January 8, 2003, Introduced by Senator JELINEK and referred to the Committee on Finance.
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending section 34d (MCL 211.34d), as amended by 1996 PA
476.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 34d. (1) As used in this section or section 27a, or
2 section 3 or 31 of article IX of the state constitution of 1963:
3 (a) For taxes levied before 1995, "additions" means all
4 increases in value caused by new construction or a physical
5 addition of equipment or furnishings, and the value of property
6 that was exempt from taxes or not included on the assessment
7 unit's immediately preceding year's assessment roll.
8 (b) For Except
as otherwise provided in this subdivision or
9 subdivision (c), for taxes levied after 1994, "additions" means
10 , except as provided
in subdivision (c), all of the
following:
1 (i) Omitted real property. As used in this subparagraph,
2 "omitted real property" means previously existing tangible real
3 property not included in the assessment. Omitted real property
4 shall not increase taxable value as an addition unless the
5 assessing jurisdiction has a property record card or other
6 documentation showing that the omitted real property was not
7 previously included in the assessment. The assessing
8 jurisdiction has the burden of proof in establishing whether the
9 omitted real property is included in the assessment. Omitted
10 real property for the current and the 2 immediately preceding
11 years, discovered after the assessment roll has been completed,
12 shall be added to the tax roll pursuant to the procedures
13 established in section 154. For purposes of determining the
14 taxable value of real property under section 27a, the value of
15 omitted real property is based on the value and the ratio of
16 taxable value to true cash value the omitted real property would
17 have had if the property had not been omitted.
18 (ii) Omitted personal property. As used in this
19 subparagraph, "omitted personal property" means previously
20 existing tangible personal property not included in the
21 assessment. Omitted personal property shall be added to the tax
22 roll pursuant to section 154.
23 (iii) New construction. As used in this subparagraph,
24 subparagraph (ix), and subdivision (c)(iv), "new construction"
25 means property not in existence on the immediately preceding tax
26 day and not replacement construction. New construction includes
27 the physical addition of equipment or furnishings, subject to the
1 provisions set forth in section 27(2)(a) to (o). For purposes of
2 determining the taxable value of property under section 27a, the
3 value of new construction is the true cash value of the new
4 construction multiplied by 0.50.
5 (iv) Previously exempt property. As used in this
6 subparagraph, "previously exempt property" means property that
7 was exempt from ad valorem taxation under this act on the
8 immediately preceding tax day but is subject to ad valorem
9 taxation on the current tax day under this act. For purposes of
10 determining the taxable value of real property under section
11 27a:
12 (A) The value of property previously exempt under section 7u
13 is the taxable value the entire parcel of property would have had
14 if that property had not been exempt, minus the product of the
15 entire parcel's taxable value in the immediately preceding year
16 and the lesser of 1.05 or the inflation rate.
17 (B) The taxable value of property that is a facility as that
18 term is defined in
section 2 of Act No. 198 of the Public Acts
19 of 1974, being section
207.552 of the Michigan Compiled Laws
20 1974 PA 198, MCL 207.552, that was previously exempt under
21 section 7k is the taxable value that property would have had
22 under this act if it had not been exempt.
23 (C) The value of property previously exempt under any other
24 section of law is the true cash value of the previously exempt
25 property multiplied by 0.50.
26 (v) Replacement construction. As used in this subparagraph,
27 "replacement construction" means construction that replaced
1 property damaged or destroyed by accident or act of God and that
2 occurred after the immediately preceding tax day to the extent
3 the construction's true cash value does not exceed the true cash
4 value of property that was damaged or destroyed by accident or
5 act of God in the immediately preceding 3 years. For purposes of
6 determining the taxable value of property under section 27a, the
7 value of the replacement construction is the true cash value of
8 the replacement construction multiplied by a fraction the
9 numerator of which is the taxable value of the property to which
10 the construction was added in the immediately preceding year and
11 the denominator of which is the true cash value of the property
12 to which the construction was added in the immediately preceding
13 year, and then multiplied by the lesser of 1.05 or the inflation
14 rate.
15 (vi) An increase in taxable value attributable to the
16 complete or partial remediation of environmental contamination
17 existing on the immediately preceding tax day. The department of
18 environmental quality shall determine the degree of remediation
19 based on information available in existing department of
20 environmental quality records or information made available to
21 the department of environmental quality if the appropriate
22 assessing officer for a local tax collecting unit requests that
23 determination. The increase in taxable value attributable to the
24 remediation is the increase in true cash value attributable to
25 the remediation multiplied by a fraction the numerator of which
26 is the taxable value of the property had it not been contaminated
27 and the denominator of which is the true cash value of the
1 property had it not been contaminated.
