HB 6005

HOUSE BILL NO. 6005
A bill to amend 1893 PA 206, entitled
"The general property tax act,"
by amending section 34d (MCL 211.34d), as amended by
2022 PA 240.
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 local tax
collecting 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
does not increase taxable value as an addition unless the assessing jurisdiction local
tax collecting unit has a property record card or other documentation
showing that the omitted real property was not previously included in the
assessment. The assessing jurisdiction local tax collecting unit 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, must 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 must 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 (q). 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. 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 as determined by the state tax commission, if
the square footage is not more than 5% greater than the property that was
damaged or destroyed, 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 equal to the taxable
value of the property in the year immediately preceding the year in which the
property was damaged or destroyed, adjusted annually as provided in section
27a(2). Any construction materials required to bring the property into
compliance with any applicable health, sanitary, zoning, safety, fire, or
construction codes or ordinances must be considered to be substantially the
same materials by the state tax commission for the sake of replacement
construction under this section.
(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
environment, Great Lakes, and energy shall determine the degree of remediation
based on information available in existing department of environment, Great
Lakes, and energy records or information made available to the department of
environment, Great Lakes, and energy 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) 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 must be added in the calendar
year following the calendar year when those public services are initially
available.
(viii) For taxes levied after 2026,
for the purpose 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.
(c) For taxes
levied after 1994, additions do not include increased value attributable to any either 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) Before December 31, 2013, 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 environment, Great Lakes, and energy shall determine the
degree to which environmental contamination limits the use of property based on
information available in existing department of environment, Great Lakes, and
energy records or information made available to the department of environment,
Great Lakes, and energy if the appropriate assessing officer for a local tax
collecting unit requests that determination. The department of environment,
Great Lakes, and energy's determination of the degree to which environmental
contamination limits the use of property must 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 must 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 must 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 is the total state equalized valuation for
the immediately preceding year multiplied by the inflation rate and the
denominator of the fraction is 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 is 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 is 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 is 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 is the total taxable value
for the current year minus additions. For each year
after 1993, a millage reduction fraction must not exceed 1.
(8) The compounded
millage reduction fraction must 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 must 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 must not exceed 1.
(9) The millage
reduction must 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 must be calculated beginning with the millage reduction fraction
for that year. Millage authorized by the voters after April 30 is not subject
to a millage reduction until the year following the voter authorization which
must 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 must not exceed 1.
(10) A millage
reduction fraction must 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 must 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 must 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 must be based on that year's millage
reduction applicable to that millage had it not expired.
(12) A reduction or
limitation under this section must 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 after 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 must 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
must 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 must be rounded to 4 decimal places, except
that the inflation rate must be computed by the state tax commission and must
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 permanently reduces the maximum rate or rates authorized by law or
charter. The reduced maximum authorized rate or rates for 1994 must 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 must
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 must be adjusted for millage for which authorization has expired
and new authorized millage approved by the voters pursuant to subsections (8)
to (12).
Enacting section 1. This amendatory act takes effect
180 days after the date it is enacted into law.
Enacting
section 2. This amendatory act does not take effect unless House Bill No. 5996
(request no. H05514'25) of the 103rd Legislature is enacted into law.