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    October 12, 2021

    The Headlee Amendment – Voter Approval of Taxes Not Always Required

    In a Nutshell

    • The 1978 Headlee Amendment requires voter approval before local governments can levy new taxes or increase existing tax rates, but taxes authorized prior to adoption of the amendment do not require voter approval.
    • A lawsuit between Oshtemo Township and the Kalamazoo County Board of Commissioners questioned whether the Township had the authority to levy mills at the higher rate authorized to charter townships since it became a charter township by a board resolution without a vote of the people after the Headlee Amendment was adopted.
    • The case was ultimately decided in the Township’s favor reenforcing a local unit’s authority to levy taxes authorized prior to 1978 without voter approval. Despite this ruling, the Headlee Amendment still provides protections to taxpayers by requiring voter approval for new taxes or tax increases and millage rate rollbacks when the tax base grows faster than inflation.

    Over the years, voters have adopted tax limitations to protect themselves from ever-increasing property taxes. One of those limitations, the 1978 Headlee Amendment, specifically requires voter approval before local governments can levy new or increase existing taxes in Article IX, Section 31 of the 1963 Michigan Constitution.

    In the years since passage of the Headlee Amendment in 1978, it has not always been apparent when voter approval is required and when it is not. In general, taxes authorized prior to 1978 do not require voter approval, but the circumstances around how taxes are levied are not always clear. What specific taxes are exempt from the requirement? Does the vote requirement extend to cities or charter townships incorporated after 1978?

    A recent Court of Appeals decision helps us to understand when local governments have “preexisting authorization” to levy taxes.

    Background – Oshtemo Township wanted to levy additional property taxes

    This all started when Oshtemo Township in Kalamazoo County passed a resolution requesting the Kalamazoo County Board of Commissioners allow it to levy an additional 0.5 mills for operating purposes and 0.5 mills for roads. Oshtemo was requesting this increase to its 0.9703 property tax millage rate pursuant to provisions in the Charter Township Act allowing charter townships to levy up to five mills for operating purposes. It was requesting the road funding increase pursuant to state law that allows townships (charter and general law) to levy up to three mills without a vote of the people to fund roads.

    The county board denied the request citing two reasons: 

    1. The township was a general law township when the Headlee Amendment was adopted in 1978 and general law townships are limited to one mill for operating purposes. 
    2. The township became a charter township in 1979 by resolution of the township board and not by a vote of the township electors so allowing the township to levy up to five mills without a vote of the people is prohibited by the Headlee Amendment. 

    The basis of the county’s denial was a 1985 Attorney General Opinion, which generally found that while the Headlee Amendment did not impose a requirement of voter approval to incorporate as a charter township, it did impose a requirement of voter approval for the increase in the authorized millage rate resulting from the change from general law township status to charter township status. The Attorney General stated:

    It is my opinion, therefore, that charter townships incorporated after December 22, 1978, the effective date of Const 1963, art 9, Sec. 31, by final resolution of the township board and without an approving vote of the township electors, are prohibited from levying millage at a charter township rate higher than the township’s previously authorized millage limitation as a general law township.

    Michigan Tax Tribunal ruling finds Attorney General opinion most compelling

    The Oshtemo Township case first went to the Michigan Tax Tribunal, which is an administrative court that hears tax appeals. The Tribunal split their decision agreeing with the County that Oshtemo could not levy the additional operating mills without a vote of the people to authorize their charter status and the additional taxing authority that goes along with it. The Tribunal agreed with the Township on the 0.5 mill road levy because the authority for that tax extends to all types of townships and pre-dates adoption of the Headlee Amendment.

    The Tribunal stated that it found the 1985 Attorney General opinion persuasive because “the most obvious understanding of the Headlee Amendment is that an increase in taxes, such as a township having authority to increase its millage, must be approved by the voters.” Since Oshtemo Township was not “authorized by law” to levy the charter millage at the time the Headlee Amendment was passed, its limitation should be limited to the one mill authorized to general law townships, adjusted by the Headlee rollback calculations.

    Court of Appeals opinion cites Michigan Supreme Court case law

    The case then went to the Michigan Court of Appeals and the questions before the court were: Does Oshtemo Township, and other townships like it, remain limited to the tax rate for general law townships because it was one when Headlee was adopted? Or, is the relevant limit on its taxing authority the five mills approved for charter townships as it has become a charter township since the adoption of the Headlee Amendment?

    The Court ultimately concluded that the 1985 Attorney General opinion, which was nonbinding, is inconsistent with later-decided case law from the Michigan Supreme Court and that Oshtemo Township may levy the charter township tax rate of up to five mills.

    The case law cited by the Court included a 2000 case American Axle & Mfg, Inc v Hamtramck where the Michigan Supreme Court found:

    The Headlee exemption of taxes authorized by law when the section was ratified permits the levying of previously authorized taxes even where they were not being levied at the time Headlee was ratified and even though the circumstances making the tax or rate applicable did not exist before that date. 

