Sunday, August 05, 2012

Beware Truth In Taxation


It has been a long time since Truth In Taxation has been used by most government bodies. The conditions under which it is profitable are becoming perfect. So, before you go voting for any more millages, no matter how small, make sure you will be able to pay for them.

In 1978 the Headlee Amendment passed  to limit  the amount of revenue government could collect. It basically limits revenue increases to the CPI (inflation).  If the revenue exceeds that amount, the millage must roll back.

In 1994 Proposal A passed. Unlike Headlee, it was concerned with the taxable value of individual property. It capped annual increases in your taxable value at the CPI (inflation) or 5% whichever is less. Millages are applied against the taxable value.

So while proposal A deals with capping your individual assessment,  the Headlee Amendment regulates government revenue to the rate of inflation and the number of mills that can be levied to reach that revenue.

For years most of our assessment values increased every year beyond the rate of inflation. As a result the Headlee Amendment caused millages to roll back to keep revenue from exceeding the inflationary limit.  Since the bubble our property values have been declining. The amount of revenue,  because of low inflation rates,  caused government bodies to seek  Headlee overides which required them to go to the ballot with their request.

Predictions are that inflation will become very serious after the first of the year.  The drought will cause food prices to rise, trouble in the middle east will force oil and gas prices to rise effecting the trucking and other transportation systems, housing prices are creeping up, early slaughter of cattle because of crop failure and the Federal Reserve will probably increase interest rates. 
All this will be going on while unemployment will still be high and wage increases will almost be unheard of.

MCL211.24e (in part) provides that a local taxing unit could approve and levy a millage rate for operating purposes in excess of the Base Tax Rate (BTR)  after providing a notice of public hearing in a newspaper, establishing the proposed additional millage rate by resolution,
holding the public hearing, and approving the levy of the additional millage rate.

This means that any millage that has been rolled back as a result of Headlee can be increased up to the voted level, or that portion necessary, if inflation determines it can be. That means any millage that was rolled back can be rolled up by a simple hearing by the governing body that can happen almost without you being aware. This might result in multiple increases on every level of government.  Be aware of these hearings - your ability to pay you taxes may depend on it.