LATEST PENSION “REFORM” FAD THREATENS TO DO MORE HARM THAN GOOD

by Justin Mordarski

The latest sortie into fixing our broken system is a push by some to assume an artificially low rate on investment returns.This sounds innocuous, perhaps even prudent…right?

Not even close. Even a very small difference in the assumed rate of return can have a massive effect on forced taxpayer contributions. A recent report on the pension system of Rhode Island illustrates the danger in manipulating the assumed rate of return. Lowering the rate by less than 1%, from 8.25% to 7.5%, increases the shortfall by over $2 billion, from $4.7 billion to $6.8 billion!  Lowering it to 6.2%, increases the amount taxpayers owe by $4.5 billion.

     
 What does this mean for a Michigan city or township?  While it varies by the size of the fund, lowering the assumed rate of return by even 1 percentage point could translate into several millions of dollars per year in additional, required payments by the city or township.

The pension fund’s assumed rate of return, or discount rate, is one of the primary variables in determining its funded ratio and it is ultimately the funded ratio that determines the bulk of the amount that taxpayers are required to contribute to the fund. It is expressed as a percent, usually between 7.5% and 8.0% and it is used discount the liabilities (what is owed) that are presented on the fund’s financial statements, so if it is too low, the liabilities appear artificially high and, most importantly, the required taxpayer contribution toward said liabilities is much higher than it needs to be.

The exact value of the discount rate should be based on the fund’s historic, long-term average rate of return in its investments.  Generally, this period should be rather long, usually 20 to 30 years; provided, of course, the pension boards has accurate records going back that far.
The latest fad in pension “reform” is to lower this rate, sometimes considerably.  The belief in is that doing so will somehow be “safer” or “more cautious”, which is why a lot if well intentioned, thought misinformed, conservative activists have been drawn to it.
The problems of artificially lowering the rate of return are significant and real, while the benefits are questionable at best.

First problem is higher taxes.
There is a direct link between the rate of return used and the amount taxpayers much contribute every year: the lower the rate used, the more residents and businesses must pay.  There is no way around this relationship. So understand that if some well-intentioned bureaucrat wants to lower it be even 1%, the taxpayers in that city or township would then be forced to increase annual payments to the fund, which, depending on the fund size, could be an extra million dollars a year or more.

This extra money can really only come for one of two places, higher property taxes or service reductions; so either homeowners and businesses pay more property taxes or needed services, such as road repair, are cut.
For most areas, the fragile housing market is just now starting to recover, the last thing we need to do is stunt its recovery by large property tax increases.

 While I strongly support closing local pension systems to new entrants, understand that this does not magically make existing unfunded liabilities go away – they must be paid and the assumed rate of return determines how much taxpayers will be paying.So even under the scenario where a traditional pension fund is replaced by the 401 (k) style plan, local residents and businesses could still end up paying hundreds of extra dollars a year in property taxes if too low an assumed rate of return is used to calculate the remaining balance.

Second, there exists a real danger to the taxpayers in overfunding. Pension boards in Michigan have quite a bit of autonomy and are, as a practical matter, usually controlled by the employee groups; and it this autonomy which confers upon them a good deal of discretion in how to deal with any overfunding; overfunding which becomes “extra” money to the board, who historically find a way to spend it to enrich their supporters. 

Perhaps the best known example is the infamous 13^th Check paid by Wayne County.  Even though not required by any contract, the 13^th Check was a bonus paid annually to existing retirees.  One of the main justifications for doing so was that there was “extra” money in the pension fund, so why not spend it. 

More commonly, the “extra” money in the pension fund is allocated to existing employees in the form of enhancements regarding how their pensions are calculated.  One frequent methodology is to allow unlimited overtime or unused vacation time to be included in their final average compensation; thereby increasing or “spiking” their pensions considerable. 

Another disastrous use of this “extra” money advocated by pension boards is a DROP, or Deferred Retirement Option Program, which allows employees to collect a full pension while still working. As long as pension boards are allowed to treat overfunding as “free money”, overfunding can be just as costly to taxpayers as underfunding.

Third, it is simply wrong and not supported by the available data. 

The assumed rate of return is supposed to be based upon real data, namely, decades of investment return data by the fund or similar funds.  It is not supposed be based on outliers (a few bad or good year), but on a long-term average.  Nor, should it be based on or influenced by the investment experiences of individual persons.  I mention this last point since many well-meaning activists like to suggest that since they only make 1% in back CD’s or their personal portfolio only made 4% last year, the pension should reduce its rate in kind.  Pension funds have a diverse investment pool including foreign currency, stocks, real estate and exotic investment products too myriad to list, and employ complex hedging strategies to achieve a fairly consistence average return rate over diverse economic conditions.  A pension fund is nothing like the investment products used by most individuals.  Another mistake many individuals make is to focus on bond yields (currently very low) and use this as a reason to reduce a rate of return for a pension fund.  Traditionally, stock and bond yields move in opposite directions, so when bond yields go down, fund managers just move assets from bonds and into stocks.  A recent report by JP Morgan indicated that US corporate pension funds increased their funding status from approximately 77% to almost 100% in just two years, primarily due to gains in the stock market.

