Michigan Senate Votes to Let Cities Tax for Police, Fire

By DAVID EGGERT | October 21, 2013

Hundreds of Michigan cities facing shrinking property tax bases could ask voters to pay special assessments for police and fire protection under legislation that won approval Wednesday in the state Senate.

The state already lets townships, smaller cities and just one larger city – Saginaw – defray the cost of public safety through special assessments on homeowners and businesses. Under the bill headed to the House, cities with at least 15,000 residents could levy the taxes after not having the option for years.

Voters in those cities would have to OK the millage increase; elected officials would put a request on the ballot. City councils in municipalities below the 15,000-population threshold already can pass police and fire millages on their own.

The legislation approved 37-0 could affect nearly 280 cities, according to a nonpartisan fiscal analysis.

Property tax income has fallen in Michigan due to decreasing property values and a declining population.

The bill’s sponsor, Democratic Sen. Steve Bieda of Warren, said many cities such as older, closer-in suburbs of Detroit are in a quandary, with few ways to expand their tax base. And state revenue-sharing payments to local governments are down about one-third from a dozen years ago.

“Some of the older communities have had big declines in property values,” Bieda said. “In order to sustain their level of service, they have very few options. Let’s treat all these local units of government the same, regardless of the population.”

Most Michigan municipalities receive money from three sources: property taxes, revenue sharing, and fees and fines. Some cities also levy an income tax.

City officials have complained about provisions in the state constitution limiting overall tax collections at the local level and preventing properties’ taxable values from rising any more than 5 percent or the rate of inflation – whichever is less – even in an economic rebound.

“There’s a realization in the Legislature that you have to reinvest in communities, in particular these vital services like police and fire,” said Samantha Harkins, director of state affairs for the Michigan Municipal League.

She said the legislation is about local control.

“Politically, this is an easy one. It could result in a tax increase. However, the Legislature’s not passing the tax increase. This just puts the ultimate decision-making ability in the hands of the voters,” Harkins said.

Local tax increases designated for specific purposes like public safety or libraries have fared pretty well in recent years, she said.

“As long as voters can see the impact of what they’re voting on, it makes it a lot easier.”

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