    The Court concluded that Oshtemo Township had a “preexisting authorization” to levy the tax and therefore, voter approval was not required. The American Axle case sets a clear standard “that a tax is exempt from the requirement of voter approval if there was a pre-Headlee authority for the tax and the local unit of government is eligible to levy the tax because of a post-Headlee change in circumstances.”

    What does this mean for charter townships

    In short, this court ruling means that all charter townships are authorized to levy the full five mills provided for in state law even if they became charter townships after the adoption of the Headlee Amendment by a resolution of their board rather than by a vote of township electors.

    Previous research on ad valorem special assessments talks about how the state has allowed local governments to levy these special assessments which look just like property taxes but are not subject to the limitations found in state law. Is this court ruling another example of certain local taxes not being subjected to statutory limitations? 

    The short answer is no. The Amendment as adopted by voters specifically states that voter approval is required for taxes not authorized by law when it was adopted in 1978. This does not just impact charter township operating millages allowed for in state law. A number of property taxes were authorized in the following public acts passed prior to the adoption of Headlee (this is not an exhaustive list):

    Tax limitations still protect property taxpayers

    Despite this court ruling, which reenforces a local unit’s authority to levy taxes authorized prior to 1978 without voter approval, the Headlee Amendment still provides protections for taxpayers. It requires voter approval of new taxes or to raise rates above what was authorized prior to its passage. It would be helpful for taxpayers and local governments if the state, through the Michigan Department of Treasury or the Attorney General’s Office, would create a comprehensive list of taxes authorized to be levied to each type of local government without voter approval. 

    If the problem is that Oshtemo Township was able to become a charter township and levy higher taxes without a vote of the people, then that can be solved by amending the Charter Township Act to require a vote of the people to become a charter township. This would remove the board resolution option and make it harder for a township to change status and levy higher taxes.

    The Headlee Amendment also requires property tax millage rates to be rolled back if the tax base of a local unit increases by more than inflation. The intent behind this part of the amendment was to keep local taxes from increasing simply due to growth in the tax base. Voters can approve an override to the millage rate rollback, but it keeps local governments from expanding their tax revenues by more than inflation without either new development or a vote of the residents to allow for greater growth in tax bases and revenues.

    If you want more details about how these tax limitations protect taxpayers see our recent report on Michigan’s overlapping property tax limitations.

    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. 

    The Headlee Amendment – Voter Approval of Taxes Not Always Required

    In a Nutshell

    • The 1978 Headlee Amendment requires voter approval before local governments can levy new taxes or increase existing tax rates, but taxes authorized prior to adoption of the amendment do not require voter approval.
    • A lawsuit between Oshtemo Township and the Kalamazoo County Board of Commissioners questioned whether the Township had the authority to levy mills at the higher rate authorized to charter townships since it became a charter township by a board resolution without a vote of the people after the Headlee Amendment was adopted.
    • The case was ultimately decided in the Township’s favor reenforcing a local unit’s authority to levy taxes authorized prior to 1978 without voter approval. Despite this ruling, the Headlee Amendment still provides protections to taxpayers by requiring voter approval for new taxes or tax increases and millage rate rollbacks when the tax base grows faster than inflation.

    Over the years, voters have adopted tax limitations to protect themselves from ever-increasing property taxes. One of those limitations, the 1978 Headlee Amendment, specifically requires voter approval before local governments can levy new or increase existing taxes in Article IX, Section 31 of the 1963 Michigan Constitution.

    In the years since passage of the Headlee Amendment in 1978, it has not always been apparent when voter approval is required and when it is not. In general, taxes authorized prior to 1978 do not require voter approval, but the circumstances around how taxes are levied are not always clear. What specific taxes are exempt from the requirement? Does the vote requirement extend to cities or charter townships incorporated after 1978?

    A recent Court of Appeals decision helps us to understand when local governments have “preexisting authorization” to levy taxes.

    Background – Oshtemo Township wanted to levy additional property taxes

    This all started when Oshtemo Township in Kalamazoo County passed a resolution requesting the Kalamazoo County Board of Commissioners allow it to levy an additional 0.5 mills for operating purposes and 0.5 mills for roads. Oshtemo was requesting this increase to its 0.9703 property tax millage rate pursuant to provisions in the Charter Township Act allowing charter townships to levy up to five mills for operating purposes. It was requesting the road funding increase pursuant to state law that allows townships (charter and general law) to levy up to three mills without a vote of the people to fund roads.

    The county board denied the request citing two reasons: 

    1. The township was a general law township when the Headlee Amendment was adopted in 1978 and general law townships are limited to one mill for operating purposes. 
    2. The township became a charter township in 1979 by resolution of the township board and not by a vote of the township electors so allowing the township to levy up to five mills without a vote of the people is prohibited by the Headlee Amendment. 

