By Mike Bouchard
Within Michigan’s unemployment rate, which has been among the nation’s highest for years, is another disturbing statistic: one-third of our construction industry is jobless.
Our carpenters, plumbers, electricians and other skilled trades are hurting. According to the U.S. Census Bureau, private home construction in Michigan has fallen from nearly 39,000 in 2005 to less than 6,000 through November 2009. The construction sector lost 28,000 jobs in our state in 2008 alone.
In addition to the emotional and financial hardships that job losses inflict on families, state and local governments feel a greater monetary pinch through substantial declines in sales tax revenue from construction materials, income taxes from builders and contractors, and permit and inspection fees.
We can change this. I recently proposed an initiative that will jump-start the economy and send our talented trades back to work. I am confident it will put construction vehicles rather than moving trucks in front of Michigan homes and businesses.
Under Michigan’s current property tax system, the taxable value of a person’s property is automatically increased when he or she renovates or builds an addition. This is hindering growth in the state. Michigan property owners are not investing in their homes or businesses. What they need is a good reason to invest here in Michigan.
Let’s give them one. I propose a 12-month tax incentive for all homeowners and businesses that would enable them to renovate, remodel and expand without increasing their property tax bill. Any work performed during the one-year period would not be counted for tax assessment purposes until the property is sold.
Projects could include new additions, remodeling efforts and other work that typically increases the value of a home or business. Newly built homes on formerly vacant land would be taxed at the same rate it was prior to construction. The former tax rate would be in place for up to a year to encourage construction. But that’s not all. For anyone wanting to invest in more energy-efficient building materials and technology for their home or business, this would provide an excellent opportunity to do so.
Michigan residents, workers and governments all stand to benefit from this approach. Home and business owners can enhance the value of their properties without increasing their tax burden. In proceeding with their projects, they will send the critical signal that long-term investments are alive and well in our state.
Our state leads the nation in outbound moves. Clearly we have many problems to fix, but as we work on the long term solutions, in the short term it’s imperative that we put as many people as possible back to work – quickly. Now more than ever, we need people to deepen their investment and commitment to this great state. Under my plan, they can do so without being punished by higher taxes.
There are many winners in this plan. Builders, contractors and suppliers will find more jobs available as this plan fuels a demand for their services. In fact, I’m proud to say this initiative has earned the support of the Michigan Association of Home Builders and the Associated Builders and Contractors of Michigan. Local governments will see a spike in the building permit and inspection fees they collect. And state government will gain revenue from the sales tax on building materials as well as the income tax from the jobs created.
There is no magic bullet to immediately solve Michigan’s economic problems, but by encouraging home construction and job creation, we can start moving in the right direction.
We cannot wait for another election to put this in place. We need to act now. I thank state Sen. Alan Sanborn for his support and commitment to moving my proposal through the legislative process. I encourage members of the Legislature to work together to pass this helpful plan. If not, it will be a top priority of the Bouchard Administration on Day One. It is through creative solutions like this and the willingness to make tough decisions that we will lead Michigan to better times.
