SENATE BILL No. 396

 

 

May 29, 2013, Introduced by Senators CASPERSON, WALKER and GREEN 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 2012 PA 185.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 34d. (1) As used in this section or section 27a, or

 

section 3 or 31 of article IX of the state constitution of 1963:

 

     (a) For taxes levied before 1995, "additions" means all

 

increases in value caused by new construction or a physical

 

addition of equipment or furnishings, and the value of property

 

that was exempt from taxes or not included on the assessment unit's

 

immediately preceding year's assessment roll.

 

     (b) For taxes levied after 1994, "additions" means, except as

 

provided in subdivision (c), all of the following:

 

     (i) Omitted real property. As used in this subparagraph,

 


"omitted real property" means previously existing tangible real

 

property not included in the assessment. Omitted real property

 

shall not increase taxable value as an addition unless the

 

assessing jurisdiction has a property record card or other

 

documentation showing that the omitted real property was not

 

previously included in the assessment. The assessing jurisdiction

 

has the burden of proof in establishing whether the omitted real

 

property is included in the assessment. Omitted real property for

 

the current and the 2 immediately preceding years, discovered after

 

the assessment roll has been completed, shall be added to the tax

 

roll pursuant to the procedures established in section 154. For

 

purposes of determining the taxable value of real property under

 

section 27a, the value of omitted real property is based on the

 

value and the ratio of taxable value to true cash value the omitted

 

real property would have had if the property had not been omitted.

 

     (ii) Omitted personal property. As used in this subparagraph,

 

"omitted personal property" means previously existing tangible

 

personal property not included in the assessment. Omitted personal

 

property shall be added to the tax roll pursuant to section 154.

 

     (iii) New construction. As used in this subparagraph, "new

 

construction" means property not in existence on the immediately

 

preceding tax day and not replacement construction. New

 

construction includes the physical addition of equipment or

 

furnishings, subject to the provisions set forth in section

 

27(2)(a) to (o). For purposes of determining the taxable value of

 

property under section 27a, the value of new construction is the

 

true cash value of the new construction multiplied by 0.50.

 


     (iv) Previously exempt property. As used in this subparagraph,

 

"previously exempt property" means property that was exempt from ad

 

valorem taxation under this act on the immediately preceding tax

 

day but is subject to ad valorem taxation on the current tax day

 

under this act. For purposes of determining the taxable value of

 

real property under section 27a:

 

     (A) The value of property previously exempt under section 7u

 

is the taxable value the entire parcel of property would have had

 

if that property had not been exempt, minus the product of the

 

entire parcel's taxable value in the immediately preceding year and

 

the lesser of 1.05 or the inflation rate.

 

     (B) The taxable value of property that is a facility as that

 

term is defined in section 2 of 1974 PA 198, MCL 207.552, that was

 

previously exempt under section 7k is the taxable value that

 

property would have had under this act if it had not been exempt.

 

     (C) The value of property previously exempt under any other

 

section of law is the true cash value of the previously exempt

 

property multiplied by 0.50.

 

     (v) Replacement construction. As used in this subparagraph,

 

"replacement construction" means construction that replaced

 

property damaged or destroyed by accident or act of God and that

 

occurred after the immediately preceding tax day to the extent the

 

construction's true cash value does not exceed the true cash value

 

of property that was damaged or destroyed by accident or act of God

 

in the immediately preceding 3 years. For Except as otherwise

 

provided in this subparagraph, for purposes of determining the

 

taxable value of property under section 27a, the value of the

 


replacement construction is the true cash value of the replacement

 

construction multiplied by a fraction, the numerator of which is

 

the taxable value of the property to which the construction was

 

added in the immediately preceding year and the denominator of

 

which is the true cash value of the property to which the

 

construction was added in the immediately preceding year, and then

 

multiplied by the lesser of 1.05 or the inflation rate. However,

 

after December 31, 2011, for purposes of determining the taxable

 

value of property under section 27a, if the property's replacement

 

construction is of substantially the same materials and square

 

footage, and if the replacement construction is completed not later

 

than December 31 in the year 3 years after the accident or act of

 

God occurred, the replacement construction's taxable value is the

 

taxable value of the property damaged or destroyed, adjusted

 

annually as provided in section 27a(2). Any construction

 

improvements required to bring the property into compliance with

 

any applicable health, sanitary, zoning, safety, fire, or

 

construction codes or ordinances shall not increase the property's

 

taxable value under section 27a.

