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      October 29, 2021

      On Implementing Section 29 of the Headlee Amendment

      The Research Council has written extensively over the years about various aspects of the 1978 Headlee Amendment to the 1963 Michigan Constitution. This is not surprising given the sheer length and breadth of the amendment (it added ten new sections and amended an existing section of the state constitution), not to mention the extremely complex nature of its subject matter (state and local government finance). It is one of the most extensive and complex amendments ever added to the 1963 Constitution. Even so, many of Headlee’s provisions (for example, voter approval of new or increased local taxes) are generally understood by citizens and function seamlessly today. For a few of its provisions, however, this is not the case.  

      The Headlee Amendment, at its core, endeavors to limit state taxes/revenues and spending, while also limiting local governments’ ability to tax. Importantly, the amendment also contains specific provisions to establish and maintain a certain equilibrium between the fiscal affairs of the state government and those of local governments (as a group). For example, it includes requirements that the state maintain aid to local governments at a fixed percentage of total state spending and reimburse local units for state mandates. These provisions were put in place, in part, to ensure the proper functioning of the amendment’s various tax and spending limitations, but also to avoid tipping the balance of the state-local fiscal relationship in the favor of the state. Specifically, to protect local governments against the state passing to locals service costs it is not willing to pay for itself.

      While the amendment’s taxing and spending limits have been implemented with fidelity and generally operate today as the framers intended, the same cannot be said of those provisions designed to create and maintain balance between state and local government finances. Rather, these constitutional provisions were never fully implemented and, as a result, have been regularly ignored by the state government over the past four decades. 

      This was the general message the Research Council delivered in its testimony to the Senate Oversight Committee on October 26.  During our remarks, we presented a case for certain statutory reforms to the implementing law dealing with Headlee’s local mandate provisions to bring the state into full compliance with the entire amendment.

      The Beaten and Battered Mandate Provisions in the Headlee Amendment 

      Michigan has struggled to carry out the protection of local governments created by Article IX, Section 29 of the Michigan Constitution. Those protections include prohibitions against:

      • mandating local governments to provide new services or activities (after 1978) without proper funding;
      • increasing the level of mandated activities and services required beyond what was required in 1978 without proper funding; or
      • decreasing the level of funding provided in 1978 for existing mandates.

      While voters placed these protections in the Constitution over 40 years ago, their implementation was largely stalled from the get-go. Public Act 101 of 1979, the law enacted to implement Section 29, was never fully implemented and state requirements subsequently have been enacted without regard to this provision in the Constitution. The courts have resisted enforcing this provision. And, state executive branch officers have failed to even comply with ministerial statutory requirements, while actively opposing enforcement of this section.

      In short, Section 29 has been “ignored, beaten, battered and abused” for most of its existence. This was the key takeaway shared with the Senate Oversight Committee earlier this week in our testimony on the Headlee Amendment. The Committee is currently considering legislation that repeals Public Act 101, replacing it with a new implementing law for Headlee’s local mandate provisions

      One would be hard-pressed to find another section of the state constitution that has endured such neglect and abuse. This should be concerning to Michigan citizens beyond the parochial state and local government fiscal interests that often arise from Section 29 controversies (and subsequent lengthy lawsuits and delayed court decisions).  A much larger issue of concern is the proper functioning of these state constitutional provisions.

      And, one does not have to look far for evidence that Headlee’s statutory provisions are still being ignored and important information being withheld from citizens. The Michigan Supreme Court ruled in July on the most recent Section 29 controversy pitting local government interests against the State of Michigan (Taxpayers for Michigan Constitutional Government v State of Michigan). As we wrote in August, the Court’s ruling provides the State of Michigan with reprieve from fulfilling its Headlee statutory obligations to collect, report and place on the public record certain information regarding its compliance with the amendment. A basic reporting requirement the state has never met and has gone unenforced since 1978.

      The practical effect of the Court’s decision is that Michigan citizens will, again, have to wait to know whether the constitutional amendment they approved more than four decades ago is being implemented properly and with fidelity.

      A Roadmap to Reform

      Beyond sharing our perspectives on the tortured past of the local mandate provisions of Headlee, we recommended to the Senate Oversight Committee some reforms to help guide that body as it considers legislation directing the State of Michigan to implement the amendment and to fully comply with the state constitution.  These reforms are informed by our previous and on-going research on the functioning of the Headlee Amendment generally, as well as, Section 29 more specifically

      Broadly, we recommend that the state, in formulating a process to comply with the constitutional provisions of Section 29, adopt statutory changes that:

      • Define state requirements in a way that recognizes state mandates even when the local governments are not required to provide the service.
      • Institutionalize a process for determining whether existing laws constitute state obligations to fund activities or services under Section 29. 
      • Strengthen the powers of local governments in this process so they are not at the mercy of the state in identifying and funding mandates.
      • Establish a process for estimating the cost of proposed legislation that would impose costs on local governments.
      • Establish a procedure in the state budget process for appropriating funding for state requirements and disbursing those funds to local governments when state laws require new or increased activities and services.

      While the Research Council does not take direct positions on specific legislative proposals, we applaud the Senate Oversight Committee for raising this important constitutional issue and considering an implementation strategy for the Headlee Amendment’s local mandate provisions. Voters have already waited forty years for the State of Michigan to fully comply with these provisions. It is our hope that they won’t have to wait much longer. 

