Editorial: Dont Meddle with Michigan Property Tax Law

 

Detroit News: The Michigan Senate is calling for a vote on a constitutional amendment to change the way homes are taxed so that when housing values decline, property taxes go down immediately. The measure is in response to a situation created by Proposal A , passed in 1994, which capped property tax increases at the rate of inflation or 5 percent, whichever is less. This capped amount is known as a home's taxable value. Now, however, as a result of the recession, home values are declining. Yet because the market value may not have declined as far as the capped taxable value, a home may still be taxed at a higher rate. The situation is correcting itself, with the market value falling toward the capped taxable value of a residence. For many homeowners, this has already taken place, and tax bills are reflecting the diminished sales value of their homes. Local government officials earlier this year told The Detroit News that more than half of the homeowners in the region will see lower tax bills this year. This, of course, means that local governments, which rely on property taxes, will also see less revenue. And once Prop A is reopened and tinkered with, all bets are off. Efforts can be expected to change the law to make it easier for school districts and others to put millage increases on the ballot, beginning anew a process that led to the amendment's passage in the first place. This proposal may have a lot of unintended consequences -- all of them bad. It should die in the state House.

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