When the Michigan Legislature passed Public Act 123 nearly a decade ago, the economic picture was much different than the one facing Michigan today. At the tail end of the Clinton administration, housing prices were rising steadily, the country wasn't at war and filling up your SUV's gas tank didn't leave you broke.
So, it seemed reasonable at the time to cut the grace period for filing late taxes from five years to two. Detroit, especially, had a problem with abandoned homes creating blight and no way to quickly get property away from negligent owners and back onto the tax rolls.
But no one's partying like it's 1999 anymore. Along with the housing market going bust and war that's going nowhere and gas prices topping $4 a gallon, the auto industry is shedding workers the way a sinking ship dumps ballast.
Michigan's economy has taken a nosedive, and the legislation passed during what seems like those long ago good times — a change in the law that shortened the time local governments could begin foreclosing on tax delinquent property — is creating much stress for many people.
State Rep. Steve Tobocman (D-Detroit) has a few talking points on the subject:
There were more than 136,025 Michigan properties that had a foreclosure filing in 2007. That's a 68 percent increase from the year before and a 282 percent jump from 2005. In Wayne County, taxes on more than 200,000 parcels are currently delinquent.
All this and more is why Tobocman and some of his colleagues introduced the Taxpayer Home Protection Act, legislation he hopes will ease the burden of folks struggling to keep the taxman from taking their property.
The package of bills currently before the House Intergovernmental, Urban and Regional Affairs Committee seeks to help low-income homeowners get extensions and exemptions on their property taxes. Local tax collectors would be required to provide exemptions to homeowners who make less than 125 percent of the poverty level, currently $21,200 a year for a family of four. Another piece of the package would prevent water and utility bills from being tacked onto tax bills, possibly triggering foreclosure.
These and other parts of the package aren't just compassionate, says Tobocman. They also make for good economic policy.
"It is a lose-lose-lose proposition when the government takes a struggling family's home for tax delinquency, hurting everyone's property values," he says. "The Taxpayer Home Protection Act provides some clarity across Michigan communities, so that the government is not needlessly adding to the blight and depression of property values inherent in any foreclosure."
There is some opposition to parts of the package, Tobocman reports, and negotiations are under way. He says he is hopeful concerns about the levels at which people will get exemptions — costing local governments at least some income — can be worked out.