      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.

      On Implementing Section 29 of the Headlee Amendment

      The Research Council has written extensively over the years about various aspects of the 1978 Headlee Amendment to the 1963 Michigan Constitution. This is not surprising given the sheer length and breadth of the amendment (it added ten new sections and amended an existing section of the state constitution), not to mention the extremely complex nature of its subject matter (state and local government finance). It is one of the most extensive and complex amendments ever added to the 1963 Constitution. Even so, many of Headlee’s provisions (for example, voter approval of new or increased local taxes) are generally understood by citizens and function seamlessly today. For a few of its provisions, however, this is not the case.  

      The Headlee Amendment, at its core, endeavors to limit state taxes/revenues and spending, while also limiting local governments’ ability to tax. Importantly, the amendment also contains specific provisions to establish and maintain a certain equilibrium between the fiscal affairs of the state government and those of local governments (as a group). For example, it includes requirements that the state maintain aid to local governments at a fixed percentage of total state spending and reimburse local units for state mandates. These provisions were put in place, in part, to ensure the proper functioning of the amendment’s various tax and spending limitations, but also to avoid tipping the balance of the state-local fiscal relationship in the favor of the state. Specifically, to protect local governments against the state passing to locals service costs it is not willing to pay for itself.

      While the amendment’s taxing and spending limits have been implemented with fidelity and generally operate today as the framers intended, the same cannot be said of those provisions designed to create and maintain balance between state and local government finances. Rather, these constitutional provisions were never fully implemented and, as a result, have been regularly ignored by the state government over the past four decades. 

      This was the general message the Research Council delivered in its testimony to the Senate Oversight Committee on October 26.  During our remarks, we presented a case for certain statutory reforms to the implementing law dealing with Headlee’s local mandate provisions to bring the state into full compliance with the entire amendment.

      The Beaten and Battered Mandate Provisions in the Headlee Amendment 

      Michigan has struggled to carry out the protection of local governments created by Article IX, Section 29 of the Michigan Constitution. Those protections include prohibitions against:

      • mandating local governments to provide new services or activities (after 1978) without proper funding;
      • increasing the level of mandated activities and services required beyond what was required in 1978 without proper funding; or
      • decreasing the level of funding provided in 1978 for existing mandates.

      While voters placed these protections in the Constitution over 40 years ago, their implementation was largely stalled from the get-go. Public Act 101 of 1979, the law enacted to implement Section 29, was never fully implemented and state requirements subsequently have been enacted without regard to this provision in the Constitution. The courts have resisted enforcing this provision. And, state executive branch officers have failed to even comply with ministerial statutory requirements, while actively opposing enforcement of this section.

      In short, Section 29 has been “ignored, beaten, battered and abused” for most of its existence. This was the key takeaway shared with the Senate Oversight Committee earlier this week in our testimony on the Headlee Amendment. The Committee is currently considering legislation that repeals Public Act 101, replacing it with a new implementing law for Headlee’s local mandate provisions

      One would be hard-pressed to find another section of the state constitution that has endured such neglect and abuse. This should be concerning to Michigan citizens beyond the parochial state and local government fiscal interests that often arise from Section 29 controversies (and subsequent lengthy lawsuits and delayed court decisions).  A much larger issue of concern is the proper functioning of these state constitutional provisions.

      And, one does not have to look far for evidence that Headlee’s statutory provisions are still being ignored and important information being withheld from citizens. The Michigan Supreme Court ruled in July on the most recent Section 29 controversy pitting local government interests against the State of Michigan (Taxpayers for Michigan Constitutional Government v State of Michigan). As we wrote in August, the Court’s ruling provides the State of Michigan with reprieve from fulfilling its Headlee statutory obligations to collect, report and place on the public record certain information regarding its compliance with the amendment. A basic reporting requirement the state has never met and has gone unenforced since 1978.

      The practical effect of the Court’s decision is that Michigan citizens will, again, have to wait to know whether the constitutional amendment they approved more than four decades ago is being implemented properly and with fidelity.

      A Roadmap to Reform

      Beyond sharing our perspectives on the tortured past of the local mandate provisions of Headlee, we recommended to the Senate Oversight Committee some reforms to help guide that body as it considers legislation directing the State of Michigan to implement the amendment and to fully comply with the state constitution.  These reforms are informed by our previous and on-going research on the functioning of the Headlee Amendment generally, as well as, Section 29 more specifically

      Broadly, we recommend that the state, in formulating a process to comply with the constitutional provisions of Section 29, adopt statutory changes that:

      • Define state requirements in a way that recognizes state mandates even when the local governments are not required to provide the service.
      • Institutionalize a process for determining whether existing laws constitute state obligations to fund activities or services under Section 29. 
      • Strengthen the powers of local governments in this process so they are not at the mercy of the state in identifying and funding mandates.
      • Establish a process for estimating the cost of proposed legislation that would impose costs on local governments.
      • Establish a procedure in the state budget process for appropriating funding for state requirements and disbursing those funds to local governments when state laws require new or increased activities and services.

      While the Research Council does not take direct positions on specific legislative proposals, we applaud the Senate Oversight Committee for raising this important constitutional issue and considering an implementation strategy for the Headlee Amendment’s local mandate provisions. Voters have already waited forty years for the State of Michigan to fully comply with these provisions. It is our hope that they won’t have to wait much longer. 

      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.

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