Proposal 1 aims to update tax code and lift tax burden on businesses

On August 5 with Proposal 1 voters will have a chance to modify in small part the current state tax code and replace income generated by the Personal Property Tax with monies collected from industrial property owners under an Essential Services Assessment (ESA) as well as the statewide use tax known as the Local Community Stabilization Share. These monies will be disbursed by a newly created Local Community Stabilization Authority. Taxpayers will not be required to pay any new taxes under this new proposal.

As the tax code is written now, businesses must pay taxes annually on equipment they purchased, no matter if the equipment is a decade, or four, old, and regardless of what sales tax they paid on it at the time of purchase. Business owners feel that this is an unfair, punitive tax, and some economists have asserted that it is this kind of disincentive that drives businesses from Michigan to states with less of a tax and regulatory burden.

The difficulty with simply eliminating this tax is that so many Michigan municipalities rely on that income in order to be able to provide critical services. If the tax is eliminated and not replaced with anything, citizens will suffer a significant loss of services such as city police, fire, libraries, schools, roads and jails throughout Michigan. Proposal 1 was crafted with the input of both businesses and city governments and is widely supported by both.

Unfortunately for a measure that is intended to eliminate the double tax burden on small businesses and stabilize funding for city services, the language of the bill itself is dense and, for many, indecipherable. In response, Michigan Citizens for Strong and Safe Communities has launched a $5.6 million marketing campaign to educate the public and eliminate confusion about this ballot issue. The funding for the campaign was donated in large part by businesses, including Ford Motor Company and Dow Chemical. The Michigan Manufacturing Association also contributed $1.6 million.

In Grand Rapids the City Commission is strongly urging voters to support Proposal 1 with a yes vote as is Mayor George Heartwell and the Grand Rapids Area Chamber of Commerce. State House Candidate Cindy Duran, however, feels that the passage of Proposal 1 will have a number of unintended consequences. The Wayne County Taxpayers Association is also urging a no vote for a number of reasons, asserting that the complex ballot language will lead to misinterpretation of the passed proposal in the future and abuse by the newly created Local Community Stabilization Authority.

Gearing up for the August 5th Primary

Kent County residents are beginning to get bombarded with campaign literature related to primary elections, millages and ballot proposals as the August 5 date approaches. For some this means nothing more than more flyers to pitch into the recycling, while for others the tension heightens as they speculate about tax revenues, loss of services or employment, or just undesirable political representation.

Locally, it's obvious that some people are shaken or made nervous by what recent polling has revealed. Election yard signs have been destroyed or stolen, and political polling and pamphleting has been ramped up considerably. Several candidates have announced and held town halls to further dialogue with their potential electorate. Some of this outreach has been largely smear tactics as with an apparently Brian Ellis-financed telephone poll that begins with questions that seem objective and then lists a series of statements and accusations about Justin Amash designed to manipulate the polled citizen rather than measure any upcoming vote. Amash is a polarizing candidate, and his beliefs and stances often clash with the interests of many in his congressional district, but questions framed like, "If we told you Amash owns an expensive house in [X], would that make you more likely to change your vote?" "Much more likely?" seem crafted to exploit and arouse negative emotions, not measure political opinions.

In Kent County, but not in the City of Grand Rapids, voters will be asked to decide on whether to vote yes on a millage to continue funding Kent District Library. If this millage does not pass, the library system will not be able to continue operating into 2015. For many people who depend on library services for education, entertainment, or job searching or who work for the KDL system, this is a nailbiter issue.

Proposal 1 will appear on all ballots because it's a state-wide attempt to eliminate the Personal Property Tax, which is an annual tax levied on business equipment and machinery, and replace it with a Local Community Stabilization Share Tax. Many business owners object to paying annual taxes on aging equipment, but some municipalities rely heavily on income from the PPT and would have to significantly limit services if it were simply eliminated. Proposal 1 aims to stem the flow of Michigan owners selling their businesses or moving them to states with lesser tax burdens.

For local citizens unaware of what will be on the ballot August 5 or unsure of what the proposals or millages may mean for them, Mlive just put out a voter guide designed to help. The guide pulls up election choices by address and is a good place to begin assembling information on candidates and issues. The length of the guide varies by location, and it would be a good idea to look at it earlier, rather than later, in order to make more informed voting choices.

See you at the polls on August 5th!

Lamar Construction Company closes its doors without notice

Lamar Construction Co. filed for Chapter 7 bankruptcy on Friday, July 11, after a sudden and unexpected layoff off all of its 293 employees in Michigan, Kentucky, and Colorado. On Wednesday the Hudsonville-based company announced that it was closing its construction division, but said it intended to keep its structural steel engineering operation open. However, it appears that Lamar’s financial situation was more complex and precarious than even its management believed earlier in the week because on Friday all workers received email notice that the company was now defunct and they would not be paid for their work this week. Online, the Lamar website has been “removed indefinitely.”

Lamar’s services consisted of designing/building, general contracting, construction management, steel & precast erection, development services, facility management, custom cabinetry/millwork, and green/sustainable construction. The larger and custom projects they worked on were quite complex involving state-of-the-art construction engineering or advanced environmental technology. The Denver Business Journal highlighted several present and future construction projects that would have to be reorganized now that Lamar will no longer be acting as general contractor. These included a 172-apartment complex in Golden, Colorado, a 12,000 square-feet office building, an industrial project, and senior housing.