    The basis of the county’s denial was a 1985 Attorney General Opinion, which generally found that while the Headlee Amendment did not impose a requirement of voter approval to incorporate as a charter township, it did impose a requirement of voter approval for the increase in the authorized millage rate resulting from the change from general law township status to charter township status. The Attorney General stated:

    It is my opinion, therefore, that charter townships incorporated after December 22, 1978, the effective date of Const 1963, art 9, Sec. 31, by final resolution of the township board and without an approving vote of the township electors, are prohibited from levying millage at a charter township rate higher than the township’s previously authorized millage limitation as a general law township.

    Michigan Tax Tribunal ruling finds Attorney General opinion most compelling

    The Oshtemo Township case first went to the Michigan Tax Tribunal, which is an administrative court that hears tax appeals. The Tribunal split their decision agreeing with the County that Oshtemo could not levy the additional operating mills without a vote of the people to authorize their charter status and the additional taxing authority that goes along with it. The Tribunal agreed with the Township on the 0.5 mill road levy because the authority for that tax extends to all types of townships and pre-dates adoption of the Headlee Amendment.

    The Tribunal stated that it found the 1985 Attorney General opinion persuasive because “the most obvious understanding of the Headlee Amendment is that an increase in taxes, such as a township having authority to increase its millage, must be approved by the voters.” Since Oshtemo Township was not “authorized by law” to levy the charter millage at the time the Headlee Amendment was passed, its limitation should be limited to the one mill authorized to general law townships, adjusted by the Headlee rollback calculations.

    Court of Appeals opinion cites Michigan Supreme Court case law

    The case then went to the Michigan Court of Appeals and the questions before the court were: Does Oshtemo Township, and other townships like it, remain limited to the tax rate for general law townships because it was one when Headlee was adopted? Or, is the relevant limit on its taxing authority the five mills approved for charter townships as it has become a charter township since the adoption of the Headlee Amendment?

    The Court ultimately concluded that the 1985 Attorney General opinion, which was nonbinding, is inconsistent with later-decided case law from the Michigan Supreme Court and that Oshtemo Township may levy the charter township tax rate of up to five mills.

    The case law cited by the Court included a 2000 case American Axle & Mfg, Inc v Hamtramck where the Michigan Supreme Court found:

    The Headlee exemption of taxes authorized by law when the section was ratified permits the levying of previously authorized taxes even where they were not being levied at the time Headlee was ratified and even though the circumstances making the tax or rate applicable did not exist before that date. 

    The Court concluded that Oshtemo Township had a “preexisting authorization” to levy the tax and therefore, voter approval was not required. The American Axle case sets a clear standard “that a tax is exempt from the requirement of voter approval if there was a pre-Headlee authority for the tax and the local unit of government is eligible to levy the tax because of a post-Headlee change in circumstances.”

    What does this mean for charter townships

    In short, this court ruling means that all charter townships are authorized to levy the full five mills provided for in state law even if they became charter townships after the adoption of the Headlee Amendment by a resolution of their board rather than by a vote of township electors.

    Previous research on ad valorem special assessments talks about how the state has allowed local governments to levy these special assessments which look just like property taxes but are not subject to the limitations found in state law. Is this court ruling another example of certain local taxes not being subjected to statutory limitations? 

    The short answer is no. The Amendment as adopted by voters specifically states that voter approval is required for taxes not authorized by law when it was adopted in 1978. This does not just impact charter township operating millages allowed for in state law. A number of property taxes were authorized in the following public acts passed prior to the adoption of Headlee (this is not an exhaustive list):

    Tax limitations still protect property taxpayers

    Despite this court ruling, which reenforces a local unit’s authority to levy taxes authorized prior to 1978 without voter approval, the Headlee Amendment still provides protections for taxpayers. It requires voter approval of new taxes or to raise rates above what was authorized prior to its passage. It would be helpful for taxpayers and local governments if the state, through the Michigan Department of Treasury or the Attorney General’s Office, would create a comprehensive list of taxes authorized to be levied to each type of local government without voter approval. 

    If the problem is that Oshtemo Township was able to become a charter township and levy higher taxes without a vote of the people, then that can be solved by amending the Charter Township Act to require a vote of the people to become a charter township. This would remove the board resolution option and make it harder for a township to change status and levy higher taxes.

    The Headlee Amendment also requires property tax millage rates to be rolled back if the tax base of a local unit increases by more than inflation. The intent behind this part of the amendment was to keep local taxes from increasing simply due to growth in the tax base. Voters can approve an override to the millage rate rollback, but it keeps local governments from expanding their tax revenues by more than inflation without either new development or a vote of the residents to allow for greater growth in tax bases and revenues.

    If you want more details about how these tax limitations protect taxpayers see our recent report on Michigan’s overlapping property tax limitations.

    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. 

  • 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

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