HB-6348, As Passed House, October 4, 2018
September 6, 2018, Introduced by Rep. VerHeulen and referred to the Committee on Appropriations.
A bill to amend 2014 PA 86, entitled
"Local community stabilization authority act,"
by amending section 17 (MCL 123.1357), as amended by 2018 PA 248,
and by adding section 17a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 17. (1) The legislature shall appropriate funds for all
of the following purposes:
(a) For fiscal year 2014-2015 and fiscal year 2015-2016, to
the authority, an amount equal to all debt loss for municipalities
that are not a local school district, intermediate school district,
or tax increment finance authority, an amount equal to all school
debt loss for municipalities that are a local school district or
intermediate school district, and an amount equal to all tax
increment small taxpayer loss for municipalities that are a tax
increment finance authority. Funds appropriated under this
subdivision for fiscal year 2015-2016 may be used to pay a
corrected tax increment small taxpayer exemption loss for 2014 if a
tax increment finance authority submits before June 1, 2016 a
correction to a report that was filed under section 16a before
October 1, 2014.
(b) For fiscal year 2014-2015 through fiscal year 2018-2019 an
amount equal to the necessary expenses incurred by the department
in implementing this act.
(c) Beginning in fiscal year 2019-2020 and each fiscal year
thereafter, an amount equal to the necessary expenses incurred by
the authority and the department in implementing this act.
(2) In fiscal year 2014-2015 and fiscal year 2015-2016, the
authority shall distribute to municipalities those funds
appropriated under subsection (1)(a). However, in fiscal year 2014-
2015, if the authority is not able to make the distribution under
this subsection, the department shall make the distribution under
this subsection on behalf of the authority.
(3) For calendar years 2014 and 2015, the authority shall
distribute local community stabilization share revenue to each city
in an amount determined by multiplying the sum of the local
community stabilization share revenue for the calendar years and
the amounts calculated under section 14(3)(e) and (f) by a
fraction, the numerator of which is that city's amount calculated
under section 14(3)(d) and the denominator of which is the total
amount calculated under section 14(3)(d), and subtracting from the
result each city's amounts calculated under section 14(3)(e) and
(f).
(4) Beginning for calendar year 2016, the authority shall
distribute local community stabilization share revenue as follows
in the following order of priority:
(a) The authority shall distribute to each municipality an
amount equal to all of the following:
(i) 100% of that municipality's school debt loss in the
current year as calculated under section 13(4) and 100% of its
amount calculated under section 15.
(ii) 100% of that municipality's amount calculated under
section 16.
(iii) 100% of that municipality's school operating loss not
reimbursed by the school aid fund in the current year, calculated
by multiplying the operating millage rate reported under section
13(4) or the operating millage rate calculated under section 13(5)
by the local school district's personal property exemption loss for
the personal property subject to the respective millage reimbursed
under this subparagraph.
(iv) 100% of the amount calculated in section 14(2). For
calendar years 2016 and 2017 only, however, the amount distributed
to a municipality under this subparagraph shall not exceed the
amount calculated in section 14(1)(d). For all calendar years, all
distributions under this subparagraph shall be used to fund
essential services.
(v) For a municipality that is a tax increment finance
authority, 100% of its amount calculated under section 16a(2), as
confirmed or adjusted by the department. For calculations made
under section 16a(2), as modified by section 16b(2), in calendar
years 2016 and 2017 only, amounts claimed for increased captured
value shall be included as claimed.
(vi) 100% of that municipality's amount calculated under
section 14(4).
(b) Beginning for calendar year 2021, after the distributions
under subdivision (a), and subject to subparagraph (viii), the
authority shall distribute an amount equal to 15% of the total
qualified loss for the current calendar year to each municipality
that is not a local school district, intermediate school district,
or tax increment finance authority in an amount determined as
follows:
(i) Calculate the total acquisition cost of all eligible
personal property in the municipality.
(ii) Multiply the result of the calculation in subparagraph
(i) by each individual millage levied by the municipality as
calculated under section 13(5) that is not used to calculate a
distribution under subdivision (a)(i) to (iv).
(iii) Divide the sum of the amounts calculated under
subparagraph (ii) for all municipalities subject to the calculation
by total qualified loss.
