CHICAGO -- The Michigan Senate has passed a bill that would give six counties the ability to place before voters a local tax package to finance sports facilities or convention centers.
The bill was an expanded version of a measure the House passed last month. That bill had originally been drafted for Wayne County, which plans to put a 1% tax on hotel and motel rooms and restaurant meals and a 2% tax on rental cars on the March ballot. Revenues from the taxes would be used to back bonds for a new baseball stadium for the Detroit Tigers in the county seat of Detroit.
While the House amended the bill to include Muskegon County and its plans for a professional ice hockey facility, the Senate version would give four more counties -- Kent, Ingham, Washtenaw, and Oakland -- the ability to ask their voters to approve the same package of taxes.
Guy Gordon, a spokesman for Senate Majority Leader Dick Posthumus, R-Alto, said the bill, passed on Thursday with 22 votes to 9, would allow the counties to use the taxes to finance sports facilities with a minimum of 3,000 seats and convention centers of at least 100,000 square feet.
For Wayne County, the stadium would have to have a minimum of 25,000 seats.
Mr. Gordon added that the Senate version of the bill will go the House, which is scheduled to meet tomorrow. If the Senate changes are not accepted, he said the bill would go to a conference committee.
Scott Schrager, senior analyst for the House Taxation Committee, said the House would likely approve the Senate version, which has the support of Rep. Curtis Hertel, D-Detroit, the bill's original sponsor.
The only hurdle after that would be getting Gov Jhn Engler to sign the bill. John Truscott, his spokesman, said the governor would wait to make a decision until after the House has reconsidered the bill. He pointed out that the governor had been in favor of extending the tax-financing ability to all counties in the state.
In fact, an earlier version of the Senate bill did just that, but was later whittled down to the six counties whose senators pressed for their inclusion.
Even if the measure becomes law, its troubles may not be over. Michael Newman, president of the Michigan Restaurant Association, said his group was considering some kind of challenge to the 1% restaurant tax. One option would be litigation charging that the tax is unconstitutional. Under that scenario, the group would argue that the 1% tax violates would bring the sales tax above the state constitution's 4% limit.
Mr. Newman said the group has a "rather convincing" legal opinion that the tax is "a bastardization of the state sales tax."
"It walks like a duck, it quacks like a duck, it looks like a duck," he said. "In my opinion, it is a duck."
A similar question about the tax was raised last month by Deputy State Treasurer Gary Wolfram. However, Jay Rising, a senior attorney with Miller, Canfield, Paddock & Stone, Wayne County's legal counsel, had contended all three taxes contained in the package were excise taxes, which he said the constitution allows local governments to levy.
Mr. Newman said another option would be to fight the promotional campaign that Wayne County would likely launch to get voters to approve the taxes in March. The ballot also will contain a referendum from the Tiger Stadium Fan Club on using public money for the stadium and changing the lease the team has with Detroit for the current stadium.
Even though the Tax Reform Act of 1986 essentially ended the use of tax-exempt financing for sports facilities, Wayne County plans to use revenue from the tax package to back tax-exempt bonds for the stadium while Tiger team revenues would back a possible taxable issue.
One public finance source had said the tax-exempt deal could be structured to flunk the private security test in the law while meeting the private use test. Both tests must be met before the use of tax-exempt bonds is excluded.