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  WebDoc 1998-02 A publication of the Citizens Research Council of Michigan May 22, 1998  

Separate Tax Limitations for Wayne County

On April 23, 1998, the Wayne County Tax Allocation Board requested the Citizens Research Council to review the issue of establishing a separate tax limitation for the County and abolishing the Tax Allocation Board.

Most general purpose governments in Wayne County are exempt from the fifteen and eighteen-mill limits because of their charter status and school districts were exempted by Proposal A. As a result, the Tax Allocation Board is responsible for only a small amount of millage allocation in a few units of government.

As of 1997, 73 of the 83 Michigan counties had adopted separate tax limitations and Wayne County would be well advised to follow.

Constitutional and Statutory Provisions

Section 6 of Article IX of the Michigan Constitution provides the option of replacing the allocated 15 mills with separate tax limitations, up to a limit of 18 mills:

Except as otherwise provided in this constitution, the total amount of general ad valorem taxes imposed upon real and tangible personal property for all purposes in any one year shall not exceed 15 mills on each dollar of the assessed valuation of property as finally equalized. Under procedures provided by law, which shall guarantee the right of initiative, separate tax limitations for any county and for the townships and for school districts therein, the aggregate of which shall not exceed 18 mills on each dollar of such valuation, may be adopted and thereafter altered by the vote of a majority of the qualified electors of such county voting thereon, in lieu of the limitation hereinbefore established. These limitations may be increased to an aggregate of not to exceed 50 mills on each dollar of valuation, for a period of not to exceed 20 years at any one time, if approved by a majority of the electors, qualified under Section 6 of Article II of this constitution, voting on the question. (Emphasis added)

This constitutional provision is implemented into statute as Sections 5a through 5-l of Public Act 62 of 1933, the Property Tax Limits Act, as amended by Public Act 278 of 1964 (See Appendix).

Wayne County History

This is not the first time Wayne County has considered establishing separate tax limits. In 1980, the voters of Wayne County were asked to approve Proposition J that would have established separate tax limits with an increase to the eighteen-mill property tax limit. The voters rejected this question. A great deal has changed since 1980 with regard to both state law and local units of government in Wayne County.

Several factors might have led to defeat of Proposition J in 1980. First, the question of separate tax limitations was couched in a three-mill increase to eighteen mills. Wayne County would have received an additional 1.2 mills. The 36 school districts would have received an additional 1.6-1.7 mills. The intermediate school district would have received an additional one-tenth mill. Overall, Proposition J was asking Wayne County voters, who already had the highest average tax rate in the state, to approve a $50 million tax increase immediately after adoption of Headlee Amendment.

In addition, two fairly major townships (Redford and Grosse Ile) would have taken a millage reduction. The part of Redford Township served by the Redford Union School District would have been in violation of the fifty-mill limit with the higher tax rates. At the same time, work was under way on the county charter that was to be put before the voters in 1981. The County Charter Act provides for a ten-mill limit that would have made adoption of a higher separate county tax limit a mute question. For all of these reasons, and perhaps more, Proposition J was defeated.

Since that time a number of circumstances have changed:

Adoption of a County Charter. In November 1981, Wayne County voters adopted a charter, making Wayne County the first, and to date, sole charter county in Michigan, thus removing the county from the tax allocation process. This reduced the number of mills available for allocation, with the remaining 8.93 mills to be allocated among the school districts and general law townships.

Proposal A. In March 1994, Michigan voters adopted Proposal A, changing the Michigan school finance system. Public Act 314 of 1993, as amended by Public Act 190 of 1994, added a section 4a to the Property Tax Limitation Act (Public Act 62 of 1933). This section provides in part that:

For a separate tax limitation vote held after 1993, the number of mills that may be allocated shall be reduced by the number of mills allocated to a local school district for school district operating purposes in 1993 or the number of mills levied by the state, whichever is greater, and mills shall not be allocated to a local school district.

Essentially, this further reduced the number of mills available for allocation by the Wayne County Tax Allocation Board to about one mill.

Representation on the Tax Allocation Board

Section 5 of Public Act 62 of 1933 provides that the county tax allocation board shall be composed of the following:

(a) The county treasurer.

(b) The chairperson of the board of county auditors if there is a board, and if not, the chairperson of the finance or ways and means committee of the county board of commissioners.

(c) The intermediate school district superintendent or his or her representative.

