Selling the idea of not only another property tax but a property tax with no maximum millage cap is difficult. To generate the required revenue to fund municipal services, it may be required to levy tax rates that make it economically uncompetitive relative to a municipality with a higher TV per capita. A municipality with a lower taxable value (TV) per capita - less than $20,000 - faces an additional burden. Additionally, 26 of the municipalities levying an Act 345 millage do not have the available mills within their cap to fund their public safety pensions out of their operating millage. Three cities - Cadillac, Dearborn Heights and Ironwood - are levying their maximum operating millage and have an Act 345 pension millage. The municipalities not currently levying a separate tax have the power to levy an Act 345 tax if their elected officials decide to implement such a millage. In turn, this ability frees up some revenue in the general fund to go toward other public services.Īs of March 2017, 49 municipalities and counties had adopted an Act 345 pension system, and 37 are levying a separate Act 345 tax (see Chart 1). Act 345 was passed in 1937 Headlee was not added to the Michigan Constitution until 1978 and “does not prevent imposition of a tax or tax increase that was authorized prior to the time the Headlee Amendment took effect.” Even if a municipality is taxing at the maximum millage permissible, the municipality can levy a millage specifically for an Act 345 police and fire pension system fund. This Act 345 millage has no ceiling and is not restricted by Headlee. Once such a fund is approved by a majority of voters in a municipality or county, Act 345 authorizes the creation of an Act 345 millage and thus a new funding source to fund police and firefighter pensions. Act 345 pensions must receive a majority vote from the citizens of the municipality or county. This law allows municipalities to adopt an Act 345 firefighter and police officer pension fund. Īct 345 of 1937 is one of the only ways a municipality can establish a new revenue stream. For townships, the millage maximum is based on a county’s allocation among the county’s townships and local schools. For cities and villages, the statutory operating maximum is 20 mills. Residents can vote to override the rollback and increase their property millage rate up to the maximum millage cap. This amendment requires a millage rollback whenever the revenue from existing property grows by more than the rate of inflation. The Headlee Amendment of 1978 (“Headlee”) limits the amount that a local government can tax its citizens’ property. Revenue sharing between the state government and local governments has decreased, making property taxes all the more important as a revenue source for local governments. Therefore, all new taxes must be voted on by the taxpayers of the municipality. In 1964, the Michigan Legislature enacted Act 243 of 1964, prohibiting local governments from levying any taxes not authorized by law. Michigan’s municipalities have very limited revenue-generating options other than the property tax. Municipalities employ a variety of tools to provide adequate monies to fund pension and retirement benefits. Many local governments in Michigan face the challenge of funding legacy costs, including pension and retirement benefits for police and fire employees.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |