SENATE BILL No. 209

February 14, 2001, Introduced by Senator JAYE and referred to the Committee on Finance.

A bill to amend 1964 PA 284, entitled

"City income tax act,"

by amending section 3 of chapter 1 (MCL 141.503), as amended by

1998 PA 500; and to repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 CHAPTER 1

2 Sec. 3. (1) The governing body of a city, by a lawfully

3 adopted ordinance that incorporates by reference the uniform city

4 income tax ordinance set forth in chapter 2, may levy, assess,

5 and collect an excise tax on income as provided in the

6 ordinance. The ordinance shall state the rate of the tax which

7 shall be the rate authorized by 1 of the following: (a) The

8 THE uniform city income tax ordinance under section 11 of chapter

9 2.

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1 (b) Subsection (2).

2 (c) Section 3a, 3b, or 3c of this chapter.

3 (2) Except as otherwise provided in subsections (3), (4),

4 and (5), in a city with a population of more than 750,000, the

5 governing body may levy and collect a tax at a rate to be deter-

6 mined from time to time, that rate to be not more than 2% on cor-

7 porations and the following maximum tax rates on resident indi-

8 viduals and nonresident individuals for the following years:

9 (a) Before July 1, 1999, 3.00% on resident individuals and

10 1.50% on nonresident individuals.

11 (b) Beginning July 1, 1999 and each July 1 after 1999, the

12 maximum tax rate under this subsection on resident individuals

13 shall be reduced by 0.1 until the rate on resident individuals is

14 2.0%. The tax rate imposed on nonresident individuals shall be

15 50% of the tax rate imposed on resident individuals each year.

16 (3) If any 3 of the following conditions exist in a city

17 with a population of 750,000 or more, the city may apply to the

18 state administrative board for certification that those condi-

19 tions exist and the maximum tax rate under subsection (2)(b)

20 shall not be further reduced as provided in subsections (4) and

21 (5):

22 (a) Funds have been withdrawn from the city's budget stabi-

23 lization fund for 2 or more consecutive city fiscal years or

24 there is a balance of zero in the city's budget stabilization

25 fund.

26 (b) The city's income tax revenue growth rate is 0.95 or

27 less.

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1 (c) The local tax base growth rate is 80% or less of the

2 statewide tax base growth rate.

3 (d) The city's unemployment rate is 10% or higher according

4 to the most recent statistics available from the Michigan jobs

5 commission.

6 (4) If the state administrative board certifies within 60

7 days of application that any 3 of the conditions set forth under

8 subsection (3) are met, the maximum tax rate under subsection (2)

9 shall not be further reduced from the date of the state adminis-

10 trative board's certification until the July 1 following the

11 expiration of 1 year after the state administrative board's cer-

12 tification unless the city applies for certification that the

13 conditions continue to exist. Before the expiration of the cer-

14 tification, the city may apply to the state administrative board

15 to certify that the conditions continue to exist and if the state

16 administrative board so certifies, the certification may continue

17 until the July 1 following the expiration of 1 year after the

18 state administrative board's certification that the conditions

19 continue to exist. The city may continue to apply for certifica-

20 tion until the conditions under subsection (3) no longer exist.

21 (5) Notwithstanding any other provision of this section, if

22 on July 1 the maximum tax rate on resident individuals is reduced

23 under subsection (2) after a year or years in which the maximum

24 tax rate was not reduced because of subsections (3) and (4), the

25 maximum tax rate on resident individuals shall be the maximum tax

26 rate in effect on June 30 of that year reduced by 0.1 and the

27 rate on nonresident individuals shall be 50% of the rate imposed

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1 on resident individuals. On each subsequent July 1, subsection

2 (2) applies to the maximum tax rates, subject to subsections (3)

3 and (4).

4 (2) (6) The governing body of a city may adopt the uniform

5 city income tax ordinance with the alternative sections as set

6 forth in chapter 3 instead of the similarly numbered sections as

7 set forth in chapter 2. The uniform city income tax ordinance

8 may be lawfully adopted or rescinded by the governing body at any

9 time. The adoption of an ordinance is effective on and after

10 January 1 or July 1 following adoption of the ordinance, as spec-

11 ified in the ordinance, but an ordinance shall not become effec-

12 tive earlier than 45 days after adoption or until approved by the

13 electors if a referendum petition is filed as authorized in this

14 act or a referendum is otherwise required. The rescission of an

15 ordinance shall become effective on the following December 31.

