August 30, 2010, 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.

CRC Staff Note

The Citizens Research Council of Michigan is sad to note that Research Associate Jill Roof has left the organization. Jill and her family have moved to New York State. Jill joined the Research Council in 2004 as a Lent Upson-Loren Miller Fellow and stayed with the Council as a researcher following her graduation. Jill tackled several of the complicated ballot issues that have appeared on recent statewide ballots, including affirmative action, stem cell research, and medical marijuana. Recently, Jill's main research focus has been on education issues.

"Jill has been a wonderful asset to CRC during her tenure here," said CRC President Jeff Guilfoyle. "She is an outstanding researcher, and she has been a pleasure to work with. We will all miss working with her."

Click Here to send a note to Jill wishing her well in New York.

IN THE NEWS

Citizens Research Council Wins National Awards

On July 27, 2010, the Citizens Research Council of Michigan was awarded the Most Distinguished Research award for 2010 at the 97th Annual Conference of the Governmental Research Association in New York City.

The winning report, Reforming the Process for Identifying and Funding Section 29 Mandates on Local Governments, was written for the Legislative Commission on Statutory Mandates. The Commission was charged with the task of reviewing and investigating the extent to which unfunded mandates have been imposed on local governments, and recommending process reforms to the legislature so that laws that require local governments to provide new activities or services can be properly addressed in the future. The Commission engaged CRC to investigate practices in other states with similar laws.

In 1978, several sections were amended to Article IX of the Michigan Constitution as part of the package commonly referred to as the Headlee Amendment. Article IX, Section 29 prohibits the State from mandating local governments to provide new services or activities without proper funding. The process to implement this section of the Headlee Amendment was never fully implemented and local government associations suggest that mandates have been enacted without funding over the 30 years since adoption. CRC's report offered alternatives and options to reform the process by analyzing processes used to implement similar laws in other states.

Since publication of the CRC report, the Commission has issued its final report and legislation has been introduced to implement the Commission's recommendations. Also, the Michigan Supreme Court has ruled in the case of Daniel Adair v State of Michigan finding that the reporting requirements schools must perform for the Center for Educational Performance and Information (CEPI) constitute a mandate under Section 29.

The Governmental Research Association was established in 1914 and is the national organization of individuals professionally engaged in governmental research.

BE OUR FRIEND ON FACEBOOK: The Citizens Research Council of Michigan now has a Facebook page. If you have a Facebook account (or have been looking for a reason to set one up), we'd like to hear from you. To visit the CRC profile, Click Here.

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Recent Publications

Article IX -- Finance and Taxation

Article VIII -- Education

Article VII -- Local Government

Article VI -- Judicial Branch

Article V -- Executive Branch

Article IV -- Legislative Branch

Article III -- General Government

Financial Emergencies in Michigan Local Governments

Article II -- Elections

Article I -- Declaration of Rights

The Fiscal Condition of the City of Detroit

Amending the Michigan Constitution: Trends and Issues

The FY2011 Executive Budget: "Déjà Vu All Over Again"

A Brief Michigan Constitutional History

General Revision of the Michigan Constitution

Public Education Governance in Michigan

 

 

 

 

 

 

Last Updated August 4, 2010