 

     (vi) An increase in taxable value attributable to the complete

 

or partial remediation of environmental contamination existing on

 

the immediately preceding tax day. The department of environmental

 

quality shall determine the degree of remediation based on

 

information available in existing department of environmental

 

quality records or information made available to the department of

 

environmental quality if the appropriate assessing officer for a

 

local tax collecting unit requests that determination. The increase

 


in taxable value attributable to the remediation is the increase in

 

true cash value attributable to the remediation multiplied by a

 

fraction, the numerator of which is the taxable value of the

 

property had it not been contaminated and the denominator of which

 

is the true cash value of the property had it not been

 

contaminated.

 

     (vii) An increase in the value attributable to the property's

 

occupancy rate if either a loss, as that term is defined in this

 

section, had been previously allowed because of a decrease in the

 

property's occupancy rate or if the value of new construction was

 

reduced because of a below-market occupancy rate. For purposes of

 

determining the taxable value of property under section 27a, the

 

value of an addition for the increased occupancy rate is the

 

product of the increase in the true cash value of the property

 

attributable to the increased occupancy rate multiplied by a

 

fraction, the numerator of which is the taxable value of the

 

property in the immediately preceding year and the denominator of

 

which is the true cash value of the property in the immediately

 

preceding year, and then multiplied by the lesser of 1.05 or the

 

inflation rate.

 

     (viii) Public services. As used in this subparagraph, "public

 

services" means water service, sewer service, a primary access

 

road, natural gas service, electrical service, telephone service,

 

sidewalks, or street lighting. For purposes of determining the

 

taxable value of real property under section 27a, the value of

 

public services is the amount of increase in true cash value of the

 

property attributable to the available public services multiplied

 


by 0.50, and shall be added in the calendar year following the

 

calendar year when those public services are initially available.

 

     (c) For taxes levied after 1994, additions do not include

 

increased value attributable to any of the following:

 

     (i) Platting, splits, or combinations of property.

 

     (ii) A change in the zoning of property.

 

     (iii) For the purposes of the calculation of the millage

 

reduction fraction under subsection (7) only, increased taxable

 

value under section 27a(3) after a transfer of ownership of

 

property.

 

     (d) "Assessed valuation of property as finally equalized"

 

means taxable value under section 27a.

 

     (e) "Financial officer" means the officer responsible for

 

preparing the budget of a unit of local government.

 

     (f) "General price level" means the annual average of the 12

 

monthly values for the United States consumer price index for all

 

urban consumers as defined and officially reported by the United

 

States department of labor, bureau of labor statistics.

 

     (g) For taxes levied before 1995, "losses" means a decrease in

 

value caused by the removal or destruction of real or personal

 

property and the value of property taxed in the immediately

 

preceding year that has been exempted or removed from the

 

assessment unit's assessment roll.

 

     (h) For taxes levied after 1994, "losses" means, except as

 

provided in subdivision (i), all of the following:

 

     (i) Property that has been destroyed or removed. For purposes

 

of determining the taxable value of property under section 27a, the

 


value of property destroyed or removed is the product of the true

 

cash value of that property multiplied by a fraction, the numerator

 

of which is the taxable value of that property in the immediately

 

preceding year and the denominator of which is the true cash value

 

of that property in the immediately preceding year.

 

     (ii) Property that was subject to ad valorem taxation under

 

this act in the immediately preceding year that is now exempt from

 

ad valorem taxation under this act. For purposes of determining the

 

taxable value of property under section 27a, the value of property

 

exempted from ad valorem taxation under this act is the amount

 

exempted.

 

     (iii) An adjustment in value, if any, because of a decrease in

 

the property's occupancy rate, to the extent provided by law. For

 

purposes of determining the taxable value of real property under

 

section 27a, the value of a loss for a decrease in the property's

 

occupancy rate is the product of the decrease in the true cash

 

value of the property attributable to the decreased occupancy rate

 

multiplied by a fraction, the numerator of which is the taxable

 

value of the property in the immediately preceding year and the

 

denominator of which is the true cash value of the property in the

 

immediately preceding year.

 

     (iv) A decrease in taxable value attributable to environmental

 

contamination existing on the immediately preceding tax day. The

 

department of environmental quality shall determine the degree to

 

which environmental contamination limits the use of property based

 

on information available in existing department of environmental

 

quality records or information made available to the department of

 


environmental quality if the appropriate assessing officer for a

 

local tax collecting unit requests that determination. The

 

department of environmental quality's determination of the degree

 

to which environmental contamination limits the use of property

 

shall be based on the criteria established for the categories set

 

forth in section 20120a(1) of the natural resources and

 

environmental protection act, 1994 PA 451, MCL 324.20120a. The

 

decrease in taxable value attributable to the contamination is the

 

decrease in true cash value attributable to the contamination

 

multiplied by a fraction, the numerator of which is the taxable

 

value of the property had it not been contaminated and the

 

denominator of which is the true cash value of the property had it

 

not been contaminated.

