The Mayor speaking as a resident (wink) made a passionate plea to the residents by yelling. Understandable considering what’s at stake. Yes the city is in trouble yes the city needs money in-order to keep running at something that resembles the city we now live in. Several things got brought up at the ccm October 25 2011 and Headlee Override was the main dish on the menu.
So many terms got mentioned at this last meeting Proposal A, Headlee Override, Roll Back, and Roll Up. Listening your head can spin. Here is my feeble attempt at understanding what all of it means I hope it will help.
This is the html version of the file http://www.mml.org/pdf/opp/opp_headlee_override.pdf.
Google automatically generates html versions of documents as we crawl the web.
Page 1Headlee Roll Back and Headlee OverrideIntroductionThe term “Headlee roll back” became part of municipal finance lexicon in 1978 with the passage of theHeadlee Amendment to the Constitution of the State of Michigan of 1963. In a nutshell, Headlee requires alocal unit of government to reduce its millage when annual growth on existing property is greater than therate of inflation. As a consequence, the local unit’s millage rate is “rolled back” so that the resulting growthin property tax revenue, community-wide, is no more than the rate of inflation. A “Headlee override” is avote by the electors to return the millage to the amount originally authorized via charter, state statute or avote of the people and is necessary to counteract the effects of the “Headlee Rollback.”Impact of Headlee AmendmentSince the passage of the Headlee Amendment, units of government are required to annually calculate aHeadlee roll back factor. The annual factor is then added to Headlee roll back factors determined in prioryears resulting in a cumulative Headlee roll back factor sometimes referred to as the “millage reductionfraction.” This total “millage reduction fraction” is then applied to the millage originally authorized bycharter, state statute or a vote of the people. In summary, the actual mills available to be levied by a unit oflocal government is the product of the authorized millage rate times the total millage reduction fraction. Thisis known as the “Headlee maximum allowable millage.”Impact of Proposal APrior to Proposal A legislation passed in 1994, local governments were allowed to “roll up” their millagerates when growth on existing property was less than inflation. “Roll ups” were a self-correctingmechanism that allowed local governments to naturally recapture taxing authority lost due to Headlee rollbacks in prior years. A local government could only “roll up” its millage rate to the amount originallyauthorized by charter, state statute or a vote of the people.Additions to taxable value (such as newly constructed property) are typically excluded (or exempt) from theHeadlee roll back calculation. The 1994 General Property Tax Act changes did not specifically define“uncapped values” (increases resulting primarily from property transfers) as exempt.ResultAlthough it might appear that a community with an annual increase in uncapped property values wouldbenefit monetarily, uncapped values are treated as growth on existing property and trigger Headlee rollbacks. For local governments levying at their Headlee maximum authorized millage, rolling back themaximum authorized millage rate reduces the revenue that would have been generated from theseincreased property values. The increase in the taxable value of property not transferred is capped at thelesser of inflation or 5 percent. Even though the taxable value of a particular piece of property increases atthe rate of inflation, the millage rate for the entire community is “rolled back” as a result of the increase inthe total taxable value of the community. The net result – a less than inflationary increase in the actualdollars received from property taxes. Consequently, the 1994 change to the General Property Tax Act hasprevented local governments from being able to share the benefits of any substantial market growth inexisting property values.Based on System Failure: Michigan’s Broken Municipal Finance Model. Prepared for the Michigan Municipal League by Frank W.Audia, Partner and Denise A. Buckley, Associate, Plante and Moran, PLLC, March, 2004Sample Headlee Override Ballot LanguageThe City of Olivet Additional Operating Millage Millage ProposalShall the City of Olivet, for the purpose of general operations, levy up to 1.1218 mills ($1.1218 per thousand dollars oftaxable value on all real and personal property) for a period of five (5) years, 2001-2005, inclusive? The intent ofthis request is to restore the total City operating Millage at maximum allocated rate of 15 mills authorized by theCharter of the City of Olivet.The 15 mills has been reduced by required Millage rollbacks in recent years to 13.8782 mills. If approved and leviedin its entirety, this additional Millage would raise an estimated $13,608 for the City of Olivet.City of Dearborn Heights Headlee Override Millage ProposalShall a “Headlee Override” be adopted so that the current limitation on the amount of City taxes that may be leviedagainst all taxable property in the City of Dearborn Heights, Wayne County, Michigan be increased• Up to 8.5 mills from approximately 6.798 mills ($8.50 from approximately $6.798 per $1,000 of taxablevalue) for general operating expenses,• Up to 3 mills from approximately 2.3991 mills ($3.00 from approximately $2.3991 per $1,000 of taxablevalue) for sanitation/rubbish, and• Up to 2 mills from approximately 1.5993 mills ($2.00 from approximately $1.5993 per $1,000 of taxablevalue) for police and fire protection?If approved and levied in its entirety, this millage would raise an estimated maximum amount of $3.57 million for theCity in 2002 by allowing the City to levy the maximum mills previously approved by the voters and authorized by theCity Charter and Sate law which have been reduced as required by the Michigan Constitution of 1963.Huntington Woods Millage Increase PropositionShall the City of Huntington Woods, Oakland County, Michigan, be authorized to levy, in 2004 and thereafter, anadditional 6.1829 mills on each dollar ($6.1829 per $1,000) of the taxable value of all property in the city, therebyallowing the levy of Charter-authorized millage for general purposes in excess of the limit to which it was reducedby Section 31 of Article IX of the State Constitution of 1963, all of which tax revenues will be disbursed to the City ofHuntington Woods; provided, that the City shall not be authorized to increase the levy of the City’s Charter-authorized millage by more than one-half (0.50) mill in 2004, or by more than an additional one-half mill eachyear.