As used in this act:

    (a) "Director" means the director of the department of management and budget.

    (b) "Estimated equalized value" means 50% of the final estimated value of a state facility as determined by the director.

    (c) "Municipality" means a city, village, or township.

    (d) "State facility" means state owned real property associated with buildings primarily used for office purposes, state prisons, or hospitals, institutions of higher education, and state owned real and inventory personal property associated with a state proprietary function, the inventory personal property of which shall be valued on the basis of the average monthly inventory for the preceding state fiscal year.

    (1) For the fiscal year beginning October 1, 1977, the director shall present to the house and senate appropriations committees a plan for the distribution of those funds appropriated in Act No. 91 of the Public Acts of 1977 for payments to municipalities with state owned facilities in lieu of taxes for services rendered. The payments to municipalities shall be made before July 1, 1978.

    (2) For state fiscal years beginning after September 30, 1978, the director shall, annually by the preceding July 1, prepare a report for each municipality in which a state facility is located listing each state facility and the value of each state facility. The date of valuation shall be December 31 of the prior year. The director shall consult with the state tax commission, the director of the bureau of facilities in the department of management and budget, and with the assessor of the affected municipality.

    (3) Copies of the director's report shall be furnished to the local assessor and the state tax commission, who may submit recommendations for adjustments to the proposed valuations within 30 days.

    (4) By September 1 of each year the director shall make a final determination of value which may not be further appealed. The director shall notify the assessor, the state agency, and the treasurer of the municipality of the final estimated value for that year, and the final estimated equalized value for that year.

    (1) By September 1 of each year, a municipality in which a state facility is located shall submit to the director the following:

    (a) The dollar amount of the actual expenditures for fire protection for the municipality's preceding fiscal year.

    (b) The current state equalized valuation.

    (c) Certification that fire protection is provided to a state facility in the same manner as those services are provided to the municipality.

    (2) Information on fire protection expenditures and state equalized valuation shall be submitted in a form prescribed by the director.

    (3) The director shall review the data submitted and, before November 1 of each year, shall certify to the state treasurer an amount, determined pursuant to the formula set forth in section 4, to be paid to a municipality in which a state facility is located.

    (4) The state treasurer shall draw a warrant upon the general fund of the state for the amount certified to be paid to a municipality and shall forward the warrant to the treasurer of the municipality before December 1 of each year, except as provided in section 2(1).

    (1) The amount due the municipality shall be determined by dividing the estimated equalized value of the state facilities located in the municipality by the sum of the state equalized valuation of the municipality and the estimated equalized value of the facilities, and multiplying the result by the fire protection expenditures of the municipality reported to the director pursuant to section 3(2).

    (2) A payment shall not be made to a municipality if the amount of the payment is less than $500.00, if the estimated equalized value of the state facility in the municipality is less than 1% of the amount of the state equalized valuation of the municipality, or if the state facility provides its own fire protection.

     This act shall not prohibit a state facility from entering into a contract pursuant to Act No. 98 of the Public Acts of 1929, as amended, being sections 17.71 to 17.76 of the Michigan Compiled Laws.

     If the amount appropriated in a fiscal year is not sufficient to make the payments required by this act, the director shall prorate the amount appropriated to each municipality.