(d) A resident of a municipality within the county who shall be selected by the judge or judges of probate of the county, except that in counties containing 1 or more municipal corporations having a population of 10,000 or more, the member shall be a resident of a municipal corporation having a population of 10,000 or more. However, in counties in which are located municipalities subject to this act, the member shall be an official of 1 of the municipalities and if there is only 1 municipality within the county, then the member shall be selected by the governing body of the municipality either from its own members or its municipal officers.

(e) A member not officially connected with or employed by any local or county unit, who shall be selected by the board of county commissioners.

(f) A member who shall be a township supervisor and who shall be selected by a majority of the township supervisors in the county.

In Wayne County, this means that on a board consisting of at least six-members, only two members represent the units of government actually receiving the allocated millage. Of the balance, one is intentionally neutral, two members represent county government (which is no longer subject to the fifteen-mill limit in Wayne County), and one member represents a municipality (that is not affected by the tax allocation).

Cost of the Tax Allocation Board to Wayne County

With county expenditures in the hundreds of millions, spending a couple of thousand dollars to support the Tax Allocation Board would not make or break a budget, the public perception of government spending tax dollars for unnecessary services may be perpetuated through continued operation of this board.

Fiscal Impact on Local Units

Changing to separate tax limits does not have to affect the individual local units fiscally. Today, the Wayne County Tax Allocation Board is responsible for allocating mills to five units of government, including three townships: Grosse Ile (1.3592 mills), Grosse Pointe (0.6486 mills), and Sumpter (0.8870 mills); the intermediate school district – the Regional Educational Services Agency (0.0984 mills); and the Detroit Public Library (0.6400 mills). Grosse Pointe Township is actually the area incorporated as the village of Grosse Pointe Shores, because townships do not cease to exist when villages are established.

It is possible that these remaining units might ask for more millage with a change to separate tax limitations. Section 6 of Article IX provides for an aggregate eighteen mills that would essentially provide up to three additional mills that could be utilized. Only a few counties have adopted tax limitations that aggregate to eighteen mills when separate tax limitations have been adopted. This is something that could be negotiated ahead of time with the individual units before a decision is made to place a question on the ballot.

The allocation to these bodies has remained unchanged since 1994. It is unlikely that locking the allocated mills in place will negatively affect the ability of any of the units to provide services, as each unit is levying an extra-voted millage to supplement its allocated millage. Should Grosse Ile Township or Sumpter Township opt to incorporate or become a charter township, its allocated millage or separate tax limits would cease to exist. As a result, it would not be expected that a change to separate tax limits would affect any of these units fiscally.

Making the Change

Should the board decide that a change should be pursued, a public vote is required. There are two methods by which this question can be placed on the ballot, either by petition or by a resolution of the county tax allocation board. Section 5a of Act 62 provides for the petition process:

A vote on adopting separate tax limitations shall be initiated by petition signed by not less than 4% of the registered electors of each township and city within the county. The petition shall be filed with the county clerk not less than 30 days before the convening of the board in regular session, or any special session called for the purpose of considering the petition.

Section 5c of this Act provides for the resolution process:

A petition to submit separate tax limitations to the electors of the county also may be initiated by a resolution adopted by a majority of the members of a county tax allocation board. The petition shall be in substantially the same form and processed in the same manner as provided in this act for initiatory petitions signed by registered electors of the county. The question shall be submitted to a vote of the registered and qualified electors of the county subject to the same conditions and in the same manner as an initiatory petition signed by registered electors. The ballot shall be in substantially the same form, and subsequent to the vote the same proceedings shall be had, as provided in this act.

Conclusion

A number of factors have made the Wayne County Tax Allocation Board obsolete. The proliferation of cities, villages and charter townships, subject to the fifty-mill limit rather than the fifteen-mill limit, has removed most property taxpayers from the purview of the Board. Adoption of the County Charter reduced the number of mills available for allocation in 1981. Adoption of Proposal A in 1994 had the same effect for school taxes. The end result over time is that the Board is responsible for allocating just a few mills to a few governmental units.

While eliminating the Board would have no fiscal impact, either on the county or the local units of government, it would eliminate the potential perception that government is using tax dollars to fund an unnecessary board.

