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Ease Property-Tax Burden, Michigan Panel Advises

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A bipartisan group of Michigan lawmakers has floated a proposal to eliminate the use of property taxes to pay for education.

Although the plan was quickly criticized by Gov. John Engler and was seen as having only a slim chance of passage, backers hailed it as an important step toward resolving the state's long-running dispute over school finance and the property-tax burden.

"Those who put the proposal together felt that the property tax is the most regressive tax, and we should go to a tax that is more state-oriented and based on the ability to pay,'' said Rep. Michael E. Nye, a Republican who helped develop the plan.

The proposal also seeks to equalize state funding for education, Mr. Nye said, "so that every student would receive the same amount of money from the state, no matter where they are located, or what their race is, or what their economic situation is.''

Sen. Debbie Stabenow, a Democrat who worked on the plan, said she hoped its mechanisms for equalizing education funding would help poorer districts make better use of computers and other technology to improve education.

Income Taxes Increased

The proposal calls for personal-property taxes to be eliminated and property taxes for school operations to be phased out in three stages.

To make up for the loss in revenue, the plan calls for the state income tax to be increased by 2.65 percentage points, and the single business tax to be increased by 3.45 percentage points. Local districts would have the option of implementing an additional income tax on residents.

The state then would allocate funds to school districts on a per-student basis. If the plan had been in place this year, the basic state grant per student would have been about $4,700.

Ms. Stabenow said the proposal's authors had hoped to move it through the legislature immediately after the election.

They were thwarted, however, by election results that left the House, formerly controlled by the Democrats, evenly split between the two parties.

The proposal received a cool reception from Governor Engler and Sen. Dick Posthumus, the leader of the Republican majority in the Senate.

John T. Truscott, a spokesman for the Governor, said the proposal "is not even under discussion within this office'' and is opposed by a majority of the Republicans in the House.

"You look at who it hurts the most, and it's small business and, typically, the underprivileged,'' said Mr. Truscott, who maintained that the proposed property-tax cut would offer little relief to renters, while the increase in the single business tax "would kill small business in Michigan.''

The Governor plans early next year to submit separate proposals dealing with school finance and property taxes, Mr. Truscott said.

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