(iv) Multiply the result of the calculation in subparagraph
(iii) by the difference between the amount calculated under section
16a(2) for captured taxes for each individual millage levied by the
municipality not including taxes attributable to increased captured
value and the subtraction amounts calculated under section
14(2)(d), (2)(f), and (4)(d) for that millage.
(v) Subtract from the amount calculated under subparagraph
(ii) the amount calculated under subparagraph (iv) for the
individual millage levied.
(vi) Divide the result of the calculation in subparagraph (v)
by the sum of the calculation under subparagraph (v) for all
millages for all municipalities.
(vii) Multiply the result of the calculation in subparagraph
(vi) by the amount to be distributed under this subdivision.
(viii) For calendar year 2022, and each calendar year
thereafter, the percentage amount described in this subdivision
shall be increased an additional 5% each year, not to exceed 100%.
(c) For calendar years 2016 and 2017, after the distributions
in subdivision (a), the authority shall distribute the remaining
balance of the local community stabilization share fund for a
calendar year to each municipality in an amount determined by
multiplying the remaining balance by a fraction, the numerator of
which is that municipality's qualified loss and the denominator of
which is the total qualified loss. Beginning for calendar year
2018, after the distributions in subdivisions (a) and (b), the
authority shall distribute local community stabilization share
revenue under this subdivision to each municipality in an amount
determined by multiplying total qualified loss minus the total
amount distributed in subdivision (b) for a calendar year by a
fraction, the numerator of which is that municipality's qualified
loss and the denominator of which is the total qualified loss.
(d) After the distributions under subdivisions (a) to (c),
beginning for calendar year 2018, the department shall adjust the
amounts calculated under subdivisions (b) and (c) for a
municipality that is a county, township, village, city, or
community college district by the amount of any overpayment to that
municipality under those subdivisions for that calendar year and
the authority shall distribute the following:
(i) To a municipality, the amount of any underpayment
calculated under subsection (5) for calendar years after 2016.
(ii) A total of $13,600,000.00 to municipalities with state
facilities under 1977 PA 289, MCL 141.951 to 141.956. The
department of licensing and regulatory affairs shall certify to the
department the amount to be paid to each municipality under this
subparagraph.
(e)
Except as otherwise provided in this subdivision, after
After the distributions under subdivisions (a) to (d), the
authority shall distribute a percentage of the remaining balance of
the local community stabilization share fund for the calendar year,
not including repaid overpayment amounts and year-end balances from
prior years under this section, plus all repaid overpayment amounts
and year-end balances from prior years under this section to each
municipality that is a county, township, village, city, or
community college district in an amount determined under this
subdivision. The percentage of that remaining balance to be
distributed under this subdivision is 100% for calendar year 2018,
90% for calendar year 2019, 80% for calendar year 2020, 70% for
calendar year 2021, 60% for calendar year 2022, and 50% for
calendar year 2023 and each calendar year thereafter. Of each
year's percentage of the remaining balance to be distributed under
this subdivision, 30% shall be distributed to counties, 5% to
townships, 2% to villages, 48% to cities, and 15% to community
college districts. For each of those categories of municipalities,
the amount to be distributed to an individual municipality in any
given
category shall be determined by
multiplying the remaining
balance
amount to be distributed to all
municipalities in that
category by a fraction, the numerator of which is the sum of that
individual municipality's amount received under subdivisions (b),
(c), and (d), only to the extent that the distribution under
subdivision (d) is for an underpayment of the current calendar
year's subdivision (b) or (c) amount, and the overpayment
adjustment under subdivision (d), and the denominator of which is
the
sum of the total amount distributed to all counties, townships,
villages,
cities, and community college districts municipalities in
that category under subdivisions (b), (c), and (d), only to the
extent that the distribution under subdivision (d) is for an
underpayment of the current calendar year's subdivision (b) or (c)
amount,
and the total overpayment adjustments for all counties,
townships,
villages, cities, and community college districts
municipalities in that category under subdivision (d). For any
municipality that, in total, was overpaid under subdivisions (a),
(b), and (c), the distribution under this subdivision, which for
purposes of this calculation for any municipality other than a
county, township, village, city, or community college district
shall be $0, shall be reduced by any positive amount determined by
subtracting the corrected amounts under subdivisions (a) to (c) for
that municipality from the distributed amounts under subdivisions
(a) to (c) for that municipality and subtracting $10,000.00. If the
resulting distribution amount is negative, the municipality has
been overpaid for the year by the amount of the negative balance.
