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State Senate approves `Renaissance Zones'

"This is a landmark day," said Senate Majority Leader Dick Posthumus (R-Alto). "It will give hope to families in depressed areas." He predicted the tax reductions would make it easier and cheaper to create new jobs.

"This is the most important urban policy we've put in place in two decades," Posthumus said.

The nine Senate bills passed on bipartisan votes, going to the House to join nine other measures which make up the package. The main bill passed on a vote of 26-11, with eight Democrats joining 18 Republicans to support it in the GOP-ruled chamber.

The final bill passed 24-12, only after Democratic-backed language to discourage property tax breaks for absentee landlords who own property in the proposed zones was added.

Under Engler's proposal, five urban and three rural Renaissance Zones would be established in Michigan. All state and local taxes would be waived in the zone, with the exception of the sales tax and local bond millages.

The state would reimburse local districts for lost school revenues, and federal taxes, state regulations and fee-for-service levies would remain in place.

The Engler administration estimates that a two-income family of two with a taxable income of $60,000 and home value of $70,000 would save $5,378 a year living in a Renaissance Zone.

No other state has adopted such a strategy of development, officials said.

Minority Democrats in the Senate tried vainly this week to limit tax breaks for business, and to cap eligibility for the wealthy to qualify for the tax breaks.

"You can very easily end up with these elitist zones," said Sen. Jim Berryman (D-Adrian). He warned the wealthy could utilize the low-tax zones to avoid paying taxes on their land holdings and income.

Others urged the state to concentrate on job training and providing most of the assistance for homeowners.

But Republicans maintained that only wholesale tax breaks will revitalize urban areas which have fallen on bad times.

"Let's let the local governments have their turn at bat," said Sen. Joanne Emmons (R-Big Rapids). "We struck out; let's get out of the way. I can't believe they'll do any worse."