Consultant: SEA 1 will shrink Clinton County’s taxable base; income-tax options can offset revenue loss

Emma Adlam, financial advisor from Baker Tilly, told the Clinton County Council that Senate Enrolled Act 1 (SEA 1) will cut the county’s taxable base and shift how property relief is delivered. “There are two main impacts for SEA 1. One is on property taxes. The other is income taxes,” Adlam said, summarizing her firm’s preliminary modeling.

Adlam said the law phases in changes through 2031 that will convert some deductions to credits for homestead owners, expand automatic deductions for non‑homestead (‘2%’) properties and raise the business personal property de minimis exemption from $80,000 to $2,000,000. “That de minimis personal property where the acquisition cost is 2,000,000 or less, we’re assuming of your pie of business personal property, about 21% of the business personal property falls under that new exemption,” she said.

The consultant’s nut graf: the combined effect is a materially smaller tax base even while gross levies may still grow somewhat; replacing revenue will depend on choices the county makes under the new local income tax structure and on parcel‑level detail Baker Tilly is still preparing.

Adlam walked the council through specifics the law changes: the standard homestead deduction ($48,000 in 2025) is phased out by 2031 while the supplemental homestead deduction rises to about 66.7% by 2031; new homestead tax credits (a supplemental homestead credit up to $300 or 10% of the net tax bill, plus 65+ and disabled homeowner credits) now apply after the tax bill is calculated rather than as assessed‑value deductions; 2% property deductions are phased in from 6% in 2026 to roughly one third (33.4%) by 2031; business personal property depreciation floors can fall below a prior 30% minimum for new equipment placed after Jan. 1, 2025 (with a TIF exception).

Adlam compared two models: the Legislative Services Agency (LSA) analysis done immediately after enactment and Baker Tilly’s county‑specific, longer‑range scenario through 2031. LSA modeled through 2028 and shows net levy growth but smaller than it would have been without SEA 1. Baker Tilly extended the view to 2031 and—using conservative assumptions including a continued 4% cap on the maximum levy growth quotient—found net assessed value declines in 2026–27 as deductions phase in, with modest growth thereafter assuming a 6.5% annual real‑property growth factor.

Emma Adlam and county staff emphasized that parcel‑level analysis is needed to show precisely which properties and taxing districts will be affected. Adlam said Baker Tilly is preparing a detailed parcel analysis and will provide the county with an electronic copy of the presentation and further data.

Council members pressed several policy questions during the discussion, including the treatment of continuing care retirement communities (CCRCs) and whether local interlocal agreements such as a jointly funded central dispatch could be protected from changes to public‑safety LIT allocations. Adlam said she would ask peers and follow up on questions about grandfathering or special treatment but had not seen specific provisions to preserve interlocal funding arrangements.

Adlam also flagged timing: many of the largest changes (revised de minimis and deductions) affect taxes payable in 2026 and 2027, and the county’s property tax replacement credits expire after 2027. She recommended county staff use the parcel data and Baker Tilly’s follow‑up to model distributional effects across townships and municipalities before final budget decisions.

The presentation was preparatory: Adlam repeatedly described the report as preliminary, and Baker Tilly and the county will supply more detailed parcel‑level data to refine the projections.

Ending: Council members said they will use the Baker Tilly analysis as a baseline while awaiting parcel‑level modeling and legislative clarifications, and staff will circulate the consultant’s slides to council and department heads.