The data over the last several decades strongly supports the 8% average rate of return used by most pension funds both in Michigan and throughout the nation.  According to the National Association of State Retirement Administrators, the median, average annual rate of return for all public pension funds was 8.5% in the 25 year period 1986 to 2011.  The average for the state of Massachusetts’s pension funds has been 9.6% since 1986.  Even the much maligned CalPERS (one of largest funds in county) posted a 8.38% average 20 year return.  These returns are reported by the funds themselves, so perhaps it is healthy to be skeptical.  Even sources outside the pension funds themselves support the 8%.  The Standard and Poor’s Composite Index retuned 10.14% for the period 1926 to December 31, 2013.  Even the Wall Street Journal recently reported that the 30 year annual return of a large bundle of stocks selected by Morningstar was 11.1%.  The data is pretty conclusive that an 8% projected rate of return is more accurate than the 4% or less some are suggesting.

Forth, this is distracting us from the real issues and does nothing to fix the underlying problems with most municipal pension funds.  The demise of a municipal pension fund in our state usually follows a simple, basic path: the municipality will contribute to the fund based upon an employee’s base salary, say $50,000; then, usually just before retirement, an enhancement is added (this can take the form of allowing overtime to be included, unused vacation pay, a ceremonial promotion, or any of a number of things) and these enhancements now increase the pension to say $80,000.  It is the gap between the $50,000 pension the funding was predicated upon and the actual pension of $80,000 that produces the shortfall.  This $30,000 may not sound like much, but it paid every year the person receives his or her pension; so $30,000 a year for 40 years is a $1.2 million shortfall in the fund for just one person!

The other problem starting to afflict more and more pension funds relates to mortality assumptions: retirees are simply living longer than the pension board had predicted. Every incident of pension distress I have seen here in Michigan came from one, or both, of these causes.  I honestly cannot find one fund where distress was caused by investments not achieving an appropriate, long-term return on investments. 

(If you know of any, please send me an email , because I have been looking and still cannot find even one.)

              
This brings us the so-called Grand Bargain in Detroit and the desire by some to use almost $200 million in state money to bail-out Detroit.  So why are they asking citizens from Grand Rapids, Plainwell, Graying and every other city and township in the state to contribute their hard earned tax dollars to Detroit?  It seems all this money is going toward the two Detroit pension funds since Orr wants to lower the rate of return to around 6.5 % for each fund.  As demonstrated earlier, all lowering this number does is increase the amount of money the taxpayers are forced to contribute.  Another issue with the $200 million Orr wants state taxpayers to spend is that it is based on old valuations of the funds, valuations that likely do not reflect recent gains in the stock market.  It seems rather plausible that is Orr used a rate of return based upon historical averages (closer to 8%) and applied to a more recent valuation, the $200 million in bail-out money would not even be needed.

 In summary, there is no need to pay higher taxes to fix a problem that does not even seem to exist.  Instead, we should focus on the true and proven problems in our pension system, such as pension spiking, and address those. This current fad of trying to manipulate the rate of return in pension funds for political reasons needs to go the way of other past fads such as popped collars on dress shirts.

Time to Prepare to Appeal Your Assessment

The Wayne County Taxpayers Association is about to start scheduling our  tri county seminars on “How to Appeal Your Assessment”. The housing market across the state has been tanking. Foreclosures are up for nonpayment of mortgages. They are also up for non payment of taxes. The rules allow foreclosure after two years of nonpayment of taxes. Many people have lost their lifetime investment due to job loss or wage cuts. This is a buyer’s market, if you can find someone to finance you.  Tax increases are expected to be requested at all levels of government.

Many people chose to ignore their right to appeal their SEV (State Equalized Value) because their taxes had been dropping along with their property value. That does not mean that you are properly assessed.  The passage of Proposal A in 1994 limited the taxable value increases to the rate of inflation or 5% which ever is less. Remember, the assessment cap is removed when the property changes ownership. New owners are stuck paying taxes based on the State Equalized Value.
Don’t forget, if you live in the City of Detroit, you must first appeal to the Board of Assessors before mid February to appeal to the Board of Review in March. Everyone else should call their city or township and inquire when their Board of Review will be meeting. It should be sometime in March. Make sure you do the work necessary to make a successful appeal. You should be able to get sales that have occurred in your area from a local real estate office or the city assessor. You should also be able to see the SEV of other houses in your area and the worksheet they keep on your home to insure accuracy of information.

Home values are starting to increase.  Millages will start to increase because of inflation that may soon get into double digits.  Headlee rollbacks will become a thing of the past and truth in taxation will be the nightmare of the future. How they intertwine will be handled in our seminars.

Please check our  website in the future for a list of the locations at which we will be presenting the seminars. For more information call 313-278-8383.  If you wish to sponsor or hold a seminar please contact us. We will be happy to present to your church group, public service group, large or small. We have a Power Point presentation and the equipment necessary to present the information. We are asking a dollar donation per person to cover the cost of the printed material. We think you will find our presentation worthwhile.

Recall Change Could Be Unconstitutional

Recall Change Could Be Unconstitutional: [...] More: Recall Change Could Be Unconstitutional


If everyone, including the legislature, were doing their job, none of this would be necessary.  By passing this law it makes it almost impossible for anyone that doesn't have a ton of money behind them or an army , such as a union, to have a recall.   The State Constitution says that the language must be clear period. It is up to those for or opposed to the recall to determine the outcome of the recall.   The validity of the argument will be determined at the polls.  The self righteous know it all attitude of some of our legislators is what gets them in trouble in the first place. They forget they represent us not themselves.

