Michigan Leaders Encourage Proposal A Reform – Detroit News Article

Michigan taxpayers expect essential services like parks, roads and first responders. But for more than a decade, we’ve seen steep drops in taxable values, leaving many municipalities unable to fully fund those services and maintain infrastructure.

According to data from the Michigan Department of Treasury, taxable value fell by 13 percent between 2008 and 2012 and has never truly recovered. In fact, the taxable property values in more than 700 cities, townships and villages have dropped lower than they were in 2000, posing “a significant risk to their fiscal health.”

The Detroit News took a look at this important municipal finance issue in a recent column, focusing on Proposal A and its impact on communities across the state.

This is an outstanding article by Detroit News reporter Jonathan Oosting that does an excellent job explaining the conflict..

Anthony Minghine, COO and Deputy Executive Director for the Michigan Municipal League and frequent SaveMICity speaker,  is quoted in it along with former League Board member and staunch SaveMICity supporter Ed Klobucher, Hazel Park city manager. The article gets into what we’ve been talking about for years – that Michigan’s system for funding its communities is broken and must be fixed. The system doesn’t allow the revenue of Michigan communities to track with the economy as it should. The article explains how change is needed and fixes can be done without an amendment to the constitution. It’s powerful, important stuff.

We also definitely need to give a huge shout-out to Senate Majority Leader Mike Shirkely for his comments in the Detroit News article over his wiliness to look at the issue.

Passed in 1994, Proposal A has capped annual growth on taxable property values at the rate of inflation or five percent, whichever is less regardless how far values fall in a decline. With this limit in place, communities hit the hardest by reductions in taxable value never fully bounce back.

“I think we have evidence to suggest that Proposal A has performed marvelously for its one intent of holding back the runaway increases in property taxes,” Senate Majority Leader Mike Shirkey, R-Clarklake, recently told reporters. “But when it was passed, nobody anticipated 10 years or more of regressive degradation of property values, and the effect that has had, I think, is measurable.”

The Headlee amendment is also overly impacted by proposal A. This occurs when uncapped values are negated when millage rates roll back when due to sales not real growth in taxable values. Lawmakers have now begun to express interest in reviewing and potentially amending both Proposal A and implementation laws surrounding the Headlee Amendment.

“There are just a couple minor fixes that would absolutely provide a different recession protection and allow us to really track with the economy in a much more realistic way,” said Tony Minghine, deputy executive director of the Michigan Municipal League. “I think any tax system at any state in the country has to do that, or it won’t work. And we’ve built one that doesn’t do that.”

The full article can be found on the Detroit News website.