HB-5176, As Passed House, February 4, 2016

HOUSE BILL No. 5176

December 17, 2015, Introduced by Rep. Farrington and referred to the Committee on Tax Policy.

A bill to amend 2014 PA 86, entitled

"Local community stabilization authority act,"

by amending sections 14, 17, and 21 (MCL 123.1354, 123.1357, and

123.1361), sections 14 and 17 as amended by 2015 PA 122; and to

repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 14. (1) Not later than August 15, 2016, and each August

15 thereafter, for each municipality that is not a local school

district, intermediate school district, or tax increment finance

authority, the department shall do all of the following:

(a) Calculate the municipality's personal property exemption

loss.

(b) Multiply the municipality's personal property exemption

loss by the millage rates calculated under section 13(5).

amount required to reflect the final order of a court or body of

competent jurisdiction related to any prior year calculation under

this subsection. An adjustment under this subdivision shall only be

made for municipalities for which changes in prior year taxable

values can be calculated from taxable values reported under section

151(1) of the state school aid act of 1979, 1979 PA 94, MCL

388.1751.

(d) Adjust the amount calculated under subdivision (b), as

adjusted by subdivision (c), by the amount calculated under section

16a(2) for captured taxes levied by the municipality not including

taxes attributable to increased captured value.

(2) Not later than August 15, 2016, and each August 15

thereafter, for each municipality that is a county, township,

village, city, or authority that provides essential services, the

department shall do all of the following:

(a) Add to the amount calculated under subsection (1)(a) any

increased value from expired tax exemptions for the current year.

(b) Subtract from the amount calculated under subdivision (a)

the amount calculated under section 16a(2)(b) for the municipality,

not including any amount attributable to increased captured value.

the 2015 small taxpayer exemption loss.

(d) ~~(c)~~ Multiply the result of the calculation in subdivision

~~(b)~~ (c) by the millage rate calculated under section 13(5) for

general operating millage.

(e) ~~(d)~~ Multiply the result of the calculation in subdivision

~~(c)~~ (d) by the percentage of the municipality's general operating

millage used to fund the cost of essential services in the

municipality's fiscal year ending in 2012. The department shall

calculate each municipality's percentage of general operating

millage used to fund the cost of essential services in the

municipality's fiscal year ending in 2012, unless the municipality

includes the calculation in its comprehensive annual financial

report for the municipality's fiscal year ending in either 2014 or

2015 or otherwise reports the calculation to the department in a

form and in a manner prescribed by the department.

(f) ~~(e)~~ Add to the result of the calculation in subdivision

~~(d)~~ (e) an amount calculated by multiplying the amount calculated

under subsection (2)(b) by the millage rates calculated under

section 13(5) that are dedicated solely for the cost of essential

services levied on industrial personal property and commercial

personal property. A millage levied to fund a pension under the

fire fighters and police officers retirement act, 1937 PA 345, MCL

38.551 to 38.562, is dedicated solely for the cost of essential

services.

(3) Not later than ~~September 15, 2015,~~ January 20, 2016, for

each municipality that is a city, the department shall do all of

the following:

(a) Calculate the municipality's 2014 and 2015 small taxpayer

exemption loss.

(b) Multiply the ~~amount calculated under subdivision (a)~~ 2014

small taxpayer exemption loss if greater than zero by the millage

rates calculated under section 13(5) for 2014, excluding debt

millage.

small taxpayer exemption loss if greater than zero by the millage

rates calculated under section 13(5) for 2015, excluding debt

millage.

(d) Add the amounts calculated under subdivisions (b) and (c).

(e) ~~Subtract from the amount calculated under subdivision (d)~~

Calculate the sum of the municipality's debt loss for 2014 and 2015

reimbursed under section 17(1)(a) for millages used to calculate

the amounts under subdivisions (b) and (c).