I should attempt to recall someone just to have standing in the courts to throw this self serving law in the garbage where it belongs. If they vote for something they should believe in it enough to explain it and defend it.  If they neither believe in it nor can defend it they should not have voted for it.  It was difficult enough to recall someone under the old law.

Wayne County Proposals and Judges In Our View

The November ballot will be an extremely long. It behooves you to study it before youe  go to vote.  This is our take on the Wayne County Questions and conservative judges.

FORM OF THE WAYNE COUNTY

BUDGET AND APPROPRIATION ORDINANCE  

"SHALL THE WAYNE COUNTY HOME RULE CHARTER BE AMENDED TO ADD A NEW SECTION 5.120 AND TO AMEND EXISTING SECTION 5.134 TO AUTHORIZE THE WAYNE COUNTY COMMISSION RATHER THAN THE WAYNE COUNTY EXECUTIVE TO ESTABLISH THE FORM (INCLUDING BUT NOT LIMITED TO LUMP-SUM AND LINE-ITEM) OF THE COUNTY BUDGET AND APPROPRIATION ORDINANCE; AND TO REQUIRE THE COUNTY COMMISSION TO ESTABLISH THE FORM OF THE BUDGET AND APPROPRIATION ORDINANCE BY DECEMBER 7, 2012 AND TO ADOPT CHANGES TO THE FORM AT LEAST TEN MONTHS BEFORE THE BEGINNING OF A FISCAL YEAR TO BE EFFECTIVE FOR THAT FISCAL YEAR; AND TO ALSO AMEND SECTION 5.121 TO REQUIRE THE COUNTY EXECUTIVE  TO PREPARE AND SUBMIT THE BUDGET AND APPROPRIATION ORDINANCE  IN THE FORM ESTABLISHED BY THE COUNTY COMMISSION?"

YES

INDEPENDENT EXTERNAL AUDITOR

"SHALL SECTION 3.119(E) OF THE WAYNE COUNTY HOME RULE CHARTER BE AMENDED TO REMOVE THE RESTRICTION THAT PROHIBITS AN INDEPENDENT EXTERNAL AUDITOR FROM PROVIDING AUDIT SERVICES TO THE COUNTY FOR MORE THAN EIGHT (8) CONSECUTIVE YEARS; AND FURTHER TO REQUIRE INDEPENDENT EXTERNAL AUDITORS BE SELECTED BASED ON A COMPETITIVE PROCESS IN ACCORDANCE WITH THE COUNTY'S PROCUREMENT ORDINANCE?"

YES

MEMBERSHIP ON THE WAYNE COUNTY RETIREMENT COMMISSION

"SHALL SECTION 6.112 OF THE WAYNE COUNTY HOME RULE CHARTER BE AMENDED TO EXPAND THE WAYNE COUNTY RETIREMENT COMMISSION'S MEMBERSHIP FROM 8 TO 9, ADDING AS A MEMBER THE WAYNE COUNTY TREASURER OR HIS OR HER DESIGNEE; AND ALSO TO AUTHORIZE THE CHAIRPERSON OF THE WAYNE COUNTY COMMISSION, WHO IS ALSO A MEMBER OF THE WAYNE COUNTY RETIREMENT COMMISSION, TO APPOINT A PERSON TO SERVE AS HIS OR HER DESIGNEE ON THE RETIREMENT COMMISSION; AND TO FURTHER ALLOW EMPLOYEES AND RETIREES OF THE WAYNE COUNTY AIRPORT AUTHORITY TO VOTE FOR AND SERVE AS  MEMBERS OF THE WAYNE COUNTY RETIREMENT COMMISSION (WITH NO MORE THAN ONE MEMBER BEING AN AIRPORT EMPLOYEE OR RETIREE) UNTIL SUCH TIME AS THE AIRPORT AUTHORITY ESTABLISHES ITS OWN RETIREMENT SYSTEM OR PENSION PLAN?"

YES

REMOVAL OF THE WAYNE COUNTY EXECUTIVE FROM OFFICE BY THE GOVERNOR

"SHALL THE WAYNE COUNTY HOME RULE CHARTER BE AMENDED TO ADD SECTION 4.124 TO AUTHORIZE THE GOVERNOR TO REMOVE THE WAYNE COUNTY EXECUTIVE FROM OFFICE FOR THE SAME REASONS AND WITH THE SAME DUE PROCESS AS PROVIDED BY LAW FOR THE SHERIFF, PROSECUTING ATTORNEY, COUNTY CLERK, REGISTER OF DEEDS, AND COUNTY TREASURER?"

YES

THE WAYNE COUNTY COMMISSION'S POWER TO APPROVE COMPENSATION

"SHALL SECTION 3.115 OF THE WAYNE COUNTY HOME RULE CHARTER, WHICH SETS FORTH THE POWERS AND DUTIES OF THE WAYNE COUNTY COMMISSION, BE AMENDED TO INCLUDE THE POWER AND DUTY TO APPROVE ALL COMPENSATION OF EVERY EMPLOYMENT POSITION IN THE COUNTY, UNLESS THE COMPENSATION IS ESTABLISHED BY STATE OR FEDERAL LAW?"