2 (vii) An increase in the value attributable to the property's
3 occupancy rate if either a loss, as that term is defined in this
4 section, had been previously allowed because of a decrease in the
5 property's occupancy rate or if the value of new construction was
6 reduced because of a below-market occupancy rate. For purposes
7 of determining the taxable value of property under section 27a,
8 the value of an addition for the increased occupancy rate is the
9 product of the increase in the true cash value of the property
10 attributable to the increased occupancy rate multiplied by a
11 fraction the numerator of which is the taxable value of the
12 property in the immediately preceding year and the denominator of
13 which is the true cash value of the property in the immediately
14 preceding year, and then multiplied by the lesser of 1.05 or the
15 inflation rate.
16 (viii) Public services. As used in this subparagraph,
17 "public services" means water service, sewer service, a primary
18 access road, natural gas service, electrical service, telephone
19 service, sidewalks, or street lighting. For purposes of
20 determining the taxable value of real property under section 27a,
21 the value of public services is the amount of increase in true
22 cash value of the property attributable to the available public
23 services multiplied by 0.50 and shall be added in the calendar
24 year following the calendar year when those public services are
25 initially available.
26 (ix) For taxes levied after December 31, 2003, new
27 construction, a mobile home assessable as real property under
1 section 2a, or a similar structure, not previously considered an
2 addition pursuant to subdivision (c)(iv), if the family member
3 who occupied the new construction, mobile home, or similar
4 structure has not occupied the new construction, mobile home, or
5 similar structure for 6 months or more.
6 (c) For Except
as otherwise provided in this subdivision,
7 for taxes levied after 1994, additions do not include increased
8 value attributable to any of the following:
9 (i) Platting, splits, or combinations of property.
10 (ii) A change in the zoning of property.
11 (iii) For the purposes of the calculation of the millage
12 reduction fraction under subsection (7) only, increased taxable
13 value under section 27a(3) after a transfer of ownership of
14 property.
15 (iv) For taxes levied after December 31, 2003, new
16 construction, a mobile home assessable as real property under
17 section 2a, or a similar structure, if it is occupied or will be
18 occupied by a family member who is 62 years of age or older.
19 (d) "Assessed valuation of property as finally equalized"
20 means taxable value under section 27a.
21 (e) "Financial officer" means the officer responsible for
22 preparing the budget of a unit of local government.
23 (f) "General price level" means the annual average of the 12
24 monthly values for the United States consumer price index for all
25 urban consumers as defined and officially reported by the United
26 States department of labor, bureau of labor statistics.
27 (g) For taxes levied before 1995, "losses" means a decrease
1 in value caused by the removal or destruction of real or personal
2 property and the value of property taxed in the immediately
3 preceding year that has been exempted or removed from the
4 assessment unit's assessment roll.
5 (h) For taxes levied after 1994, "losses" means, except as
6 provided in subdivision (i), all of the following:
7 (i) Property that has been destroyed or removed. For
8 purposes of determining the taxable value of property under
9 section 27a, the value of property destroyed or removed is the
10 product of the true cash value of that property multiplied by a
11 fraction the numerator of which is the taxable value of that
12 property in the immediately preceding year and the denominator of
13 which is the true cash value of that property in the immediately
14 preceding year.
15 (ii) Property that was subject to ad valorem taxation under
16 this act in the immediately preceding year that is now exempt
17 from ad valorem taxation under this act. For purposes of
18 determining the taxable value of property under section 27a, the
19 value of property exempted from ad valorem taxation under this
20 act is the amount exempted.
21 (iii) An adjustment in value, if any, because of a decrease
22 in the property's occupancy rate, to the extent provided by law.
23 For purposes of determining the taxable value of real property
24 under section 27a, the value of a loss for a decrease in the
25 property's occupancy rate is the product of the decrease in the
26 true cash value of the property attributable to the decreased
27 occupancy rate multiplied by a fraction the numerator of which is
1 the taxable value of the property in the immediately preceding
2 year and the denominator of which is the true cash value of the
3 property in the immediately preceding year.
4 (iv) A decrease in taxable value attributable to
5 environmental contamination existing on the immediately preceding
6 tax day. The department of environmental quality shall determine
7 the degree to which environmental contamination limits the use of
8 property based on information available in existing department of
9 environmental quality records or information made available to
10 the department of environmental quality if the appropriate
11 assessing officer for a local tax collecting unit requests that
12 determination. The department of environmental quality's
13 determination of the degree to which environmental contamination
14 limits the use of property shall be based on the criteria
15 established for the classifications
categories set forth in
16 section 20120a(1) of
part 201 (environmental remediation) of
17 the natural resources and
environmental protection act, Act
18 No. 451 of the Public
Acts of 1994, being section 324.20120a of
19 the Michigan
Compiled Laws 1994 PA 451, MCL
324.20120a. The
20 decrease in taxable value attributable to the contamination is
21 the decrease in true cash value attributable to the contamination
22 multiplied by a fraction the numerator of which is the taxable
23 value of the property had it not been contaminated and the
24 denominator of which is the true cash value of the property had
25 it not been contaminated.
