Bill
HB 4788
The bill replaces ad valorem taxes on qualified replacement electric distribution infrastructure with a new annual 30-mill CPI-adjusted tax, paid by utilities and shared with local
HB 4788 — Comprehensive Summary
Overview
- Purpose: Establish a new framework for taxing and regulating replacement electric distribution infrastructure in Michigan. The bill both exempts qualifying replacement infrastructure from ad valorem property taxes and imposes a new annual specific tax (the “replacement electric distribution infrastructure specific tax”) on that same infrastructure.
- Scope: Applies to electric distribution assets replacing depreciated infrastructure within the same service territory, replacing generation/transmission assets, and placed in service after the act’s effective date. It involves electric utilities regulated by the Michigan Public Service Commission and cooperative electric utilities.
- Tie-bar: The act is tied to HB 4787 (and will take effect only if HB 4787 is enacted).
What the bill would do (Key Provisions)
- Section 3 — Property tax exemption
- Beginning for taxes levied after December 31, 2025, qualified replacement electric distribution infrastructure would be exempt from ad valorem taxes under the General Property Tax Act.
- Section 4 — Replacement electric distribution infrastructure specific tax
- Creates an annual statewide tax on qualified replacement electric distribution infrastructure.
- First-year tax calculation (Section 4(2)(a)):
- Apply a rate of 30 mills to the taxable value of the replaced depreciated infrastructure in the prior calendar year (the year before replacement).
- Subsequent-year adjustments (Section 4(2)(b)):
- Adjust the tax amount annually based on the cumulative percentage change in the Consumer Price Index (CPI) for the immediately preceding year.
- Payment and collection (Section 4(3)):
- The tax is payable annually in the same manner and schedule as property taxes under the General Property Tax Act.
- Distribution (Section 4(4)):
- Collected funds are distributed to the state and local taxing units (cities, townships, counties, school districts, etc.) in the same proportions and timing as property tax distributions.
- Reporting (Section 4(5)):
- Collecting officers must send the distribution details to the State Tax Commission.
- Section 5 — Delinquency
- Unpaid taxes may be forfeited, foreclosed, and sold in the same manner as delinquent property taxes.
- Section 2 — Definitions (key terms)
- “Qualified replacement electric distribution infrastructure” includes utility property (poles, wires, crossarms, insulators, switches, etc.) that:
- Is installed by an electric utility regulated by the Michigan PSC or a cooperative electric utility.
- Replaces depreciated infrastructure within the same service territory.
- Serves a similar functional purpose to the replaced asset.
- Is not part of generation or transmission facilities.
- Does not expand the service territory beyond the footprint of the replaced infrastructure.
- Is placed in service on or after the act’s effective date.
- Other defined terms include “cooperative electric utility,” “Michigan Public Service Commission,” “State Tax Commission,” “taxable value,” and “utility personal property.”
Who Would Be Affected
- Electric utilities regulated by the Michigan PSC and cooperative electric utilities undertaking replacement of electric distribution infrastructure.
- Local units of government (cities, townships, villages, counties, school districts, etc.) that receive property tax distributions.
- Taxpayer units responsible for paying and collecting the new specific tax.
Implementation and Timeline
- Introduction and status: Introduced August 21, 2025; initially referred to Government Operations; subsequently moved to the Energy Committee (as of October 21, 2025).
- Effective date tying: Act would take effect only if HB 4787 is enacted.
- Administrative details: Tax collections mirror property tax timing; CPI-based annual adjustments; annual reporting to the State Tax Commission.
Potential Impacts and Considerations
- Revenue shift: Replaces ad valorem tax revenue on qualified replacement infrastructure with a 30-mill CPI-adjusted specific tax, distributed to local taxing units like standard property tax.
- Budget planning: Local governments may see changes in tax revenue streams tied to utility infrastructure replacements; budgeting and planning will depend on the pace of infrastructure replacement.
- Compliance: Utilities must determine eligibility based on the strict definition of “qualified replacement infrastructure” and track taxable values from the prior year for first-year tax calculations.
- Economic effects: The CPI adjustment intends to maintain revenue relative to inflation; however, actual impacts depend on future CPI changes and replacement activity.
Notes
- The bill is specific to replacing depreciated distribution infrastructure and does not cover generation facilities or transmission assets.
Compiled from official sources — confirm details with the bill’s official record.
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