YES

WAYNE COUNTY COMMUNITY COLLEGE DISTRICT

MILLAGE PROPOSAL

Shall the limitation on the amount of taxes which may be imposed on taxable property in the Wayne County Community College District be increased by one dollar per thousand dollars (1 mill) of the taxable value of all taxable property in the College District for a period of ten (10) years, the tax years commencing July 1, 2013, to July 1, 2022, inclusive, as new additional millage to provide funds for community college purposes authorized by law?  It is estimated that 1 mill would raise approximately $21,746,964 when first levied in 2013.

NO

Justice of The Supreme Court-8 Year Term (2 positions)

There are eight candidates for two openings.  Justice Stephen Markman is a conservative Justice running for re-election to his current seat.  The second 8 year term position is for the seat currently held by Marilyn Kelly, who cannot be reelected due to age limitations. Of the other candidates running for that seat I recommend Judge Colleen O’Brien.  I recommend a vote for:

·         Justice Stephen Markman

·         Judge Colleen O’Brien

Justice of The Supreme Court-Partial Term

Justice Brian Zahra, a conservative Justice who was appointed last year by Governor Snyder, must now be elected to complete his partial term ending 1/1/2015.  Justice Zahra deserves to be elected to complete his term.  My recommendation is a vote for:

·         Justice Brian Zahra

3^rd Circuit Judge of the Circuit Court Incumbent–6 yr. Term (16) positions 

There are seventeen (17) candidates for the sixteen (16) positions.  There are five (5) judges in this group of sixteen incumbents whom I consider to be conservative.  They deserve your vote even if you don’t vote for any of the others.  They are:

·         Annette J. Berry

·         Gregory Dean Bill

·         Kathleen M. McCarthy

·         Maria L. Oxholm

·         Daniel P. Ryan

3^rd Circuit Judge of the Circuit Court Non Incumbent – 6 yr. Term (3) positions 

There are six (6) candidates for these three (3) positions.   There are only two of them whom I consider to be conservative.  I would encourage all conservative voters to vote for:

·         Kevin Cox

·         Kelly Ann Ramsey

3^rd Circuit Judge of the Circuit Court Incumbent–Partial Term ending 1/1/2015 (2) positions

There are three (3) candidates for two (2) positions.  Of the two who are incumbents, Margaret M. Van Houten is the only one that I consider to be conservative.

·         Margaret M. Van Houten

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.

Please Help

Just click on this link to locate your legislators. You can also copy and paste this to your browser.
http://www.legislature.mi.gov/%28S%28ufs3fxz5g22iryuvf0icrneo%29%29/mileg.aspx?page=home

We can stop this legislation. Right now many cities and townships share services and procurements without creating authorities. That is why we elect individuals to make decisions for us.  Please call, email or visit your legislators.

Please pass this information on.

MICHIGAN LEGISLATIVE LOBBY DAY & TAXPAYER TEA PARTY RALLY

It's almost here. Thursday April 14, is our chance to recommit to our desire for fiscal intergrity by our state and federal governments.  We need you to join us in Lansing.  Americans for Prosperity and 40 Tea Party , 9-12 and taxpayers groups are sponsoring this event.  It is difficult for many to get time off from their jobs and for some to give up income to join us, but for those who can, we appreciate your support.

You can find the agenda for the day and a list of the great speakers by clicking here. Now is not the time to leave it to someone else.  Everyone is needed and the legislators need to know they have your support when they stand up for you. Don't let them down. Help those who are on the fence to make a decision for taxpayers and not special interests.

The decision to make the event on the 14th  instead of  the 15th was made because the legislature will be in session. It will also give those who want to have a taxday rally the oportunity.  Make sure they know we will not go away.

Now Is The Time to Tweek

This is the first time since 1994 that the Taxable Value of property has been so near the State Equalized Value of Property. While there are laws prohibiting the increase of taxes without a vote of the people there is no law prohibiting the reductions of taxes.  It is time to restore justice and uniformity. In 1994 Proposal A passed.   It was concerned with the taxable value of individual property and the way we finance schools. It capped annual increases in your taxable value at the CPI (inflation) or 5% whichever is less. Millages are applied against the taxable value.

The red line in the graph is the State Equalized Value (SEV) and the Blue is the Taxable Value.  For years, they have been talking about tweaking Proposal A.  The problem is that suggestions were not always in the interest of the taxpayer. The suggestion that I have found to have the most value is the elimination of the "pop up". Under Proposal A, whenever property changes hands the new owner's taxes "pop up" because he now must pay on the SEV.  If you notice in the graph there was quite a difference between the SEV and Taxable Value when property was increasing in value.  As a result, two identical houses in the same subdivision could be paying dramatically different taxes because one person had been living in the house since 1994 when Proposal A Passed and another bought a house at the height of housing values. What that means is that there could have been almost a 50% difference in the amount of taxes paid for the same services.

The legislature should act now to eliminate the "pop up". and bring everyone down to 50% of their true cash value which is what the SEV should be and which is also in most cases the present Taxable Value. We need to bring some sanity back to the system.  The Constitutional limitation that prohibits increases in taxable value to inflation or 5% which ever is less would remain in effect.  Revenue for government units woulds be regulated by the Constitution (Headlee Amendment) and voted millages by the people.