The municipality shall pay to the authority the amount of the
overpayment in 3 equal annual payments, due by September 20 1 year
following notice of the overpayment and by September 20 of the
subsequent 2 years. A municipality may pay the amount of the
overpayment at any time during the 3-year period. If a municipality
fails to repay the amount of the overpayment as provided in this
subdivision, the authority shall add interest to the entire amount
of the original overpayment from the date of notice of the
overpayment and may reduce subsequent distributions to the
municipality under this section to recover the outstanding balance
of the overpayment and interest. Interest added under this
subdivision shall be at the rate determined under section 23 of
1941 PA 122, MCL 205.23. Any overpayment amounts repaid to the
authority under this subdivision by September 30 of each year shall
be added to the local community stabilization share revenue
available for distribution under this section for the calendar
year. If reductions to distributions calculated under this section
result in the authority having a year-end balance of local
community stabilization share revenue originally calculated for
distribution under this section, that revenue shall be added to the
local community stabilization share revenue available for
distribution under this section for the subsequent calendar year.
(5) The department and authority shall administer overpayments
and underpayments as follows:
(a) For calendar years before 2016, if a municipality received
an overpayment under this section due to an error in reporting or
calculation, the authority may reduce a subsequent payment to the
municipality or bill the municipality to recover the overpayment.
(b) Before November 7, 2017, the department shall recalculate
2016 payments to correct any errors in reporting under section
13(3) or (4) and any calculation errors made by the department, and
adjust the 2017 payment to each municipality for any change in its
2016 payment.
(c) For calendar year 2018, for any errors in reporting under
section 13(3) or (4) in calendar year 2017 or 2018, any calculation
errors made by the department in calendar year 2017 or 2018, or any
prior year error adjustment used in the calculation of the calendar
year 2017 distributions, that resulted in an underpayment or
overpayment under this section to a municipality for the prior
calendar year or current calendar year, the department shall
calculate the amount of underpayment or overpayment. For each
municipality, the department shall add together the calendar year
2016 and calendar year 2017 underpayment and overpayment amounts.
If a municipality has a net underpayment for calendar years 2016
and 2017, the amount of the net underpayment shall be added to the
calendar year 2018 underpayment or overpayment amount for that
municipality. If a municipality has a net overpayment for calendar
years 2016 and 2017, the amount of the net overpayment shall be
excused by the authority and shall not be added to the calendar
year 2018 underpayment or overpayment amount for that municipality.
The following apply to determining underpayment or overpayment
amounts:
(i) For calendar year 2016, the underpayment or overpayment of
a municipality's qualified loss shall be calculated by multiplying
the municipality's qualified loss by 261.3820%.
(ii) For calendar year 2017, the underpayment or overpayment
of a municipality's qualified loss shall be calculated by
multiplying the municipality's qualified loss by 292.4677%.
(d) Beginning for calendar year 2019, for any errors in
reporting under section 13(3) or (4), and for any calculation
errors made by the department, that resulted in an underpayment or
overpayment under this section to a municipality for the current
calendar year, the department shall calculate the amount of
underpayment or overpayment. A calculation made under this
subdivision shall not recalculate a prior year payment.
(e) Except as provided in subsection (6), any underpayment
under this section shall be paid to the municipality as provided in
subsection (4)(d). Any underpayment amount under this section
determined by the department to be the fault of that municipality,
by either the municipality reporting inaccurate information or
filing information after the reporting due dates, shall not be
included in any payment made under subsection (4)(d) or (6).
(f) For any overpayment under this section for which the state
treasurer determines that the municipality was at fault and acted
in bad faith, the department may calculate the amount of the
overpayment for all years to which the bad faith applied without
any adjustment and the municipality shall immediately repay the
amount of the overpayment and interest to the authority within 30
days following notice of the overpayment. If a municipality fails
to repay the amount of the overpayment and interest to the
authority, the authority shall reduce subsequent payments to the
municipality under this section to recover the outstanding balance
of the overpayment and interest. Interest added under this
subsection shall be at the rate determined under section 23 of 1941
PA 122, MCL 205.23. Any overpayment amounts repaid to the authority
under this subsection by September 30 of each year shall be added
to the local community stabilization share revenue available for
distribution under this section for the calendar year. Any
reduction of subsequent payments due to municipalities failing to
repay the amount of the overpayment and interest shall be added to
the local community stabilization share revenue available for
distribution under this section for the subsequent calendar year.
