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    April 15, 2013

    When voter approval is required for new local government taxes

    from: A former county commissioner
    subject: PA 88 of 1913
    body: Eric:  I am a former county administrator and county commissioner from a Michigan county.
    After my retirement from the board, the next Board of Commissioners “discovered” PA 88 was still on the books and levied a .5 mills property tax on the property owners of the county to support the local MSU Extention office and county economic development agency.  I and several others protested that they could not levy such a tax without a vote of the people because it violated Headlee. That is, my belief is that because of Headlee, if a tax was not in place in Nov 78, you must have a vote to establish it.
    The Board at the time, in 2010, sought and received a legal opinion from a local attorney who is on the board of economic development agency, that stated they had the authority to do this.  In fact, it was pointed out, that Washtenaw County was already taxing under this authority.
    I do not believe this is right because of Section 31, Art IX of the Constitution.  Can you imagine the amount of money sucked from the private sector if every County in Michigan did this.  I believe it was the spirit and intent of Headlee to prevent just such actions.
    We, our group of opponents are looking for help fighting this.  Can you help or steer us to someone who can?
    Thanks so much for your time.
    CRC’s Response
    I’m afraid my response will not be helpful to your cause.
    Although Michigan is a strong home rule state (Home rule cities, villages, and counties are assumed to possess a broad range of powers and do not require authorization from state law to engage in most activities. The courts are to assume general law governments (e.g., townships, most counties, school districts) have powers that are fairly implied.), state law requires the enactment of specific laws to authorize the levy of taxes by local governments.  In some other states, local governments can design and levy taxes without action or authorization from their state governments.
    The Michigan Constitution requires for many (but not all) types of taxes, in addition to the authorization in state law, that voters within the local jurisdiction must approve the levy of the taxes at the ballot box.  Article IX, Section 31 of the Michigan Constitution (part of the Headlee Amendment of 1978) provides in relevant part,

    “Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon.”

    A key point here is that the language says that the tax must be authorized.  It does not require that the tax was levied by the individual unit of government in 1978.
    Local government taxes can be authorized in four ways.  Those four ways can be sub-divided into two groups:
    A. Those requiring voter approval:
    1. Charter millage. The charters of home rule cities, villages, and counties provide for the levy of property taxes and limit the rate at which the taxes can be levied.  The home rule governments can work within those limits without going back to the voters every time, but voter approval is obtained when the residents approve adoption of the charter.
    2. Charter township and extra voted millages.  Charter townships can exceed the limits generally placed on general law townships, levying taxes at rates that cannot exceed ten (10) mills.  Like home rule governments, the authorization to do so is obtained when residents of the townships vote to adopt charter township status.  Other taxes may be levied only with voter approval.  Extra voted millages can be levied for a wide range of activities and must be of limited duration.
    It should be noted that these vote requirements extend to other types of taxes that were not authorized to be levied by individual local governments in 1978, including: local option income taxes, utility users excise taxes, and casino taxes for cities; and rental car and hotel room taxes for counties.
    B. Those not requiring voter approval:
    3. Tax Allocation.  General purpose governments are authorized to levy a limited number of mills for operations within certain tax limitations.  Those limitations generally confine the number of mills to be divided among the different types of governments to 15 mills, but it can be raised to 18 mills with a county-wide vote.
    4. Taxes that Pre-Dated Headlee.  A number of taxes existed in state law to authorize the levy of taxes by different types of governments.  The section of the Headlee Amendment cited above specifies that local governments are, “… prohibited from levying any tax not authorized by law or charter when this section is ratified …”  These taxes were authorized by law when this section was ratified and therefore do not require voter approval to be levied.
    For cities, these include:
    A tax of up to 3 mills for garbage collection and disposal.
    A tax of up to 1 mill for library operations.
    A tax of up to 1 mill for senior services.
    For counties, this includes Public Act 88 of 1913 for economic development purposes.
    Referring to the point made above, you can see that taxes may have been authorized, but not levied, in 1978 1) if charter authority existed, 2) if taxes were allocated to a county or township, and 3) because the authority existed in state law for cities and counties to levy taxes for garbage collection, libraries, senior services, and economic development.
    I have purposefully avoided going into too much detail in this explanation.  If there are any details I can provide that would help to fill in holes or answer further questions, please do not hesitate to ask.
    ——————————————————-
    Eric Lupher
    Director of Local Affairs
    Citizens Research Council of Michigan
    734.542.8001
    elupher@crcmichstaging.wpengine.com
     

    President

    About The Author

    Eric Lupher

    President

    Eric has been President of the Citizens Research Council since September of 2014. He has been with the Citizens Research Council since 1987, the first two years as a Lent Upson-Loren Miller Fellow, and since then as a Research Associate and, later, as Director of Local Affairs. Eric has researched such issues as state taxes, state revenue sharing, highway funding, unemployment insurance, economic development incentives, and stadium funding. His recent work focused on local government matters, including intergovernmental cooperation, governance issues, and municipal finance. Eric is a past president of the Governmental Research Association and also served as vice-chairman of the Governmental Accounting Standards Advisory Council (GASAC), an advisory body for the Governmental Accounting Standards Board (GASB), representing the user community on behalf of the Governmental Research Association.