A Special Invitation

We have been finding it difficult to find a location near Detroit.  Leon's Family Dining, where we have our membership meetings, has agreed to lend us his banquet room.  I had indicated that I would ask everyone to purchase something.  You can have dinner, desert  or just a cup of coffee. The meeting is at 7:00 pm on February 22 at 23830 Michigan Ave.  We have reduced our $2.00 donation to $1.00 on this occasion.

If you have any questions, please feel free to call 313-278-8383. If you are unable to attend look on our website for our other scheduled seminars. http://www.wctaxpayers.org/.

Don't Miss the Boat

The time is now to learn how to appeal your assessment. The Comsumer price Index has increased 1.7% (inflation) but your home value has continued to decline. Many people can not afford to hire someone to appeal for them and that is why we have designed a seminar that teaches how to do it yourself.
If nothing else, it will give you the tools to find out if it is worth your while to hire someone else to do it.

You will have to be on the defensive for several years to come, when it comes to your financial security. Take the time to secure what is the biggest investment for most people - your home.

Go to our website  for a location nearest you. We will be adding additional locations through the end of the month.  

While your at it, stock up on some food and paper products. Inflation is expected to increase. Anything you can buy and keep now will save you money in the future.

It Is Time to Prepare to Appeal Your Assessment

Michigan Taxpayers Alliance and the Wayne County Taxpayers Association are about to start scheduling our state tour on How to Appeal Your Property Assessment. The housing market across the state is tanking. Foreclosuresare up for nonpayment of mortgages.They are also up for non payment of taxes. Since the State

has changed the rules to allow foreclosure after two years of nonpayment of taxes, many people have lost
their lifetime investment due to job loss or wage cuts. This is a buyer’s market if you can find someone to finance you. Home prices are dropping so they can be sold and be affordable. Tax increases are expected to
be requested at all levels of government.

Many people chose to ignore their right to appeal their SEV (State Equalized Value), which should be half of the true cash value,because they are being taxed at the Taxable Value which was capped with the passage of Proposal A in 1994. This limited the taxable value increases to the rate of inflation or 5% which ever is less. Property Values have dropped so much that it is almost advantageous for everyone to appeal their assessment.

Remember, the assessment cap is removed when the property changes ownership. New owners are
stuck paying taxes based on the State Equalized Value.

Don’t forget, if you live in the City of Detroit, you must first appeal to the Board of Assessors before mid February to appeal to the Board of Review in March. Everyone else should call their city or township and inquire when their Board of Review will be meeting. Make sure you do the work necessary to make a successful appeal. You should be able to get sales that have occurred in your area from a local real estate office or the city assessor. You should also be able to see the SEV of other houses in your area and the worksheet they keep on your home to insure accuracy of information.

Please check our website in January for a list of the locations at which we will be presenting the seminars. For more information call 313-278-8383.  If you wish to sponsor a seminar please contact us.

Awarding Those Who Do a Good Job

 

It is really important to award people who do a good job.  The four people we have decided to award at the 2nd Annual Michigan Taxpayers Alliance and Wayne County Taxpayers Association Award Banquet have several thing in common.  They are intelligent, well versed and, most of all, trustworthy. We will have a Post Mortem award for Chet Zarko. Chet was known as the original Michigan conservative blogger. Zarko Research and Consulting was a Michigan-based political, marketing, and design service run by freelance investigative writer Chetly Zarko. In mid July Chet passed away at the young age of 39 and it was a huge loss to to everyone.  Those on the right and the left respected him and trusted him.
He pulled the original FOIAs that led to the discovery of the False Tea Party Group.

Rep. Tom McMillin (R-Rochester Hills) is a standard bearer for fiscal conservatism in the state House. He is also widely recognized as the de facto minority leader opposing House Democrats’ plans to increase the cost and power of government for the past two years in Lansing. Rep. McMillin stood up to help lead battles against Obamacare, against corporate welfare, against excessive spending, and for transparency in government spending.

Joe Lehman, President of the Mackinac Center for Public Policy, for the Center’s new e-newsletter, Capitol Confidential.Have you heard of Capitol Confidential? The Mackinac Center created ‘Cap Con’ to fill the void left by lazy and/or biased news media and, boy, have they! A rapidly growing number of citizens turn to this online news source every day for updates on government policy and investigative journalism that exposes government corruption. Cap Con isn’t a blog. It isn’t opinion. It is real, hard-hitting investigative journalism on behalf of taxpaying citizens.

Jason Gillman was the epitome of the ‘tea party activist’ in 2010. He blogs for Right Michigan website where he helped expose the fraudulent “Tea Party” political trick that was attempted by the MI Democratic Party. Gillman’s  was instrumental in keeping the fake Democrat Party Tea Party off the ballot this past November. In addition, Jason Gillman was a leader organizing tea party rallies and protests in Traverse City that played a key role in pushing Congressman Bart Stupak toward retirement.

Please join us. These men have done so much more for us and if you checked there work they were always right on.  If we fail to recognize people like this, they and their families will never know how much we appreciate them.

Buy tickets online here

or mail a check to:

MI Taxpayers Alliance

46116 Lookout Drive

Macomb, MI 48044

(Please make notation “banquet” on your check)

The DROP Shell Game

Which nut has your money?



Please pass this on to those you know in Dearborn Heights.

