The bills deal with the so-called "pop up" in property taxes that comes with buying a home, but it's unclear if or when the Legislature will strike a deal over competing plans.

In Michigan, the assessed taxable value of a house can rise annually by no more than 5 percent or the inflation rate, whichever is less. But when the home is sold, the new owner's property taxes usually rise by far more because the cap is lifted to reflect the home's current market value.

One bill passed 32-5 by the state Senate Thursday would give a new homeowner a state income tax credit equal to how much higher the property taxes are than the previous owner's. People would have to buy a house in the next 33 months to qualify, though the credit could be taken for as long as they own the new home - in some cases wiping out their income tax liability.

Sen. Roger Kahn, a Saginaw Republican, said the median value of homes sold in Michigan declined 12 percent from October 2006 to October 2007.

"Taxes are part of the problem," he said. "By eliminating the pop-up tax for the next 33 months, there's a stimulus."

While many Democrats backed the legislation, some questioned the cost to government and criticized majority Republicans for rushing the bills on the last day of session before a two-week spring break without holding any committee hearings to get input.

"What has happened to all my good, fiscal conservative friends?" said Sen. Mickey Switalski of Roseville, the top-ranking Democrat on the Senate Appropriations Committee.

He criticized Republicans for not making spending cuts to correspond with lower taxes, and the GOP responded its budget plans would spend less than what Democrats have proposed. Switalski said the tax legislation would cost $160 million this year and more in future years.

"We just are putting ourselves into the same kind of deficit we just took six years to get out of," he said.

Other bills headed to the House would increase the homestead property tax credit from $1,200 to $1,300 and increase the income threshold for getting the credit by $10,000.

The homestead credit now is gradually phased out for people making more than $73,650 a year. The phaseout would begin at $83,650 under a bill approved 32-5.

The Senate action came more than a year after the Democratic-controlled House passed a plan to put an 18-month moratorium on the pop-up tax. That legislation went nowhere in the Senate, despite House Democrats saying it was an urgent matter.

The House plan would give homebuyers an incentive by letting them pay roughly the same amount of property taxes paid by the previous owner. Senators said their plan would be an improvement on the House legislation because cutting property taxes hurts K-12 funding and state revenue-sharing payments to local governments.

Giving an income tax credit would affect other areas of the state budget, according to Senate GOP staffers.

Some Democratic senators noted there is a national housing downturn, and blamed the economy - not the state's tax structure - for the housing crisis in Michigan.

The Senate did pass one House bill, letting homeowners who can't sell their house but have bought another to claim the principal residence exemption on both houses for up to three years.

For more information about Senate Bills 790-791 and 1065 and House Bill 4215, visit Michigan Votes and type in the appropriate bill number in the search engine. Or try searching the Michigan Legislature web page.

Source: By Michigan State University Libraries