(6) If a municipality received an underpayment under this
section of $500,000.00 or more for calendar year 2017 due to an
error in reporting under section 13(3) or (4), or a calculation
error made by the department, including a prior year error
adjustment used in the calculation of the calendar year 2017
distributions, the municipality may notify the department of any
errors identified by providing substantiating documentation to
support an adjustment to the payment amount by August 1, 2018. Upon
the department's review of the substantiating documentation and
verification of the errors, the department shall calculate an
underpayment amount in accordance with subsection (5)(c). The
underpayment amount shall be calculated using the appropriate
proration factor provided for under subsection (5)(c). The
department shall determine if the substantiating documentation is
sufficient. The department shall notify the authority to make an
advance 2018 payment to the municipality for the amount of the 2017
underpayment. The advance payment shall be deducted from the
municipality's payment for calendar year 2018 that includes the
distribution under subsection (4)(d).
(7) For payments received under this section beginning October
20, 2018, a municipality shall do all of the following:
(a) Allocate payments received, up to 100% reimbursement,
under this section based on the portion of the municipality's
payment attributable to each millage levied by the municipality.
The portion of the payment allocated to each millage other than the
general operating millage shall be considered restricted and
recorded by the municipality in the same manner as the millage
levied. As used in this subsection, "100% reimbursement" means the
amounts received under subsection (4)(a), (b), (c), and (d)(i),
only to the extent that the distribution under subsection (4)(d)(i)
is for an underpayment of the current calendar year's subsection
(4)(a), (b), or (c) amount.
(b) For millage levied by a county under section 20b of 1909
PA 283, MCL 224.20b, the governing bodies of the cities and
villages in the county and the board of county road commissioners
shall agree to a formula that allocates a portion of the payments
under this section to each city and village based on the city and
village share of the losses and acquisition cost used to calculate
the payment to the county described in this subdivision and each
city's and village's portion of that share. The formula once
established will be in effect until the effective date of any
subsequent agreement. If the governing bodies of the cities and
villages and the board of county road commissioners described in
this subdivision do not agree on a formula by March 31 following
the receipt of the subsection (8)(b) payment, the department may
prescribe a formula for allocating the payments under this section.
(c) Payments under this section, except for the payments under
subsection (4)(d)(ii), to a municipality that is participating in
an intergovernmental conditional transfer by contract under 1984 PA
425, MCL 124.21 to 124.30, or any other interlocal agreement that
provides for a millage-based sharing of revenue, shall be allocated
between the parties based on the proportionate share of the payment
as it is attributable to the area subject to the agreement.
(8) The authority shall make the payments required by
subsection (3) not later than June 20, 2016, payments required by
subsection (6) not later than October 20, 2018, and payments
required by subsection (4) not later than on the following dates:
(a) Except as provided in subdivision (d), for county
allocated millage, November 20, 2017, and thereafter October 20 of
the year the millage is levied.
(b) Except as provided in subdivision (d), for county extra-
voted millage, township millage, and other millages levied 100% in
December of a year, February 20 of the following year.
(c) Except as provided in subdivision (d), for other millages,
November 20, 2017, and thereafter October 20 of the year the
millage is levied.
(d) Payment under subsection (4)(d)(i) and (e) shall be made
on May 20 of the year following the calendar year for which the
payments are calculated.
(e) Payment under subsection (4)(d)(ii) shall be made on
November 30 every year.
(9) If the authority has insufficient funds to make the
payments on the dates required in subsection (8) or section 17a(2),
the department shall advance to the authority the amount necessary
for the authority to make the required payments. The authority
shall repay the advance to the department from the local community
stabilization share.
(10) For each fiscal year from fiscal year 2015-2016 through
fiscal year 2018-2019, the authority may use up to $300,000.00 of
the local community stabilization share revenue for purposes
consistent with implementing and administering this act.
(11) The authority shall distribute local community
stabilization share revenue under this section and section 17a as
follows:
(a) From fiscal year 2015-2016 local community stabilization
share revenue, $19,200,000.00 for calendar years 2014 and 2015 and
$76,900,000.00 for calendar year 2016.
(b) From fiscal year 2016-2017 local community stabilization
share revenue, $297,400,000.00 for calendar year 2016 and
$83,200,000.00 for calendar year 2017.