Dear Taxpayer:

As a resident of Dearborn Heights you may be aware that in 1965 the voters adopted PA 345 of 1937, which allows for a millage in order to pay for police and fire personnel retirement benefits. Over the years, generous contracts with the promise of exceptional retirement benefits have been negotiated for Dearborn Heights police and fire personnel and the taxpayers have shouldered the costs for those benefits based on the vote of residents in 1965.

IF YOU DON’T WANT YOUR PROPERTY TAXES TO INCREASE PLEASE READ BELOW AND TAKE ACTION!

Please pass this along to your neighbors.

Scott Hagerstrom
State Director-Michigan
Americans For Prosperity
www.michiganafp.com

Background:

Three years ago during contract negotiations the City agreed to what is known as a DROP program (deferred retirement option plan). This program encourages police and fire personnel who are nearing retirement age to take an early retirement, thus moving the liability for their benefits off the regular City personnel budget and to the taxpayers through the police and fire millage provisions in PA 345. Once the burden of these employees’ benefits are moved off the City of Dearborn Heights’ books, the city frequently rehires the same personnel back as contractors.

The intent of PA 345 was to continue to support our city’s heroes once they have retired. That’s not what is happening today. Today, the City of Dearborn Heights is playing a shell game with your hard-earned tax dollars to fund EXISTING police and fire personnel benefits so they can make room on the city’s books for other expenditures.
In other words, while everyone else is figuring out ways to make the hard decisions in their personal budgets during this painful recession, the clever politicians at the City of Dearborn are simply moving liabilities off their books at the expense of the taxpayers through a loophole and NOT asking the taxpayers if they’re willing to support this.

Add to that the fact that in a down economy the investments and interest payments to the PA 345 funds are low, meaning the taxpayers must put more in to fund the liabilities. The millage this year alone increased by $2.30 for every $1000 in taxable property value, and because the recently arbitrated contract extends the DROP programming that millage rate is certain to continue to increase.

What does all of this mean in the real world? Former City of Taylor Mayor Cameron Priebe estimated that the PA 345 provision in their city meant that each retiree currently costs the taxpayers of Taylor more than $4.5 million (they currently have around 100 police and fire retirees). In Taylor, residents paid 1.2 mills in 1979 to support the PA 345 provisions; today they pay 6 mills and that number is expected to increase substantially. What does that mean in dollars and cents? A single resident in the City of Taylor with property valued at $150,000 will pay $450 this year just to support the police and fire retiree benefit provision of PA 345.

We MUST reign the liability of this fund in NOW. We can continue to support the retirements of the men and women who risk their lives to protect us within the provisions of PA 345, but the City of Dearborn Heights MUST get their house in order and stop using loopholes to shift the liability of the non-retired police and fire workforce to a millage provision.

Tell Dearborn Heights Mayor Daniel Paletko that you will support a referendum to repeal PA 345 if the DROP program is allowed to continue.

You can contact the Mayor of Dearborn Heights, Daniel Paletko, and city council in the following ways:
E-mail: dpaletko@ci.dearborn-heights.mi.us

Regular mail: City of Dearborn Heights
6045 Fenton
Dearborn Heights, MI 48127-3294
Telephone: (313) 791-3490
Facsimile: (313) 791-3491
Kenneth R. Baron
Council Chair
(313) 565-0420
FAX (313) 565-9184
(313) 791-9924
Janet Badalow
Chair Pro-Tem
(313) 791-9923 mailto:dh4badelow@comcast.net
Elizabeth Agius
(313) 791-9922
Tom Berry
(313) 563-6100
(313) 791-9925
Marge Horvath
(313) 791-9927
Margaret Van Houten
(313) 791-9928
Roy Pilot
(313) 274-4205

History Repeats Itself

At times I identify with Sisyphus, a figure of Greek mythology who was condemned to repeat forever the same meaningless task of pushing a boulder up a mountain, only to see it roll down again.

I think it was 1983 the first time I asked the Attorney General's office to enforce the Uniform Budgeting Act in Wayne County and demand that they abide by the Constitution and balance their budget. At that time they could not because they did not find they were in violation. They were not using standard accounting practices and no one could figure out their budget.

An audit was conducted and they could still not figure out what they were doing. The State developed the five year plan for balancing the budget. This kind of plan has been used over and oveer again. They switched to standard accounting pactices but that was not the last time no one cound figure out what was going on. At what point can we expect Wayne County to be accountable to the law. Poor services, excessive salaries and contracts, corruption, and mismanagement, are not reasons to give them a pass.

I don't care if the executive branch, the commission or the unions take the responsibility. I want the law enforced. Not only is the county facing a $105 million deficit in a $558 operating budget out of control but their unfunded liabilities are unsustainable. Their $2.1 billion dollar overall budget is down 6.4% since 2000. The County has also lost population,according to the estimates.

The Ways and Means Committee Chair, Edward Bioke, says they will be taking action soon. Do not include a tax increase in your deliberations commissioners - we are not in the mood and it is beyond our ability.

RESA Wants Millage Increase

The Wayne County Intermendiate School District RESA wants a millage increase. Suprisingly, they are getting school districts to agree that they want more money. The Detroit School Board still believes, or at least claims to believe, lack of money is their problem. I guess more than $11,000 per student in Detroit is not enough to expect some kind of resonable education. This is insanity.

How did this come about? With the passage of Proposal A and the change in how schools were funded, the only way to increase operating millage was on a county wide millage. Exempt from this were sinking funds and bonds which were still allowed on a local district level and are used unmercifully.

