How nuclear plant, teacher layoffs inform Michigan’s ‘dark store’ tax debate

• A Michigan school district faces big cuts because of a tax strategy of a nearby nuclear plant
• Big box stores and other companies can request lower property assessments that reduce money for schools and governments
• Bills to curtail tax strategy may be considered in the Legislature’s ‘lame duck’ session

Shane Peters has a nuclear headache. The superintendent of tiny Bridgman Public Schools in the southwest corner of Michigan must cut 12% from the district’s budget by next school year. That could include the elimination of two administrators and up to a dozen teachers — more than 1 in 7 of the teaching staff in the 900-student district.

The cause of those cuts isn’t dwindling state support or plummeting enrollment, but a nuclear power plant sitting 4 miles north of Peters’ desk, humming 24 hours a day producing electricity along Lake Michigan.

The operators of the Cook Nuclear Plant are paying about $4.2 million less in local and state taxes this year than in 2023, a decrease that threatens to hobble local governments and schools.

“We’re going to have to reimagine our staff and how we provide services to our kids,” Peters said.

How a nuclear power plant is causing teacher layoffs is the latest example of what critics call the state’s “dark store loophole.” 

It’s an issue that is debated perennially in Lansing and could come up for a vote in the “lame duck” session of the state Legislature in December, when a flood of bills are expected to be considered while Democrats maintain control of both chambers and the governor’s office.

In January, Republicans will take over the majority in the House, while Democrats will maintain control of the Senate.

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Opponents of the tax appeal strategy say it has cost Michigan $2 billion since 2013. A four-bill package to curtail the strategy may get a hearing as soon as next week, said Rep. Julie Brixie, D-Okemos.

“Retailers all over Michigan are using this loophole to avoid paying billions of dollars in property taxes that directly support our schools, local communities and the services that we rely on every day,” Brixie said at a recent news conference.

Typically used by big box stores like Walmart and Costco, the dark store tax strategy involves companies asking for lowered property assessment, arguing their properties should be assessed like similar, but closed (dark) big box stores, because their buildings have low value after they close.

Those appeals to the Michigan Tax Tribunal are generally successful, with many cases settling before reaching court. 

Tom Clement, chief operating officer and general counsel of the Michigan Retailers Association, said the current system is fair because retailers are disproportionately hurt by higher taxes.

“Everybody is short on cash these days, from consumers to local communities. Not everything falls on businesses and retailers. That's just patently unfair,” he said.

“The fact that a business is doing well in a community does not equate to an increased property value just because they happen to have inventory and customers and income.”

But foes of the system say the appeals can cripple local government services.

Ashley Winston, assessor in Meridian Township in Ingham County, said that when a local Meijer received a lowered reassessment, the township’s downtown development fund was “wiped out,” and Okemos Public Schools lost $130,000.

A similar big box store reassessment in Marquette caused the Peter White Public Library to close on Sundays to make up for lost tax revenue.

The bills would make it tougher for companies to win reassessments based on the dark store policy, in part by requiring the Michigan Tax Tribunal to give deference to the assessments made by local assessors.

The bills would not affect already-approved reassessments.

They are supported by government groups including the Michigan Association of Counties and have typically been opposed by business interests such as the Michigan Chamber of Commerce.

The legislation comes as officials across Berrien County are scrambling to fill budget holes left by the reassessment of one of the state’s two nuclear plants. There, various governments, schools and Lake Michigan College must trim $3.2 million from their budgets. The state is losing another $902,900.

County officials haven’t decided yet how to tighten the budget to make up for a loss of $897,000, a little over 1% of their budget. 

Indiana Michigan Power, the owner of Cook Nuclear Plant, is appealing to make sure we are paying our fair share of property taxes,” Steve Baker, the company’s president and chief operating officer, said in a September statement to customers.

“Any savings derived from this agreement will go back directly to customers,” he wrote. 

Lake Township, where Cook Power Plant is located, squirreled away funds for several years in anticipation of the assessment cut, and plans to “weather the storm” without layoffs, said Township Supervisor Zach Carson.

Besides 15 layoffs, Bridgman Public Schools, also plans to make up the shortfall by delaying new curriculum, postponing the replacement of old Chromebooks.

“When you reduce people — and education is a people business —   students will suffer when these companies continue to exploit the tax loopholes that currently exist,” Peters said.