The allocations to each unit of government have remained unchanged for the past several years. It is likely that any future changes would be to simply remove another governmental unit from this process. Should Grosse Ile and Sumpter townships opt to incorporate or become charter townships, they would be removed from this process. The same would be true if the village of Grosse Pointe Shores would become a city rather than a village, thus eliminating Grosse Pointe Township. Such actions would leave allocations for the intermediate school district and the Detroit Public Library. Adoption of separate tax limits would lock in place the millages current allocated to these bodies, pending a change in their status as a unit of government.


Appendix

§ 7.65(1) Adoption of separate tax limitations; petition, signatures, filing.

Sec. 5a. A vote on adopting separate tax limitations shall be initiated by petition signed by not less than 4% of the registered electors of each township and city within the county. The petition shall be filed with the county clerk not less than 30 days before the convening of the board in regular session, or any special session called for the purpose of considering the petition.

(MCL § 211.205a)

§ 7.65(2) Form of petition; circulator of petition; signature and acknowledgment.

Sec. 5b. (1) The petition for the adoption of a separate tax limitation shall be in substantially the following form: "Petition initiating procedures for the adoption of separate tax limitations to the county board of commissioners:

We, the undersigned qualified and registered electors and
residents of the city or township of ____________________,
in the county of _______________________, and state of
Michigan, petition the county board of commissioners to
place before the voters of this county the question of
establishing separate tax limitation millage rates for a
period of ____________ years or for an indefinite period,
or until altered by the voters of the county, for the county
of ____________________ and the townships and intermediate
school districts within the county, the aggregate of which
shall nor execeed _________________mills as follows:
Mills

County of............. .....................
Townships .....................
Intermediate school districts .....................

Total .....................

Mills

County of............. .....................
Townships ................
Intermediate school districts ................

Total ................

WARNING

A person who knowingly signs this petition more than once, signs a name other than his or her own name, signs if not a qualified and registered elector, or places opposite his or her signature on a petition a date other than the actual date the signature was affixed, is in violation of the law."

(2) The circulator of the petition shall be a qualified and registered elector of the county in which he or she circulates the petition. Petitions shall be signed and acknowledged by the circulator before a person authorized by law to take acknowledgments.

(MCL § 211.205b)

§ 7.65(3) Initiation by resolution; petition; submission of question; ballot.

Sec. 5c. A petition to submit separate tax limitations to the electors of the county also may be initiated by a resolution adopted by a majority of the members of a county tax allocation board. The petition shall be in substantially the same form and processed in the same manner as provided in this act for initiatory petitions signed by registered electors of the county. The question shall be submitted to a vote of the registered and qualified electors of the county subject to the same conditions and in the same manner as an initiatory petition signed by registered electors. The ballot shall be in substantially the same form, and subsequent to the vote the same proceedings shall be had, as provided in this act.

(MCL § 211.205c)

§ 7.65(4) Sufficiency of petition; order for submission of question; date for special election.

Sec. 5d. Upon receipt of a petition, the county clerk shall check it as to its sufficiency as provided by section 552 of Act No. 116 of the Public Acts of 1954, as amended, being section 168.552 of the Michigan Compiled Laws . If the petition substantially complies with this act, the county board of commissioners shall order by resolution that the question of providing separate tax limitations be submitted to the registered and qualified electors of the county at the next general election, state presidential primary election, or state general primary election, occurring in not less than 49 days after adoption of the resolution. If such election will not be held within 90 days after adoption of the resolution, the resolution may fix a date for a special election on the question not less than 49 days after adoption of the resolution.

(MCL § 211.205d)

§ 7.65(5) County tax allocation board; separate tax limitations.

Sec. 5e. Before adoption of a resolution submitting to a vote a question proposed by the initiatory petition of electors, the county board of supervisors shall request the county tax allocation board to submit to the county board of supervisors the separate tax limitations for the county and the intermediate school districts and townships in the county, aggregating not less than the same number of mills as in the electors' petition that the majority of the members of the allocation board considers calculated to provide for the financial needs of the local units.

(MCL § 211.205e)

§ 7.65(6) Transmission of documents to city and township clerks.

Sec. 5f. The county clerk, within 3 days after passage of a resolution to submit the question to the electors of the county, shall transmit a certified copy of the initiatory petition, the suggested tax rate limitations submitted by the county tax allocation board, and the resolution submitting the questions to a vote, to the clerk of each city and township in the county who shall conduct the election on the question in the same manner as provided by law for other county elections.