The County millage could be increased up to 3 mils with the approval of the districts that together make up more than half the student population of the county district and then it would be placed on the ballot. We should be grateful they are so considerate to ask for only 1.9 of the three mills allowed. That is only $1.90 for every $1,000 of taxable value on your property. If your taxable value is $50,000 this means you will only have to pay $95 more per year. This millage will only generate $92 million. It will then be distributed back to the districts based on student population. More redistribution of wealth with no accountability and guarentee of better education.

If we let this happen we deserve it. Accountability first. If we don't get accountability, we are throwing good money after bad.

I Appeal to You

The Michigan Taxpayers Alliance and the Wayne County Taxpayers Association have been busy scheduling seminars on " How to Appeal Your Property Assessment". We only have a few more to schedule around the state.

If you are interested in seeing the schedule go to our website and click on the picture of the little pink house.

We have a PowerPoint presentation, a handout, and question and answer sessions at all of them. If you are going to appeal you might as well learn what will help make it successful.

We will explain the difference between the Headlee Amendment and Proposal A, Truth in Taxation and how they determine the value of your property. You might also make suggestions on how we can improve the program. We had our first one in Detroit in the middle of January. I am looking forward to seeing you.

Ficano Is It True?

The following was sent as a comment to one of the blogs on this site. I wish to know if anyone knows the answer to these questions. I don't believe that running it through a true or false search engine would have these answers but the commission should be able to find out.

The Wayne County Commissioners should investigate Mr. Ficano’s over the top mishandling of public funds for his own personal private benefit. A media firm in Clawson, Michigan was sub-contracted to produce this Ficano “campaign commercials” masquerading as a Public Service Announcement.http://www.facebook.com/video/video.php?v=264826959408

The media firm ----

Magnetic Cinema was retained by FMG. Is FMG the same Oakland County Firm FMG (First Media Group) that is also a Wayne County Airport Authority Contractor? Is it a coincidence that FMG owner Delora Hall Tyler also hosts a radio program on WCHB with Ficano gal pal Mildred Gaddis?

1. Did this contract and sub-contract go out for bid?

2. What county employees were involved with this?

3. How much was paid, including commissions, to produce these spots?

4. What budget did they come out of?

5. What was the purpose of that budget as originally approved by the CountyCommission?

6. Were federal funds used?

It is time to put a stop to Ficano’s Mass Manipulation of the Detroit Media Market.
Why all of these Flu Shot Radio and TV ads surrounded by children??? Did the parents give permission for this possible political exploitation? Is this “PSA” running in free air time or was even more money squandered to make paid media buys? HOW CAN A BROKE COUNTY AFFORD FICANO THIS INDULGENCE? Flu season was over in Nov/December. But campaign season is just starting. Ficano may have broken the law if he shifted federal funds from free flu shots for the poor to producing these "political commercials". Did he once again use the media company owned by Mildred Gaddis (1200 AM) or Kevin Deitz to produce these campaign commercials that pretend to be Public Service Announcements??? Is this a clear violation of Michigan Campaign Finance Law or FCC rules? If these were truly public service announcements then perhaps the public health director or a nurse should be doing them --- not Freeloading Ficano. When will the TV Stations wake up and realize that Ficano is duping them again to plastering his Face all over the air for free? . Amazing how these “PSA” always start up when he is running for office. Oh well I guess he is desperate for free air-time since he does not have Benny Napoleon to put in his race this time to split up the black vote. (Ricardo Solomon )

Is this the ranting of a disgruntled employee? Is this the rantings of an opponent? We may soon find out.

How to Appeal Your Assessment Seminar

Well we finally found a place for our first seminar in Detroit. We don't have much time to advertize, so if you will help us spread the news we would appreciate it. Send it to those who live in the area.

Make sure to check our website for updates on other locations as we set them up.


How to Appeal Your Assessment Seminar

Type: Education - Workshop

Where: Redford Library in Detroit
21200 Grand River / 6 Mile
When: Saturday, January 16, from 3:30 pm to 5:30 pm


This is the first in a series of seminars on How to Appeal Your Property Assessment sponsored by the Michigan Taxpayers Alliance and the Wayne County Taxpayers Association. This was scheduled in early January because the people of Detroit must appeal to the assessors review in February to appeal to the Board of Review in March. We had great success with our presentations last year and expect this year will meet or exceed last year’s expectations.

A powerpoint presentation and hand out will facilitate out program. A question and answer session will be held at the end.

We are asking for a $1.00 donation for the cost of the material.

Check for future seminars as they are scheduled on our website.
http://www.wctaxpayers.org
For more information call 313-278-8383

Assessment Time

Michigan Taxpayers Alliance and the Wayne County Taxpayers Association are about to start scheduling our state tour on How to Appeal Your Property Assessment. Here is the Problem. We have to schedule a seminar in Detroit in January because they are the only city that requires an appeal at the Assessors Review in early February before an appeal can be made before the Board of Review in March. We need a place to hold it.

Last year,we reserved a room at Wayne County Community College and they cancelled on us the day we were going to hold the seminar. We need a place in Detroit to hold our seminar. I need your help to find one. It can be a church hall. It can be an auditorium. It needs to be in a location where the people of Detroit will be interested in coming.

If other are interested in having one in their community please contact us and we will try to hold one or let you know where the closest one to you is located when we finalize our schedule.