 

     (i) For taxes levied after 1994, losses do not include

 

decreased value attributable to either of the following:

 

     (i) Platting, splits, or combinations of property.

 

     (ii) A change in the zoning of property.

 

     (j) "New construction and improvements" means additions less

 

losses.

 

     (k) "Current year" means the year for which the millage

 

limitation is being calculated.

 

     (l) "Inflation rate" means the ratio of the general price level

 

for the state fiscal year ending in the calendar year immediately

 

preceding the current year divided by the general price level for

 

the state fiscal year ending in the calendar year before the year

 

immediately preceding the current year.

 

     (2) On or before the first Monday in May of each year, the

 


assessing officer of each township or city shall tabulate the

 

tentative taxable value as approved by the local board of review

 

and as modified by county equalization for each classification of

 

property that is separately equalized for each unit of local

 

government and provide the tabulated tentative taxable values to

 

the county equalization director. The tabulation by the assessing

 

officer shall contain additions and losses for each classification

 

of property that is separately equalized for each unit of local

 

government or part of a unit of local government in the township or

 

city. If as a result of state equalization the taxable value of

 

property changes, the assessing officer of each township or city

 

shall revise the calculations required by this subsection on or

 

before the Friday following the fourth Monday in May. The county

 

equalization director shall compute these amounts and the current

 

and immediately preceding year's taxable values for each

 

classification of property that is separately equalized for each

 

unit of local government that levies taxes under this act within

 

the boundary of the county. The county equalization director shall

 

cooperate with equalization directors of neighboring counties, as

 

necessary, to make the computation for units of local government

 

located in more than 1 county. The county equalization director

 

shall calculate the millage reduction fraction for each unit of

 

local government in the county for the current year. The financial

 

officer for each taxing jurisdiction shall calculate the compounded

 

millage reduction fractions beginning in 1980 resulting from the

 

multiplication of successive millage reduction fractions and shall

 

recognize a local voter action to increase the compounded millage

 


reduction fraction to a maximum of 1 as a new beginning fraction.

 

Upon request of the superintendent of the intermediate school

 

district, the county equalization director shall transmit the

 

complete computations of the taxable values to the superintendent

 

of the intermediate school district within that county. At the

 

request of the presidents of community colleges, the county

 

equalization director shall transmit the complete computations of

 

the taxable values to the presidents of community colleges within

 

the county.

 

     (3) On or before the first Monday in June of each year, the

 

county equalization director shall deliver the statement of the

 

computations signed by the county equalization director to the

 

county treasurer.

 

     (4) On or before the second Monday in June of each year, the

 

treasurer of each county shall certify the immediately preceding

 

year's taxable values, the current year's taxable values, the

 

amount of additions and losses for the current year, and the

 

current year's millage reduction fraction for each unit of local

 

government that levies a property tax in the county.

 

     (5) The financial officer of each unit of local government

 

shall make the computation of the tax rate using the data certified

 

by the county treasurer and the state tax commission. At the annual

 

session in October, or, for a county or local tax collecting unit

 

that approves under section 44a(2) the accelerated collection in a

 

summer property tax levy of a millage that had been previously

 

billed and collected as in a preceding tax year as part of the

 

winter property tax levy, before a special meeting held before the

 


annual levy on July 1, the county board of commissioners shall not

 

authorize the levy of a tax unless the governing body of the taxing

 

jurisdiction has certified that the requested millage has been

 

reduced, if necessary, in compliance with section 31 of article IX

 

of the state constitution of 1963.

 

     (6) The number of mills permitted to be levied in a tax year

 

is limited as provided in this section pursuant to section 31 of

 

article IX of the state constitution of 1963. A unit of local

 

government shall not levy a tax rate greater than the rate

 

determined by reducing its maximum rate or rates authorized by law

 

or charter by a millage reduction fraction as provided in this

 

section without voter approval.

 

     (7) A millage reduction fraction shall be determined for each

 

year for each local unit of government. For ad valorem property

 

taxes that became a lien before January 1, 1983, the numerator of

 

the fraction shall be the total state equalized valuation for the

 

immediately preceding year multiplied by the inflation rate and the

 

denominator of the fraction shall be the total state equalized

 

valuation for the current year minus new construction and

 

improvements. For ad valorem property taxes that become a lien

 

after December 31, 1982 and through December 31, 1994, the

 

numerator of the fraction shall be the product of the difference

 

between the total state equalized valuation for the immediately

 

preceding year minus losses multiplied by the inflation rate and

 

the denominator of the fraction shall be the total state equalized

 

valuation for the current year minus additions. For ad valorem

 

property taxes that are levied after December 31, 1994, the

 


numerator of the fraction shall be the product of the difference

 

between the total taxable value for the immediately preceding year

 

minus losses multiplied by the inflation rate and the denominator

 

of the fraction shall be the total taxable value for the current

 

year minus additions. For each year after 1993, a millage reduction

 

fraction shall not exceed 1.