(f) ~~Subtract from the amount calculated under subdivision (e)~~

Calculate the amount of any tax increment small taxpayer loss for

captured taxes levied by the municipality in 2014 and 2015 for

millages used to calculate the amounts under subdivisions (b) and

(c).

(4) Not later than August 15, 2016, and each August 15

thereafter, for each municipality that is not a local school

district, intermediate school district, or tax increment finance

authority, the department shall do all of the following:

(a) Calculate the municipality's 2015 small taxpayer exemption

loss.

(b) Multiply the municipality's 2015 small taxpayer exemption

loss by the millage rates calculated under section 13(5).

amount required to reflect the final order of a court or body of

competent jurisdiction related to any prior year calculation under

this subsection. An adjustment under this subdivision shall only be

made for municipalities for which changes in prior year taxable

values can be calculated from taxable values reported under section

151(1) of the state school aid act of 1979, 1979 PA 94, MCL

388.1751.

(d) Adjust the amount calculated under subdivision (b), as

adjusted by subdivision (c), by the amount calculated under section

16a(2) for captured taxes levied by the municipality not including

taxes attributable to increased captured value. The adjustment

under this subdivision shall only be made to the extent that the

adjustment made under subsection (1)(d) did not fully account for

all captured taxes levied by the municipality not including taxes

attributable to increased captured value.

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.

(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.

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)~~ 14(3)(d) and the denominator of which is the

total amount calculated under section ~~14(3).~~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 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.

(iv) 100% of the amount calculated in section 14(2). However,

the amount distributed to a municipality under this subparagraph

shall not exceed the amount calculated in section 14(1)(d). 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).

(vi) 100% of that municipality's amount calculated under

section 14(4).

(b) Beginning for calendar year 2019, after the distributions

under subdivision (a), and subject to subparagraph (viii), the

authority shall distribute 5% of the remaining balance of the local

community stabilization share fund 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 the sum of the lowest rate of each individual millage levied

by the municipality in the period between 2012 and the year

immediately preceding the current year that is not used to

calculate a distribution under subdivision ~~(a).~~ (a)(i) to (iv). For

an individual millage rate not levied in 1 of the years, the lowest

millage rate is zero. A millage used to make the calculation under

this subparagraph must be eligible to be levied against both real

property and personal property.

(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 amount calculated under section 16a(2) for captured

taxes levied by the municipality not including taxes attributable

to increased captured value.

(v) Subtract from the amount calculated under subparagraph

(ii) the amount calculated under subparagraph (iv).

(vi) Divide the result of the calculation in subparagraph (v)

by the sum of the calculation under subparagraph (v) 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 2020, and each calendar year

thereafter, the percentage amount described in this subdivision

shall be increased an additional 5% each year, not to exceed 100%.

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.

(5) The authority shall make the payments required by

subsection (3) not later than ~~October 20, 2015,~~ February 20, 2016,

and payments required by subsection (4) not later than on the

following dates:

(a) For county allocated millage, September 20 of the year the

millage is levied.

(b) For county extra-voted millage, township millage, and

other millages levied 100% in December of a year, February 20 of

the following year.

levied.

(6) If the authority has insufficient funds to make the

payments on the dates required in subsection (5), 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.

(7) 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.

(8) The authority shall distribute local community

stabilization share revenue under this section 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.

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. 21. ~~From the amount received under section 17, a~~

~~municipality shall first replace debt loss or school debt loss, as~~

~~applicable. A municipality shall not receive a distribution under~~

~~this act if it has increased its millage rate without voter~~

~~approval to replace debt loss or school debt loss, as applicable,~~

~~that otherwise would be reimbursed under this act.~~

(1) If a municipality does not adjust its debt millage rate to

reflect reimbursement for the small taxpayer exemption loss under

section 17(1)(a), the reimbursement under section 17(1)(a) shall be

reduced by the excess debt taxes levied.

(2) A municipality shall use the amount received under section

17(4) for debt millage to pay debt. If a payment under section

17(4) for debt millage is not used to pay debt, the amount not used