(MCL § 211.205f)

§ 7.65(7) Form of question submitted to electors.

Sec. 5g. The question of adopting separate tax limitations shall be submitted to the registered and qualified electors of the county in substantially the following form:

"Shall separate tax limitations be established for a period of years or for an indefinite period, or until altered by the voters of the county, for the county of and the townships and intermediate school districts within the county, the aggregate of which shall not exceed _____ mills as follows:
Mills
County of ............ ...............
Townships ...............
Intermediate school districts ...............

Total ...............

Yes ( )
No ( )"

(MCL § 211.205g)

§ 7.65(8) Separate submission of questions; more than one question receiving greatest number of affirmative votes or same number of identical votes.

Sec. 5h. At an election upon the question of adopting separate tax limitations, the tax limitations proposed by electors' initiatory petitions and the tax limitations proposed by the county tax allocation board shall be separately submitted to the voters. If the allocation board has recommended separate tax limitations identical to those proposed by the initiatory petitions, only 1 question shall be submitted to the voters. If more than 1 question receives more "yes" than "no" votes, the set of separate tax limitations which received the greater number of "yes" votes shall be adopted. If more than 1 question receives the same number of "yes" votes being the highest number of "yes" votes, the question adopted shall be the one receiving the greater excess of "yes" votes over "no" votes.

(MCL § 211.205h)

§ 7.65(9) Separate tax limitations; effective date.

Sec. 5i. Upon the filing in the offices of the secretary of state and the county clerk of a copy of the initiatory petition; the separate tax limitations recommended by the county tax allocation board; all resolutions of the board; and the certificate of the county board of canvassers showing that a majority of the electors voting on either the separate tax limitations proposed by petition of electors or of the county tax allocation board, or both, has approved the separate tax limitations and stating the number of votes cast on the separate questions and the number cast for and against the questions, the separate tax limitations for the county an d the townships and intermediate school districts in the county shall be effective and shall apply to all subsequent tax levies until altered by another vote pursuant to this act or expiration of the period for which the separate tax limitations were voted. However, if the election is held after April 1 in any year, the adopted limitations shall be first effective in the next succeeding calendar year.

(MCL § 211.205i)

§ 7.65(10) Abolition of county tax allocation board upon adoption of separate limitations; re-establishment.

Sec. 5j. Whenever a majority of the registered and qualified electors of a county voting upon the question adopt separate tax limitations as authorized by section 6 of article 9 of the state constitution, the county tax allocation board created for such county by section 5 is abolished. If a specified period of years for the separate tax limitations expires and no limitations have been voted for any additional time, the allocation board shall be re-established.

(MCL § 211.205j)

§ 7.65(11) Separate tax limitations; initiatory petition or resolution to alter or extend; procedure; notice; county advisory tax limitation committee; election.

Sec. 5k. When an initiatory petition is received by the county board of commissioners to alter or extend within the 18 mill limitation existing separate tax limitations of the county and the townships and intermediate school districts in the county, or when the county board of commissioners resolves to alter or extend within an existing 18 mill limitation existing separate tax limitations of the county and the townships and intermediate school districts in the county, the county board of commissioners shall proceed in the same manner as provided in this act for an original initiatory petition. The county board of commissioners shall notify the persons and bodies having appointive powers under section 5 of the receipt of the petition or the resolution by the county board of commissioners. Those persons and bodies shall select the same persons provided by section 5 for a county tax allocation board to serve as members of a county advisory tax limitation committee that is created. The committee shall meet within 10 days of its selection and shall prepare separate tax limitations for the county and the townships and intermediate school districts in the county, aggregating not more than 18 mills that the majority of the committee considers will provide for the financial needs of the county, townships, and intermediate school districts. The separate tax limitations shall be promptly transmitted to the county board of commissioners and the functions of the committee shall then cease. The question shall be submitted to a vote of the registered and qualified electors of the county at the same time as the separate tax limitations proposed by initiatory petitions. The election, determination of results, and procedure after the determination shall be the same as provided in this act for an election held upon original petitions.

(MCL § 211.205k)

§ 7.65(12) Effect of establishment or alteration of separate tax limitations.

Sec. 5-l. The establishment and alteration of separate tax limitations shall not affect prior voted millage increases or the power of a local unit to vote additional millage increases, pursuant to section 3 or other law.

(MCL § 211.205-l)