 

     (8) The compounded millage reduction fraction shall be

 

calculated by multiplying the local unit's previous year's

 

compounded millage reduction fraction by the current year's millage

 

reduction fraction. The compounded millage reduction fraction for

 

the year shall be multiplied by the maximum millage rate authorized

 

by law or charter for the unit of local government for the year,

 

except as provided by subsection (9). A compounded millage

 

reduction fraction shall not exceed 1.

 

     (9) The millage reduction shall be determined separately for

 

authorized millage approved by the voters. The limitation on

 

millage authorized by the voters on or before April 30 of a year

 

shall be calculated beginning with the millage reduction fraction

 

for that year. Millage authorized by the voters after April 30

 

shall not be subject to a millage reduction until the year

 

following the voter authorization which shall be calculated

 

beginning with the millage reduction fraction for the year

 

following the authorization. The first millage reduction fraction

 

used in calculating the limitation on millage approved by the

 

voters after January 1, 1979 shall not exceed 1.

 

     (10) A millage reduction fraction shall be applied separately

 

to the aggregate maximum millage rate authorized by a charter and

 


to each maximum millage rate authorized by state law for a specific

 

purpose.

 

     (11) A unit of local government may submit to the voters for

 

their approval the levy in that year of a tax rate in excess of the

 

limit set by this section. The ballot question shall ask the voters

 

to approve the levy of a specific number of mills in excess of the

 

limit. The provisions of this section do not allow the levy of a

 

millage rate in excess of the maximum rate authorized by law or

 

charter. If the authorization to levy millage expires after 1993

 

and a local governmental unit is asking voters to renew the

 

authorization to levy the millage, the ballot question shall ask

 

for renewed authorization for the number of expiring mills as

 

reduced by the millage reduction required by this section. If the

 

election occurs before June 1 of a year, the millage reduction is

 

based on the immediately preceding year's millage reduction

 

applicable to that millage. If the election occurs after May 31 of

 

a year, the millage reduction shall be based on that year's millage

 

reduction applicable to that millage had it not expired.

 

     (12) A reduction or limitation under this section shall not be

 

applied to taxes imposed for the payment of principal and interest

 

on bonds or other evidence of indebtedness or for the payment of

 

assessments or contract obligations in anticipation of which bonds

 

are issued that were authorized before December 23, 1978, as

 

provided by section 4 of chapter I of former 1943 PA 202, or to

 

taxes imposed for the payment of principal and interest on bonds or

 

other evidence of indebtedness or for the payment of assessments or

 

contract obligations in anticipation of which bonds are issued that

 


are approved by the voters after December 22, 1978.

 

     (13) If it is determined subsequent to the levy of a tax that

 

an incorrect millage reduction fraction has been applied, the

 

amount of additional tax revenue or the shortage of tax revenue

 

shall be deducted from or added to the next regular tax levy for

 

that unit of local government after the determination of the

 

authorized rate pursuant to this section.

 

     (14) If as a result of an appeal of county equalization or

 

state equalization the taxable value of a unit of local government

 

changes, the millage reduction fraction for the year shall be

 

recalculated. The financial officer shall effectuate an addition or

 

reduction of tax revenue in the same manner as prescribed in

 

subsection (13).

 

     (15) The fractions calculated pursuant to this section shall

 

be rounded to 4 decimal places, except that the inflation rate

 

shall be computed by the state tax commission and shall be rounded

 

to 3 decimal places. The state tax commission shall publish the

 

inflation rate before March 1 of each year.

 

     (16) Beginning with taxes levied in 1994, the millage

 

reduction required by section 31 of article IX of the state

 

constitution of 1963 shall permanently reduce the maximum rate or

 

rates authorized by law or charter. The reduced maximum authorized

 

rate or rates for 1994 shall equal the product of the maximum rate

 

or rates authorized by law or charter before application of this

 

section multiplied by the compounded millage reduction applicable

 

to that millage in 1994 pursuant to subsections (8) to (12). The

 

reduced maximum authorized rate or rates for 1995 and each year

 


after 1995 shall equal the product of the immediately preceding

 

year's reduced maximum authorized rate or rates multiplied by the

 

current year's millage reduction fraction and shall be adjusted for

 

millage for which authorization has expired and new authorized

 

millage approved by the voters pursuant to subsections (8) to (12).