DETROIT (AP) — Governments and schools across Michigan are bracing for the possible loss of millions of dollars in tax revenue as General Motors Co. and Chrysler Group LLC argue that they should pay less in property taxes.
GM and Chrysler say their property taxes are inflated by more than 50 percent because local communities overestimate the value of their plants and buildings. If the automakers prevail before the Michigan Tax Tribunal, some of the hardest hit communities would be those in metro Detroit where GM and Chrysler are the biggest taxpayers. Those communities include Warren, Sterling Heights, Auburn Hills, Pontiac and Milford Township.
But the Detroit Free Press reports that the potential loss of $45 million in taxes would also affect school districts, community colleges, public transportation, libraries and the Detroit Zoo. Community leaders say they could be forced to lay off police and firefighters or cut services to seniors and lower-income families.
"This is the worst thing that has ever happened to us budget-wise," said Don Green, supervisor for Milford Township, which could lose 11 percent of its $950,000 budget.
The downsizing automakers are looking for savings and say they have no choice but to go to the tax tribunal.
"While we are pleased that the new GM is moving forward, we still have to look for every way to reduce our costs," GM spokesman Dan Flores said. "This fundamentally comes down to where we think the assessed values don't match up with the true market value."
Commercial real estate appraisers say the automakers have a good case because their property taxes remained steady despite a dramatic downturn in the real estate market and closures of large sections of some plants.
"We know the real estate values have bottomed out, but a lot of the property values are above and beyond a fair assessment," said Jack Parr, a commercial appraiser for Quorum in Detroit. "It's going to pinch the pockets of jurisdictions."
Officials with the Michigan Tax Tribunal said they likely wouldn't issue a decision on the property values for another year.
Some communities such as Warren and Auburn Hills hope to reach a settlement with the automakers sooner. They're hiring attorneys to meet individually with the companies to try to reach a compromise that includes a more modest reduction in taxes.