16 The ordinance may be rescinded at any time by the governing body

17 in the same manner in which it was adopted and with appropriate

18 enforcement, collection, and refund provisions with respect to

19 liabilities incurred prior to the effective date of the rescis-

20 sion of the ordinance. The ordinance shall not be amended except

21 as provided by the legislature. A AFTER THE EFFECTIVE DATE OF

22 THE AMENDATORY ACT THAT REPEALED SECTIONS 3A, 3B, AND 3C OF THIS

23 CHAPTER, A city may SHALL amend the ordinance to change the tax

24 rate to a THE TAX rate authorized by this act IF THE TAX RATE

25 IN THE ORDINANCE IS GREATER THAN THE TAX RATE AUTHORIZED BY THIS

26 ACT, AND MAY AMEND THE ORDINANCE TO CHANGE THE TAX RATE TO A TAX

27 RATE LESS THAN THE MAXIMUM TAX RATE AUTHORIZED BY THIS ACT.

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1 (3) (7) Petitions for a referendum election on the

2 question of adopting an ordinance adopted by the governing body

3 may be filed with the city clerk not later than the sixth Monday

4 following the adoption of the ordinance. The petitions shall be

5 signed by a number of registered electors of the city equal to at

6 least 10%, but not more than 20%, of the registered electors of

7 the city voting in the last general municipal election prior to

8 the adoption of the ordinance by the governing body. If proper

9 petitions are filed, the question of adopting the ordinance shall

10 be submitted by the governing body to the city electors at the

11 next primary or general election or at a special election called

12 for the purpose, in any case held not less than 45 days nor more

13 than 90 days after the clerk has reported the filing of the ref-

14 erendum petition to the city's governing body. The checking of

15 names on the petitions, the counting, canvassing, and return of

16 the votes on the question, and other procedures for the election

17 shall be as provided by law or charter. Upon a favorable vote of

18 the city electors, the ordinance shall be effective as specified

19 in the ordinance, which may be amended by the governing body of

20 the city following the election to specify July 1 or January 1 as

21 the effective date of the ordinance , if the effective date

22 originally specified in the ordinance is considered impractical

23 or inconvenient for any reason. The provisions in this section

24 for a referendum election , and for delaying the effective date

25 of the ordinance if petitions for a referendum are filed , are

26 not applicable to a city that on January 1, 1964 had in effect a

27 valid ordinance levying and imposing an excise tax levied on or

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1 measured by income. Notwithstanding any other provision of this

2 act, if an ordinance becomes effective on any date other than

3 January 1, each tax year shall end on December 31, and the provi-

4 sions of the ordinance based on a full tax year are modified

5 accordingly to be applicable to the partial tax year.

6 (4) (8) The city shall annualize the rates under this sec-

7 tion as necessary.

8 (9) As used in this section:

9 (a) "Consumer price index" means the Detroit consumer price

10 index for all urban consumers as defined and reported by the

11 United States department of labor, bureau of labor statistics,

12 and as certified by the state treasurer.

13 (b) "Income tax revenue growth rate" means a number the

14 numerator of which is the income tax collections of the city for

15 the city fiscal year immediately preceding the city's application

16 under subsection (3) and the denominator of which is the product

17 of the income tax collections of the city for the city fiscal

18 year immediately preceding the city fiscal year used to determine

19 the numerator multiplied by 1 plus the corresponding percentage

20 change in the average consumer price index for the calendar year

21 ending in the city fiscal year used to determine the numerator.

22 (c) "Local tax base growth rate" means the total taxable

23 value of real property and personal property in the city for the

24 most recent year for which data is available divided by the total

25 taxable value of real property and personal property in the city

26 for the second year immediately preceding the most recent year

27 for which the data is available.

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1 (d) "Statewide tax base growth rate" means the total taxable

2 value of real property and personal property in the state for the

3 most recent year for which the data is available divided by the

4 total taxable value of real property and personal property in the

5 state for the second year immediately preceding the most recent

6 year for which the data is available.

7 Enacting section 1. Sections 3a, 3b, and 3c of chapter 1 of

8 the city income tax act, 1964 PA 284, MCL 141.503a, 141.503b, and

9 141.503c, are repealed.

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