Michigan Proposes Sales Tax Exemption for Jail Construction Materials

LANSING, Mich. — Michigan lawmakers have proposed a bill to create a sales tax exemption on construction materials used for the building of new county jails.
Senate Bill 245, introduced by Senator Rick Jones, R-Grand Ledge, would exempt the 6 percent Michigan sales tax from the business of “constructing, altering or improving” county jails.
Senators said that because a county jail is constitutionally mandated, it only makes sense that the state would make motions to ease the financial strains of construction materials.
“If Michigan law requires a county to do something, we shouldn’t make it tough to do it,” Jones said.
Jones, a former sheriff of Eaton County, represents Allegan County, which is currently constructing a new 300-bed jail to replace their current 75-year-old jail, has exceeded its initial $17.8 million budget.
According to Jones, the new jail is being constructed as a result of safety issues at the current jail. Though in the best interest of the county, the county was still obligated to pay sales tax, he said.
“This greatly increased their costs and they were very upset,” Jones said. “And I agree with them.”
If SB 245 is passed, Allegan County would receive a rebate of approximately $400,000.

The bill would also include a tax rebate for any construction, renovation or expansion that took place after Dec. 31, 2011.
The bill is co-sponsored by Senators Geoff Hansen, R-Hart, Jack Brandenburg R-Harrison Township, Tonya Schuitmaker, R-Lawton and James Marleau, R-Lake Orion.
Kalamazoo County is planning for a 75,000-square-foot addition to their county jail in an effort to ease overcrowding. The $23 million expansion will bring capacity up to 500 beds.
Counties such as Muskegon County, which is planning for a new jail and juvenile detention center, would save approximately $1.2 million on the as the county expects to spend about $20 million in construction materials. The project is expected to cost $40 million in total.
The bill defines “county jail” as, “a facility operated by a county for the physical detention and correction of persons charged with or convicted of criminal and ordinance violations, persons found guilty of civil or criminal contempt, and juveniles detained by court order.”

The bill has been referred to the Committee on Finance, which will then formulate a recommendation to the Michigan Senate on how to move forward with the bill.
According to Jones, all county sheriffs are supporting SB 245.

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