The Michigan Association of School Boards and the Michigan Association of Superintendents and Administrators have joined together to voice strong opposition to House Bills 5872-5878 and House Joint Resolution T, warning that the proposed property tax overhaul would significantly compromise funding for K-12 classrooms and local municipalities.
As introduced, the legislative package would eliminate major revenue streams that support the state’s School Aid Fund (SAF), resulting in an immediate reduction of more than 20% of the fund’s total revenues.
According to an analysis of the bills, the projected fiscal impact includes:
HB 5873: Repeals the State Education Tax, removing $3.1 billion (16%) from the SAF.
HB 5874: Repeals the Real Estate Transfer Tax, a $475 million reduction to the SAF.
HB 5878: Repeals the personal property tax on utilities, creating an additional $400 million shortfall.
These combined losses of $3.98 billion do not include further localized revenue reductions resulting from the proposed repeal of the “pop-up tax” under HB 5872, which directly impacts funding for local school districts and municipal services.
“While we understand the desire for property tax reform, this specific approach creates an unsustainable gap in school funding,” said Tina Kerr, Ph.D., Executive Director of the Michigan Association of Superintendents and Administrators. “A 20% reduction in revenue directly impacts core classroom resources, including critical, state-level investments in early childhood literacy. We need a solution that protects our students’ academic progress.”
The bill package currently contains legislative intent language directing the state to “backfill” the lost School Aid Fund revenue from other sources. However, MASB cautions that such provisions are legally unenforceable. “The reality is that the state budget cannot absorb a multi-billion-dollar hit of this magnitude,” said Don Wotruba, CAE, Executive Director of the Michigan Association of School Boards. “This package would directly impact the resources needed to help students succeed.”