House Property Tax Overhaul Threatens Local Library Funding

Last month, a bill package was introduced in Michigan’s House of Representatives that seeks to eliminate certain property taxes and limit future property tax growth across the state. The Michigan Library Association stands in opposition to several of the bills – House Bills (HB) 5872, 5878, and 5880 – as they raise significant concerns by reducing local revenue streams that support public libraries and increasing certain administrative costs for libraries. MLA recognizes that thoughtful property tax relief deserves real consideration, but these bills would reduce local revenue for public services without providing reliable replacement funding for libraries.

Michigan residents consistently support their local libraries at the ballot box, and any property tax reform should preserve local investment opportunities and local control. Libraries understand that many homeowners are struggling and that Michigan’s state property tax system warrants serious review. A successful reform package should provide meaningful tax relief while also ensuring sustainable funding for the services that Michigan communities depend on every day.

For Michigan’s public libraries, the stakes are especially high. Over 75% of funding for public libraries comes from locally approved property tax millages. Libraries depend on stable and predictable millage levies to fund operations, collections, programming, technology, and the trusted professional staff that deliver necessary learning and information services. When property tax revenues are reduced, libraries are faced with difficult decisions around staffing, open hours, deferred maintenance, and crucial resources provided across the state.

HB 5872 would eliminate the uncapping of taxable value when property changes ownership. While intended to provide tax relief for new buyers, uncapping is one of the few mechanisms that allows local tax bases to gradually keep pace with real estate values. Eliminating the uncapping of taxable value would reduce future revenue growth for library millages already approved by voters. Over time, libraries could experience a widening gap between operating costs and available revenue, while demand for library services continues to grow in many Michigan communities.

HB 5878 would eliminate the personal property tax on utilities and certain business equipment. While MLA acknowledges that reducing tax burdens on local businesses is a worthy policy goal, the proposal would remove another significant source of local revenue, with no long-term plan to keep libraries and other public services whole. 

HB 5880 is part of the bill package’s replacement revenue strategy, but it creates additional funding challenges and uncertainty for public libraries. The bill creates new costs through a proposed excise tax on services routinely used by libraries, such as legal counsel, accounting, consulting, and many other contracted services. Those costs would increase, placing additional pressure on already constrained operating budgets.

MLA will continue to track property tax reform legislation and share updates with Michigan libraries as they become available.