According to the bankruptcy petition Lamar Construction filed, the company has assets of between $10 to $50 million and liabilities within the same range. Company shareholder Carl Blaukamp, in an interview with Mlive said that Fifth Third Bank had declined to extend their line of credit after “some unexpected losses.” Lamar obliquely blamed the shutdown on “current economic conditions.”

Lamar Construction Company had been in business for 74 years and was named one of West Michigan’s 101 Best and Brightest Companies to Work For by the Michigan Business and Professional Association in 2013. In June Mlive photographed Lamar preparing the Fifth Third Ballpark for the Midwest League All-Star Classic.

Tornado touches down in Kentwood

We've had a spate of serious weather in the last year or so for the normally more temperate West Michigan. First we had the Great Flood of 2013 and then a bitterly cold and snowy winter, and now the summer of 2014 is turning out to be wet and stormy - with an actual tornado touchdown in Kentwood! Some of the neighborhoods the tornado passed through were previously drowned out in the flood, so it's a second round for those people. A friend's house was struck by lightning in the storm Sunday night - thankfully, it didn't burn down.

It's feeling a little apocalyptic in Grand Rapids these days. Maybe the next time the sky darkens we should grab Grandmother's jewelry, the flash drive full of photos, and get the heck out of Dodge. 

Fortunately, no one was killed, but it will be awhile before all of the property damage is repaired. In addition to the tornado damage, parts of West Michigan have gotten 10 inches of rain this past month which means some fields - and basements - have flooded. Everything not washed away is nice and green, though, which is a change from two years ago when we were in the middle of a drought.

In fact, the water levels of the Great Lakes have done a sudden turnaround, rising from well below normal to average levels for the first time in a decade. This time last year there was a whole chorus of doomsayers, from environmentalists to economists to tourist industry businessmen worried that the end was nigh. And now who knows what the future will bring? For now, though, you can easily get your boat in and out of most of Michigan's more than 10,000 lakes, and there's plenty of water for the fish to swim around in.

Tornadoes are truly frightening, though, and our thoughts and prayers go out to all those who suffered loss this weekend.

Why is the west side of Michigan doing so much better than the east side?

In January, Stephen Moore wrote an article for the Wall St. Journal entitled, “Why the Rest of Michigan Isn’t Singing the Motown Blues.” In it he discussed the discrepancy in unemployment between Grand Rapids (then at 5.9%, 5.6% in April, 2014) and Detroit (then at 15.1%, 14.5% in April, 2014).

Moore credited West Michigan’s current robust economy as being the result of good government policy (via Gov. Rick Snyder), a diversified economy, a union-lite business environment, a strong regional work ethic, and cheap energy,provided by shale. These are all important factors, and it is difficult to pinpoint what manufactures success at a particular point in time (after all, Detroit considerably overshadowed Grand Rapids as a producer of jobs and wealth for much of the 20th century). Moore did not touch on one aspect that is inescapable to those who live in West Michigan: that is, who settled the area. And that was the Dutch.

If you look at a Census map of primary ancestry by county, you will note that West Michigan has a three-county area with “Dutch” written all over it. These are Ottawa, Allegan, and Kent counties where Grand Rapids and Holland (both referenced by Moore) are located. The rest of the state was settled by Germans, except for the northwest corner of the Upper Peninsula, which was settled by Finns.

Many people underestimate the commercial nature of the Dutch, but they have throughout history turned less promising areas into thriving commercial centers. In the 16th century they created an international shipping empire out of a swampy lowland country, and in the New World they brought New York City, the center of trade in the colonies, into being.

West Michigan was largely settled by Dutch looking for freedom to worship in their Dutch Calvinist tradition. In 1900 40% of Grand Rapids was Dutch, and in 1990, 300,000 people of Dutch descent lived in West Michigan, the largest area of Dutch settlement in the United States.

The Dutch chose to settle here not only for religious reasons, but also economic. In the 1840s Michigan was already link by rail to New York City, so there was a potential market already established. The Hollanders quickly became known for their industry, their frugality, and their hospitality. Their Calvinist religious beliefs only reinforced their natural tendency to materially prosper. Entrepreneurship was in their blood.

They were also civic-minded and remain this way today. The Van Andel, DeVos, and Meijer family invested heavily in Grand Rapids when it was stagnating, and their money and ideas have succeeded time and time again in attracting both tourists and mental capital. The most obvious recent example is Rick Devos's creation of ArtPrize, less than a decade old and already an international festival venue.

In describing the atmosphere for doing business in West Michigan, business broker Max Friar recently said, “What makes Grand Rapids different, in my opinion, is a strong, conservative, honest work ethic that runs thick through the small business community. I think that West Michiganders like to do business with each other because in general there is a sense of trust that permeates business relations. Certainly companies have contracts, but I genuinely smile at how many people do business on a handshake. That says a lot about a community. When people ask me if I work outside of West Michigan, I tell them yes, but honestly I prefer not to."

The influence of the Dutch in developing the business mores of the West Michigan area is often overlooked, but it should not be. We are who we are today because of who the people of yesterday were and what they did.