26 (i) For taxes levied after 1994, losses do not include
27 decreased value attributable to either of the following:
1 (i) Platting, splits, or combinations of property.
2 (ii) A change in the zoning of property.
3 (j) "New construction and improvements" means additions less
4 losses.
5 (k) "Current year" means the year for which the millage
6 limitation is being calculated.
7 (l) "Inflation rate" means the ratio of the general price
8 level for the state fiscal year ending in the calendar year
9 immediately preceding the current year divided by the general
10 price level for the state fiscal year ending in the calendar year
11 before the year immediately preceding the current year.
12 (2) On or before the first Monday in May of each year, the
13 assessing officer of each township or city shall tabulate the
14 tentative taxable value as approved by the local board of review
15 and as modified by county equalization for each classification of
16 property that is separately equalized for each unit of local
17 government and provide the tabulated tentative taxable values to
18 the county equalization director. The tabulation by the
19 assessing officer shall contain additions and losses for each
20 classification of property that is separately equalized for each
21 unit of local government or part of a unit of local government in
22 the township or city. If as a result of state equalization the
23 taxable value of property changes, the assessing officer of each
24 township or city shall revise the calculations required by this
25 subsection on or before the Friday following the fourth Monday in
26 May. The county equalization director shall compute these
27 amounts and the current and immediately preceding year's taxable
1 values for each classification of property that is separately
2 equalized for each unit of local government that levies taxes
3 under this act within the boundary of the county. The county
4 equalization director shall cooperate with equalization directors
5 of neighboring counties, as necessary, to make the computation
6 for units of local government located in more than 1 county. The
7 county equalization director shall calculate the millage
8 reduction fraction for each unit of local government in the
9 county for the current year. The financial officer for each
10 taxing jurisdiction shall calculate the compounded millage
11 reduction fractions beginning in 1980 resulting from the
12 multiplication of successive millage reduction fractions and
13 shall recognize a local voter action to increase the compounded
14 millage reduction fraction to a maximum of 1 as a new beginning
15 fraction. Upon request of the superintendent of the intermediate
16 school district, the county equalization director shall transmit
17 the complete computations of the taxable values to the
18 superintendent of the intermediate school district within that
19 county. At the request of the presidents of community colleges,
20 the county equalization director shall transmit the complete
21 computations of the taxable values to the presidents of community
22 colleges within the county.
23 (3) On or before the first Monday in June of each year, the
24 county equalization director shall deliver the statement of the
25 computations signed by the county equalization director to the
26 county treasurer.
27 (4) On or before the second Monday in June of each year, the
1 treasurer of each county shall certify the immediately preceding
2 year's taxable values, the current year's taxable values, the
3 amount of additions and losses for the current year, and the
4 current year's millage reduction fraction for each unit of local
5 government that levies a property tax in the county.
6 (5) The financial officer of each unit of local government
7 shall make the computation of the tax rate using the data
8 certified by the county treasurer and the state tax commission.
9 At the annual session in October, the county board of
10 commissioners shall not authorize the levy of a tax unless the
11 governing body of the taxing jurisdiction has certified that the
12 requested millage has been reduced, if necessary, in compliance
13 with section 31 of article IX of the state constitution of 1963.
14 (6) The number of mills permitted to be levied in a tax year
15 is limited as provided in this section pursuant to section 31 of
16 article IX of the state constitution of 1963. A unit of local
17 government shall not levy a tax rate greater than the rate
18 determined by reducing its maximum rate or rates authorized by
19 law or charter by a millage reduction fraction as provided in
20 this section without voter approval.
21 (7) A millage reduction fraction shall be determined for each
22 year for each local unit of government. For ad valorem property
23 taxes that became a lien before January 1, 1983, the numerator of
24 the fraction shall be the total state equalized valuation for the
25 immediately preceding year multiplied by the inflation rate and
26 the denominator of the fraction shall be the total state
27 equalized valuation for the current year minus new construction
1 and improvements. For ad valorem property taxes that become a
2 lien after December 31, 1982 and through December 31, 1994, the
3 numerator of the fraction shall be the product of the difference
4 between the total state equalized valuation for the immediately
5 preceding year minus losses multiplied by the inflation rate and
6 the denominator of the fraction shall be the total state
7 equalized valuation for the current year minus additions. For ad
8 valorem property taxes that are levied after December 31, 1994,
9 the numerator of the fraction shall be the product of the
10 difference between the total taxable value for the immediately
11 preceding year minus losses multiplied by the inflation rate and
12 the denominator of the fraction shall be the total taxable value
13 for the current year minus additions. For each year after 1993,
14 a millage reduction fraction shall not exceed 1.