Contact us at wctaxpayers@comcast.net or 313-278-8383.

I Must Be Precient

When the effort for passing Proposal A was in full force in 1993,I worked my heart out trying to defeat it. Some people thought I was crazy. There was no question that assessments were out of control as well as the property taxes they generated. My argument then is the same as it is now. It was the method they chose that I was opposed to. A tax reduction could have been acheived by something as simple as reducing taxes from 50% of true cash value to say 40% of the true cash value of the property.

They on the other hand had to make it complicated and bate one segment of the population against the other. While Proposal A did slow the taxation rate by reduceing millage rates and slowing taxable values for some, other were picking up the burden as property changed hands through sales or inheritance. Right now, two families living in identical houses in the same subdivision may be paying drastically different amounts of taxes for the same services because one person has lived in their house longer. The crash in our property values has helped to aleviate that problem for some but it has not eliminated it. When we go to sell our homes there are fewer buyers because the tax will then be applied to the State Equalized Value of our property making the payments to expensive.

Proposal A had all kinds of enabling legislation that went into effect. We got an increase in the sales tax and gas tax. Inflation helps to increase those taxes. Given the way the federal government is spending money, we will soon see a huge increase in inflation and taxes. We got a different rate of tax on our non homstead property. Another thing that came to fruition was an increase in requests for bonds and sinking funds for schools, which are still allowed.

Due to the decline in proprty values,you will now begin to see more Truth in Taxation Hearings. Local governing bodies can increase millage rates up to the maximum allowable truth in assessment / equalization millage by simple ordanance or resolution instead of a vote of the people. This can be done because the revenue generated under Proposal A will not equal last years revenue plus inflation without increasing the millage. This is also true of all the other government millages in Michigan.

Another interesting restriction that was created under Proposal A was a requirement that no increase over the then authorized operating millage could be passed unless it was done on an intermediate school district level. Each County wide region is allowed a 3 mil enhancement if approved by the voters.
Multi-district tax a tough sell, but that could change

By DAWSON BELL

FREE PRESS STAFF WRITER

With state aid in peril and federal stimulus funding that came to the rescue this year set to expire, is it time for Michi­gan’s local school districts to turn again to local taxpayers?

Some have exercised a rare­ly used option under 1994’s Proposal A to seek multi-dis­trict millage hikes.

Very few have succeeded.

The schools of Washtenaw County — including Ann Ar­bor, Ypsilanti and Saline — asked voters to approve en­hancement mills on Nov. 3. Property taxpayers in the Washtenaw Intermediate School District would have paid an extra 2 mills for 5 years had the request been ap­proved.

It passed in Ann Arbor, but got hammered elsewhere. The final tally was 57.4% no to 42.6% yes.

“We knew that this was a bad time” to be asking taxpay­ers for more money, said Ann Arbor Public Schools commu­nications director Liz Margo­lis. “But we just had no choice.” With state help in decline as state revenues shrink and the likelihood of more bad news to come, a countywide discussion had been under way for a year, Margolis said. Ann Arbor vot­ers had a history of support for school millages, and district of­ficials led the campaign.

But while Ann Arbor voters kept their reputation intact, the measure lost by margins of up to 3-1 in some out-county communities such as Milan and Lodi Township. Margolis said schools won’t try again soon and would give it another shot only if every school dis­trict in the intermediate school district, or ISD, would “buy in and really try to sell it.”

So far, talk about enhance­ment- millage requests — re­gions can ask for as much as 3 mills and use the money for any purpose — has been muted around the state.

David Martell, executive di­rector of the Michigan School Business Officials, said that for years after Proposal A took ef­fect, school funding was secure and obstacles to winning re­gional approval for tax hikes were so high, that few en­hancement elections were held.

“It’s a very, very hard sell,” Martell said, chiefly because the cost and benefits are usu­ally unbalanced across an ISD because the tax is assessed on property wealth and distribut­ed on a per-pupil basis.

But financial conditions are rapidly worsening in so many districts that Martell said the bar for passing a millage could drop.

“I don’t know why” en­hancement- millage requests “haven’t taken hold more re­cently,” he said. “I think once parents start to feel the real impact of the cuts that are coming … they might turn to something like that.”

Voters in Kalamazoo Coun­ty approved a 1.5-mill regional tax in 2005 and renewed it by a wider margin in 2008. But Kal­amazoo Regional Superinten­dent Ron Fuller said that un­less economic anxiety in Michi­gan lightens by then, “it will be a tougher sell a year and a half from now” when it is scheduled to expire again.

Doug Drake, a financial ana­lyst with Public Policy Associ­ates in Lansing and former state budget official, said that if state lawmakers decline to approve higher taxes to re­store school funding, more dis­tricts may have to consider joining for enhancement ef­forts.

“When the checkbook in the sky is empty, you just may have to think about going door-to­door. There aren’t very many other options,” Drake said.

Governor Granholm and the legislature understood this when they refused to reduce the budget in other ways, while alowing cuts to education. If you can not get the legislature to raise taxes, put the pressure on parents to do the job.

I for one am tired of excuses and the blame shifting. The Governor and the legislators are paid to do a job but they keep shiftng the hard stuff on to the taxpayer and disclaim any personal reponsibility. Enough is enough! We need to make them do their job or remove them and keep them from any future office.