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CRC Column

The right to criticize government is also an obligation to know what you are talking about. 
-Lent Upson, 1st Executive Director of CRC  


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Proposal A: Questions Regarding School Property Taxes
June 1994
Council Comments 1028

THE ISSUE IN BRIEF

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On March 15, 1994, the voters of Michigan approved a constitutional amendment (Proposal A) white affects property taxation in several respects: (1) it permits nonuniform (classified) property taxation for school operating purposes; (2) it creates a new system of assessing property for all purposes by limiting the annual increases in the taxable value of each parcel to the lesser of five percent or inflation and provides that property be assessed upon transfer in ownership; and (3) imposes upon the Legislature a three-fourths vote requirement to increase the statutory limits on school operating property taxes which were in effect on February 1, 1994.

In addition, adoption of Proposal A made effective various implementing legislation which included new provisions on school operating taxes. These new provision prohibit school districts from imposing millage allocated under the 15 or 18 mill constitutional limitations, authorize a new state property tax of six mills on all property, and imposes new limitations upon the levy of voterapproved millage for school operating purposes. The new legislation also establishes two new classes of property for school operating purposes: homestead and non-homestead.

While adoption of Proposal A and its implementing legislation reflects a significant change in school finance and property taxation, this change also creates a number of issues that will need to be addressed. This Council Comments examines these issues as they relate to the Michigan property taxation system as altered by Proposal A.

Why do local school districts continue to schedule millage elections given the fact that Public Act 145 of 1993 exempted all property from general ad valorem taxation for school operating purposes?

Public Act 312 of 1994, one of the Proposal A implementation statutes, reinstates local ad valorem property taxes for specific school operating purposes: (1) to receive state school aid beginning in 1994, a school district must levy for operating purposes on non-homestead property the lesser of 18 mills or the number of mills imposed in 1993; (2) a school district with a per pupil revenue allowance of more than $6,500 per pupil In 1994-95 is authorized to impose sufficient supplemental millage to maintain existing per pupil revenue levels (the first 18 supplemental mills are to be levied upon non-homestead property only and upon all property above 18 mills); and (3) local school districts may levy up to three mills during 1994 through 1996 for enhancement purposes. Voter approval is required for these millages; however, existing voter authorization may be utilized for the nonhomestead millage and supplemental millage, but a new vote is required for enhancement millage.
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