15 (8) The compounded millage reduction fraction for each year
16 after 1980 shall be calculated by multiplying the local unit's
17 previous year's compounded millage reduction fraction by the
18 current year's millage reduction fraction. Beginning with 1980
19 tax levies, the compounded millage reduction fraction for the
20 year shall be multiplied by the maximum millage rate authorized
21 by law or charter for the unit of local government for the year,
22 except as provided by subsection (9). A compounded millage
23 reduction fraction shall not exceed 1.
24 (9) The millage reduction shall be determined separately for
25 authorized millage approved by the voters. The limitation on
26 millage authorized by the voters on or before May 31 of a year
27 shall be calculated beginning with the millage reduction fraction
1 for that year. Millage authorized by the voters after May 31
2 shall not be subject to a millage reduction until the year
3 following the voter authorization which shall be calculated
4 beginning with the millage reduction fraction for the year
5 following the authorization. The first millage reduction
6 fraction used in calculating the limitation on millage approved
7 by the voters after January 1, 1979 shall not exceed 1.
8 (10) A millage reduction fraction shall be applied separately
9 to the aggregate maximum millage rate authorized by a charter and
10 to each maximum millage rate authorized by state law for a
11 specific purpose.
12 (11) A unit of local government may submit to the voters for
13 their approval the levy in that year of a tax rate in excess of
14 the limit set by this section. The ballot question shall ask the
15 voters to approve the levy of a specific number of mills in
16 excess of the limit. The provisions of this section do not allow
17 the levy of a millage rate in excess of the maximum rate
18 authorized by law or charter. If the authorization to levy
19 millage expires after 1993 and a local governmental unit is
20 asking voters to renew the authorization to levy the millage, the
21 ballot question shall ask for renewed authorization for the
22 number of expiring mills as reduced by the millage reduction
23 required by this section. If the election occurs before June 1
24 of a year, the millage reduction is based on the immediately
25 preceding year's millage reduction applicable to that millage.
26 If the election occurs after May 31 of a year, the millage
27 reduction shall be based on that year's millage reduction
1 applicable to that millage had it not expired.
2 (12) A reduction or limitation under this section shall not
3 be applied to taxes imposed for the payment of principal and
4 interest on bonds or other evidence of indebtedness or for the
5 payment of assessments or contract obligations in anticipation of
6 which bonds are issued that were authorized before December 23,
7 1978, as provided by
former section 4 of chapter I of the
8 municipal finance act,
Act No. 202 of the Public Acts of 1943
9 former 1943 PA 202, or to taxes imposed for the payment of
10 principal and interest on bonds or other evidence of indebtedness
11 or for the payment of assessments or contract obligations in
12 anticipation of which bonds are issued that are approved by the
13 voters after December 22, 1978.
14 (13) If it is determined subsequent to the levy of a tax that
15 an incorrect millage reduction fraction has been applied, the
16 amount of additional tax revenue or the shortage of tax revenue
17 shall be deducted from or added to the next regular tax levy for
18 that unit of local government after the determination of the
19 authorized rate pursuant to this section.
20 (14) If as a result of an appeal of county equalization or
21 state equalization the taxable value of a unit of local
22 government changes, the millage reduction fraction for the year
23 shall be recalculated. The financial officer shall effectuate an
24 addition or reduction of tax revenue in the same manner as
25 prescribed in subsection (13).
26 (15) The fractions calculated pursuant to this section shall
27 be rounded to 4 decimal places, except that the inflation rate
1 shall be computed by the state tax commission and shall be
2 rounded to 3 decimal places. The state tax commission shall
3 publish the inflation rate before March 1 of each year.
4 (16) Beginning with taxes levied in 1994, the millage
5 reduction required by section 31 of article IX of the state
6 constitution of 1963 shall permanently reduce the maximum rate or
7 rates authorized by law or charter. The reduced maximum
8 authorized rate or rates for 1994 shall equal the product of the
9 maximum rate or rates authorized by law or charter before
10 application of this
section multiplied by the compound
11 compounded millage reduction applicable to that millage in 1994
12 pursuant to subsections (8) to (12). The reduced maximum
13 authorized rate or rates for 1995 and each year after 1995 shall
14 equal the product of the immediately preceding year's reduced
15 maximum authorized rate or rates multiplied by the current year's
16 millage reduction fraction and shall be adjusted for millage for
17 which authorization has expired and new authorized millage
18 approved by the voters pursuant to subsections (8) to (12).