    When voter approval is required for new local government taxes

    from: A former county commissioner
    subject: PA 88 of 1913
    body: Eric:  I am a former county administrator and county commissioner from a Michigan county.
    After my retirement from the board, the next Board of Commissioners “discovered” PA 88 was still on the books and levied a .5 mills property tax on the property owners of the county to support the local MSU Extention office and county economic development agency.  I and several others protested that they could not levy such a tax without a vote of the people because it violated Headlee. That is, my belief is that because of Headlee, if a tax was not in place in Nov 78, you must have a vote to establish it.
    The Board at the time, in 2010, sought and received a legal opinion from a local attorney who is on the board of economic development agency, that stated they had the authority to do this.  In fact, it was pointed out, that Washtenaw County was already taxing under this authority.
    I do not believe this is right because of Section 31, Art IX of the Constitution.  Can you imagine the amount of money sucked from the private sector if every County in Michigan did this.  I believe it was the spirit and intent of Headlee to prevent just such actions.
    We, our group of opponents are looking for help fighting this.  Can you help or steer us to someone who can?
    Thanks so much for your time.
    CRC’s Response
    I’m afraid my response will not be helpful to your cause.
    Although Michigan is a strong home rule state (Home rule cities, villages, and counties are assumed to possess a broad range of powers and do not require authorization from state law to engage in most activities. The courts are to assume general law governments (e.g., townships, most counties, school districts) have powers that are fairly implied.), state law requires the enactment of specific laws to authorize the levy of taxes by local governments.  In some other states, local governments can design and levy taxes without action or authorization from their state governments.
    The Michigan Constitution requires for many (but not all) types of taxes, in addition to the authorization in state law, that voters within the local jurisdiction must approve the levy of the taxes at the ballot box.  Article IX, Section 31 of the Michigan Constitution (part of the Headlee Amendment of 1978) provides in relevant part,

    “Units of Local Government are hereby prohibited from levying any tax not authorized by law or charter when this section is ratified or from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon.”

    A key point here is that the language says that the tax must be authorized.  It does not require that the tax was levied by the individual unit of government in 1978.
    Local government taxes can be authorized in four ways.  Those four ways can be sub-divided into two groups:
    A. Those requiring voter approval:
    1. Charter millage. The charters of home rule cities, villages, and counties provide for the levy of property taxes and limit the rate at which the taxes can be levied.  The home rule governments can work within those limits without going back to the voters every time, but voter approval is obtained when the residents approve adoption of the charter.
    2. Charter township and extra voted millages.  Charter townships can exceed the limits generally placed on general law townships, levying taxes at rates that cannot exceed ten (10) mills.  Like home rule governments, the authorization to do so is obtained when residents of the townships vote to adopt charter township status.  Other taxes may be levied only with voter approval.  Extra voted millages can be levied for a wide range of activities and must be of limited duration.
    It should be noted that these vote requirements extend to other types of taxes that were not authorized to be levied by individual local governments in 1978, including: local option income taxes, utility users excise taxes, and casino taxes for cities; and rental car and hotel room taxes for counties.
    B. Those not requiring voter approval:
    3. Tax Allocation.  General purpose governments are authorized to levy a limited number of mills for operations within certain tax limitations.  Those limitations generally confine the number of mills to be divided among the different types of governments to 15 mills, but it can be raised to 18 mills with a county-wide vote.
    4. Taxes that Pre-Dated Headlee.  A number of taxes existed in state law to authorize the levy of taxes by different types of governments.  The section of the Headlee Amendment cited above specifies that local governments are, “… prohibited from levying any tax not authorized by law or charter when this section is ratified …”  These taxes were authorized by law when this section was ratified and therefore do not require voter approval to be levied.
    For cities, these include:
    A tax of up to 3 mills for garbage collection and disposal.
    A tax of up to 1 mill for library operations.
    A tax of up to 1 mill for senior services.
    For counties, this includes Public Act 88 of 1913 for economic development purposes.
    Referring to the point made above, you can see that taxes may have been authorized, but not levied, in 1978 1) if charter authority existed, 2) if taxes were allocated to a county or township, and 3) because the authority existed in state law for cities and counties to levy taxes for garbage collection, libraries, senior services, and economic development.
    I have purposefully avoided going into too much detail in this explanation.  If there are any details I can provide that would help to fill in holes or answer further questions, please do not hesitate to ask.
    ——————————————————-
    Eric Lupher
    Director of Local Affairs
    Citizens Research Council of Michigan
    734.542.8001
    elupher@crcmichstaging.wpengine.com
     

  • Permission to reprint this blog post in whole or in part is hereby granted, provided that the Citizens Research Council of Michigan is properly cited.

  • Recent Posts

  • Stay informed of new research published and other Citizens Research Council news.


    By submitting this form, you are consenting to receive marketing emails from: Citizens Research Council of Michigan. You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact
    President

    About The Author

    Eric Lupher

    President

    Eric has been President of the Citizens Research Council since September of 2014. He has been with the Citizens Research Council since 1987, the first two years as a Lent Upson-Loren Miller Fellow, and since then as a Research Associate and, later, as Director of Local Affairs. Eric has researched such issues as state taxes, state revenue sharing, highway funding, unemployment insurance, economic development incentives, and stadium funding. His recent work focused on local government matters, including intergovernmental cooperation, governance issues, and municipal finance. Eric is a past president of the Governmental Research Association and also served as vice-chairman of the Governmental Accounting Standards Advisory Council (GASAC), an advisory body for the Governmental Accounting Standards Board (GASB), representing the user community on behalf of the Governmental Research Association.

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