TheReview_Jan_Feb_2022 Flipping Book

While it may be cold comfort, the CRC study found that most local governments are better off financially with the two overlapping tax limitation laws than they would have been had only the Headlee Amendment been in effect during the devastating Great Recession from 2007 to 2009. It was the first time in modern history that property values collapsed, resulting in a steep decline in the overall tax base. Prior to the Great Recession, property values were spiking. That required local government to roll back millage rates under Headlee. But in the subsequent collapse, local units were collecting tax revenues at much lower rates. Proposal A allowed for some additional revenue growth as the recession eased and the economy picked up steam. In one example from the CRC study, tax revenues in Farmington Hills would have declined nearly twice as fast under only Headlee during the Great Recession and its aftermath than under both tax limitation measures. Without any limitations, tax revenues in this Detroit suburb would have nearly recovered by now from the downturn. But under the current structure, “Farmington Hills revenues will not return to prerecession levels for many years,” Roof said. CRC officials cautioned that future tax policies should not be based on “a once-in-a-century event like the Great Recession.”

While taxpayers have benefitted from tax limitations, the study shows they’re also concerned about the impact tax cuts have had on local government services and the vibrancy of their communities. Many communities have voted to overturn Headlee rollbacks on existing taxes and implement new ones to restore police, fire, and other critical services. In Oakland County alone, 80 percent of local units have increased their overall tax rate since 2007. In this year’s May statewide local elections, 79 percent of the more than 140 tax hike proposals passed. The CRC study concluded that Michigan needs a new municipal tax structure that is fair to taxpayers but also allows local governments to grow with the economy. It offered a variety of policy options. They include eliminating the Headlee Amendment’s limit on local government revenue growth, diversifying local revenue sources, and promoting a regional services model. “Good tax policy meets the needs of taxpayers and governments,” Roof said. “It’s no easy feat to match both needs.” But Michigan’s unsustainable municipal finance system demands that policymakers work to find a solution to those needs. The full CRC study can be found at crcmich.org.

Rick Haglund is a freelance writer. You may contact him at 248.761.4594 or haglund.rick@gmail.com.

ELECTED OFFICI LS C DEMY Upcoming In-Person and Virtual Trainings League educational events provide up-to-date information on major issues and concerns relating to local government. Check out upcoming events below which can also be found on the League's event calendar mml.org/events

NE LY ELECTED OFFICI LS OFFERINGS • nn rbor— Thursday, January 20, 2022 • Virtual— Saturday, January 22, 2022

CORE & DV NCED EEKENDER • Midland— Friday & Saturday, February 11-12, 2022

Upcoming 2022 League Trainings–Save the Dates!

JANUARY / FEBRUARY 2022

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THE REVIEW