Michigan self storage facilities barely avoiding being subjected to a sales tax in December 2007, when Michigan’s legislature passed a six percent service sales tax and then repealed the tax only a few hours after it went into effect. Instead Michigan legislators decided to add a 21.99 percent surcharge to the state’s new bu
siness tax.
But now Michigan’s self storage industry faces the likelihood that the legislature will pass the service sales tax again. Michigan is projecting that in its upcoming fiscal year, starting in October, the state will have a $1.7 billion budget deficit. Governor Jennifer Granholm wants to reinstate the service sales tax to help make up the difference. She told the Michigan Public Radio Network this week that legislators, most of whom are up for reelection in November, would be better off agreeing to a service sales tax now than taking the risk of having to shut down the government for lack of money, a month before the general election. In October 2007, Michigan’s government had to partially shut down for four hours.
“I can’t wave a magic wand,” Granholm told the Michigan Public Radio Network. “I cannot push the vote button for these legislators….They don’t want to do the tough things, and everything I’m asking them to do is tough because there is no easy way out. We cannot get this done unless we take some really hard steps, and it’s hard for them to do in an election year.”
Governor Granholm herself will be leaving office at the end of her term, as Michigan limits its governors to two four-year terms. Granholm has been serving as Michigan’s governor for nearly eight years now.
The service sales tax is not Granholm’s only proposal for balancing Michigan’s budget. She is also trying to coax 47,000 state and public school employees to retire this year and hopes to rescind the three percent pay raise that is scheduled to take effect for unionized Michigan state employees on October 1. These and other changes could save Michigan a
bout $265 million in the upcoming fiscal year, but are not enough to wipe out the e
xpected budget deficit.
The national Self Storage Association and the Self Storage Association of Michigan are working together to try to find ways to fight the proposed tax in order to protect Michigan self storage tenants from the rate increases that might follow from the imposition of a sales tax. Many Republican legislators in Michigan are also opposing the sales tax, proposing about $800 million in budget cuts instead – which would still not be enough to keep Michigan’s government services operating next year.
Sources used:
Bell, Dawson and Christoff, Chris. “Michigan Republicans’ budget: $800M in cuts, no sales tax hike.” Detroit Free Press. March 23, 2010.
Martin, Tim. “Budget stalemate lingers as lawmakers take break.” Associated Press. March 26, 2010.
“Sales-tax threat may resurface for Michigan self-storage operators.” Inside Self-Storage. March 25, 2010.