(c) From fiscal year 2017-2018 local community stabilization
share revenue, $321,500,000.00 for calendar year 2017 and
$89,000,000.00 for calendar year 2018.
(d) From fiscal year 2018-2019 local community stabilization
share revenue, $341,800,000.00 for calendar year 2018 and
$95,900,000.00 for calendar year 2019.
(e) From fiscal year 2019-2020 local community stabilization
share revenue, $364,500,000.00 for calendar year 2019 and
$101,400,000.00 for calendar year 2020.
(f) From fiscal year 2020-2021 local community stabilization
share revenue, $383,500,000.00 for calendar year 2020 and
$108,000,000.00 for calendar year 2021.
(g) From fiscal year 2021-2022 local community stabilization
share revenue, $405,700,000.00 for calendar year 2021 and
$115,600,000.00 for calendar year 2022.
(h) From fiscal year 2022-2023 local community stabilization
share revenue, $428,300,000.00 for calendar year 2022 and
$119,700,000.00 for calendar year 2023.
(i) From fiscal year 2023-2024 local community stabilization
share revenue, $438,900,000.00 for calendar year 2023 and
$122,800,000.00 for calendar year 2024.
(j) From fiscal year 2024-2025 local community stabilization
share revenue, $445,800,000.00 for calendar year 2024 and
$124,000,000.00 for calendar year 2025.
(k) From fiscal year 2025-2026 local community stabilization
share revenue, $447,100,000.00 for calendar year 2025 and
$124,300,000.00 for calendar year 2026.
(l) From fiscal year 2026-2027 local community stabilization
share revenue, $447,700,000.00 for calendar year 2026 and
$124,500,000.00 for calendar year 2027.
(m) From fiscal year 2027-2028 local community stabilization
share revenue, $448,000,000.00 for calendar year 2027 and
$124,600,000.00 for calendar year 2028.
(n) From the local community stabilization share revenue for
fiscal year 2028-2029 and each fiscal year thereafter, the
authority shall increase the prior fiscal year's 2 distribution
amounts under this subsection by the personal property growth
factor, the first amount for the calendar year in which the fiscal
year begins and the second amount for the calendar year in which
the fiscal year ends. As used in this subdivision, "personal
property growth factor" means that term as defined in section 2c of
the use tax act, 1937 PA 94, MCL 205.92c.
Sec. 17a. (1) After the distributions under section 17(4)(a)
to (e), the authority shall first distribute any prior year
underpayment adjustment amount under this section as calculated by
the department and then distribute the remaining balance of the
local community stabilization share fund for the calendar year in
accordance with subdivisions (a) to (e), with payments adjusted by
the department as necessary to account for any prior year
overpayment under this section, subject to subdivisions (f) and
(g), as follows:
(a) Distribute an amount equal to 30% of the remaining balance
to counties, each county's share in proportion to its population as
a percentage of the total population of all counties.
(b) Distribute an amount equal to 48% of the remaining balance
to cities, each city's share in proportion to its population as a
percentage of the total population of all cities.
(c) Distribute an amount equal to 2% of the remaining balance
to villages, each village's share in proportion to its population
as a percentage of the total population of all villages.
(d) Distribute an amount equal to 5% of the remaining balance
to townships, each township's share in proportion to its population
as a percentage of the total population of all townships.
(e) Distribute an amount equal to 15% of the remaining balance
to community colleges, each community college's share in proportion
to its total fiscal year equated students as a percentage of the
total fiscal year equated students for all community colleges.
(f) For purposes of subdivisions (a) to (d), population shall
be determined in the same manner as under section 3 of the Glenn
Steil state revenue sharing act of 1971, 1971 PA 140, MCL 141.903.
In addition, any city or village that according to the most recent
federal decennial census is determined to have population in more
than 1 county shall be treated as a single entity when determining
the distribution to the city or village under this subparagraph.
(g) For purposes of subdivision (e), fiscal year equated
students for each community college shall be determined by the
department of education as reported in the state community college
database commonly known as the "activities classification
structure" or "ACS" database pursuant to section 217 of the state
school aid act of 1979, 1979 PA 94, MCL 388.1817.
(2) The authority shall make the payments required by
subsection (1) not later than May 20 of the year following the
calendar year for which the payments are calculated.