SCHOOL ELECTION DAY IS TUESDAY, AUGUST 4

Dear Holland Public Schools Voter: A letter about the August 4th Millage Request from Holland Public Schools.

Vote Tuesday August 4Like a lot of other things in the Holland-area over the last few months, our May school election was cancelled to help flatten the curve and prevent the spread of Covid-19. Our new school election day is Tuesday, August 4. This election is important to the financial health of our school district and the Holland community.

All public school districts in Michigan are required to levy a non-homestead millage. This levy is capped by law at 18-mills. In Holland, this revenue represents 30% of our operating budget. However, over the past two years, the amount levied in Holland has fallen below the voter-approved 18-mills.

This is due to a Headlee Rollback* which automatically lowers millage rates when property values in a district increase faster than the rate of inflation. HPS is seeking to restore the amount collected this summer to the 18-mills voters overwhelmingly approved in the past, and to offset these rollbacks through 2022 as necessary.

By statute, at no time would Holland Public Schools levy more than 18-mills for operating purposes.

By providing HPS with the flexibility to restore the millage rate to 18-mills through 2022 as necessary, you will help us protect the current level of funding for the district. This is how we pay employees, keep our buildings warm, and run programs.

  • This funding protection will only take effect if property values in the district increase enough to trigger a rollback from the state.
  • This request only applies to business, commercial, second home and similar properties. It does not apply to your primary residence.
  • This is not a tax increase over the previously approved 18-mill request.

Everyone at HPS is determined to continue to provide educational excellence to the children and families in our community. Maintaining current levels of funding is critical to making this happen. Thank you for your consideration.

Operating Millage Request Language

Official List of Proposals August 4, 2020 State Primary Election Ottawa County, Michigan

School District of the City of Holland

Operating Millage Proposal

This proposal will allow the school district to levy the statutory rate of not to exceed 18 mills on all property, except principal residence and other property exempted by law, required for the school district to receive its revenue per pupil foundation allowance. The remaining 1.5 mills are only available to be levied to restore millage lost as a reduction required by the "Headlee" amendment to the Michigan Constitution of 1963 and will only be levied to the extent necessary to restore that reduction.

Shall the limitation on the amount of taxes which may be assessed against all property, except principal residence and other property exempted by law, in School District of the City of Holland, Ottawa and Allegan Counties, Michigan, be increased by 19.5 mills ($19.50 on each $1,000 of taxable valuation) for a period of 3 years, 2020, 2021 and 2022, to provide funds for operating purposes; the estimate of the revenue the school district will collect if the millage is approved and .77 mill is levied in 2020 is approximately $442,000 (1.5 mills is to restore future millage lost as a result of the reduction required by the Michigan Constitution of 1963 and will be levied only to the extent necessary to restore such reductions)?

How the Headlee Amendment Impacts School Funding

Headlee Rollback and Headlee Override Introduction

Provided by Michigan Municipal League:

The term “Headlee Rollback” became part of municipal finance lexicon in 1978 with the passage of the Headlee Amendment to Michigan’s Constitution. In a nutshell, Headlee requires a local unit of government to reduce its millage when annual growth on existing property is greater than the rate of inflation. As a consequence, the local unit’s millage rate gets “rolled back” so that the resulting growth in property tax revenue, community-wide, is no more than the rate of inflation. A “Headlee override” is a vote by the electors to return the millage to the amount originally authorized via charter, state statute, or a vote of the people, and is necessary to counteract the effects of the “Headlee Rollback.”

Impact of Headlee Amendment

Since the passage of the Headlee Amendment, units of government are required to annually calculate a Headlee rollback factor. The annual factor is then added to Headlee rollback factors determined in prior years resulting in a cumulative Headlee rollback factor sometimes referred to as the “millage reduction fraction.” This total “millage reduction fraction” is then applied to the millage originally authorized by charter, state statute, or a vote of the people. In summary, the actual mills available to be levied by a unit of local government is the product of the authorized millage rate times the total millage reduction fraction. This is known as the “Headlee maximum allowable millage.”

Impact of Proposal A

Prior to Proposal A legislation passed in 1994, local governments were allowed to “roll up” their millage rates when growth on existing property was less than inflation. “Roll ups” were a self-correcting mechanism 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 originally authorized 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 the Headlee roll back calculation. The 1994 General Property Tax Act changes did not specifically define “uncapped values” (increases resulting primarily from property transfers) as exempt.

Result

Although it might appear that a community with an annual increase in uncapped property values would benefit 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 the maximum authorized millage rate reduces the revenue that would have been generated from these increased property values. The increase in the taxable value of property not transferred is capped at the lesser of inflation or five percent. Even though the taxable value of a particular piece of property increases at the rate of inflation, the millage rate for the entire community is “rolled back” as a result of the increase in the total taxable value of the community. The net result—a less than inflationary increase in the actual dollars received from property taxes. Consequently, the 1994 change to the General Property Tax Act has prevented local governments from being able to share the benefits of any substantial market growth in existing property values.

Based on System Failure: Michigan’s Broken Municipal Finance Model. Prepared for the Michigan Municipal League by Plante and Moran, PLLC, March, 2004

Michigan Municipal League І October 2016