simply tax relief. That is a tax shift."

What happens next

The property tax package now moves to the Michigan Senate, where Democrats hold the majority. The Senate has entertained more targeted property tax cut proposals in the past. It is unclear when or if the Senate will take up the House package.

The legislation cannot become law without the accompanying service tax bill, which has not yet passed the House.

Frisbie noted that a citizens' ballot initiative called AxMiTax, which would have eliminated all property taxes in the state, collected signatures last year but ultimately failed to qualify for the ballot.

"Michigan residents need to see tax relief immediately," Frisbie said.