The legislative analysis states this:
If a taxpayer is elegible for an exemption, the board of review would grant the exemption for the tax year in which the application was filed, and for the immediately preceding tax year if the taxpayer would have been eligible for an exemption that year. If the board of review did so,any exempted and unpaid taxes, interest, penalties, and fees for the immediately preceding tax year would be extinguished......
The local board of review could deny an exemption for one or more of the following reasons:
- the person claiming the exemption was not a qualified taxpayer
- the claim for exemption was based on fraud
- the qualified taxpayer had no interest in the property for which the exemption was claimed, and the claim was an attempt to avoid the collection of taxes
- the state equalized valuation of the principal residence for which an exemption was claimed was 200 percent or more greater than the median value of a principal residence in the local tax collection unit.
Doesn't sound to bad. Well who is going to make up the revenue? In the Right Michigan article they refered to the problem with bonds and referenced the increase that will be required on those still paying taxes, to meet the annual payments. It is much worse than that and difficult to explain.
There aren two thing that govern the level of taxation on our taxable value. The first is the Headlee Amendment (Article 9 Section 26-32 of the State Constitution) which limits the revenue to local units of governmet to the rate of inflation and the second is Proposal A, which limits the increase in the taxable value of individual property to the rate of inflation or 5% which ever is less. The amount of the millage rollback, if any, is determined by the total taxable value in a local unit of government. That means your school district, city or township, and county determine how many mills they can levy by basically taking last years revenue, plus any additions or deleations of property and figuring how much revenue they are entitled to under the Headlee Amendment.
As some people's taxable value decrease or disappear , as in HB 6162 the burden is shifted to others still paying taxes. Article 9 Section 31 of the State Constitution assures local units of government a certain level of revenue;
I have tried to simplify a very complex tax system. You might want to consult the Citizen's Research Council for the more complicated version.
As you know, your taxes have continued to rise while your property values have declined. People ask me why every day. How can this happen? When taxable values continue to be capped each year to the rate of inflation due to Proposal A, assessments increased at a much faster rate. The difference between your taxable value and assessed value was still too great for you to experience a reduction. Surprisingly, the legislature noticed that too. They passed House Joint Resolution III to revise the Proposal A assessment cap for declining values. This from MichiganVotes.org :
Received in the House on September 25, 2008, to place before voters in the next general election a Constitutional amendment to establish that, after 2010, if a property's assessed value decreases the taxable value not be allowed to increase, as it does now under the enacting language adopted by the legislature following passage of the 1994 Proposal A. If the assessed value increased by less than the rate of inflation, the assesment increase could not exceed that amount. Passed in the House (101 to 0) on September 25, 2008, to place before the voters in the next general election a Constitutional amendment to establish that after 2010, if a property's assessed value decreases the taxable value not be allowed to increase, as it does now under the enacting language adopted by the legislature following the passage of the 1994 Proposal A. If the assessed value increased by less than the rate of inflation, the assessment increase could not exceed that amount.
Keep in mind that this would still be a tax shift because the revenue is still guaranteed to the local units of government under the Constitution. The millage would just not be rolled back as much and those who have purchased their houses after 1994 when Proposal A passed will still be paying more than their fair share and those who receive an exemption would shift their share to others.