Contact: Eric Lupher
734.542.8001

CRC's Con-Con Series Examines Article IX - Finance and Taxation

The Citizens Research Council of Michigan has released the twelfth in a series of papers focusing on state constitutional issues. CRC is examining the state's constitution in anticipation of this November's vote on whether Michigan should convene a constitutional convention. This paper focuses on Article IX of the 1963 Constitution - Finance and Taxation.

The Great Recession has had significant negative effects on state and local government services in Michigan, including public education, as tax revenues declined in response to the slowdown in economic activity. As governments struggle to balance their annual budgets during these austere times, they do so within the confines of the constitutional limitations contained within Article IX. These limitations range from prescribing the proportion of value at which property may be taxed, to requiring voter approval before units of local government may increase certain taxes and indebtedness, to limiting the forms and rates of taxation (state and local), to specifying how the revenues from certain taxes are to be expended.

Prior to the recent economic slide, Article IX has been the subject of the most attempts to amend the Constitution (29 proposed amendments), indicating the importance of the issues contained therein. The article has been successfully amended 10 times, most recently in 2006. The two most significant amendments were Proposal E of 1978 (Headlee Amendment) and Proposal A of 1994; both dealt with multiple sections and both created tax and/or spending limitations. It is expected that given the State of Michigan's fiscal challenges over the past eight years and the public's general interest in state and local tax and finance issues, a constitutional convention would spend considerable time addressing the complex and varied provisions of Article IX.

"In addition to the specific tax and finance provisions of Article IX, a convention is likely to address the level of complexity and detail contained in the current constitution," said Eric Lupher, CRC's Director of Local Affairs. The inclusion of finite detail in the Constitution results in a great deal of complexity in the management of state and local fiscal affairs. Furthermore, the level of detail in the state's foundational legal document effectively limits the legislature's discretion with respect to carrying out its fundamental "power of the purse."

Administration of the property tax, the main revenue source for local governments and an already complex tax by its very nature, has been made more complex by a series of constitutional amendments which have had the effect of layering tax limitations on top of existing provisions. "A constitutional convention may want to begin with a goal of eliminating some of the complexity of the property tax system," Lupher said.

Article IX - Finance and Taxation can be accessed at www.crcmich.org/PUBLICAT/2010s/2010/rpt36012.html. The series of constitutional issues papers is being released on roughly a bi-weekly schedule and can be accessed at www.crcmich.org/election.

The Citizens Research Council of Michigan is a private, nonprofit public affairs research organization, founded in 1916 to analyze issues pertaining to state and local government organization and finance in Michigan.