millage presentation (masb nov 2017 annual conf) v3.ppt ·  · 2017-11-111 school elections ......

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1 School Elections and Operating Millage Renewals MASB ANNUAL CONFERENCE, NOVEMBER 11, 2017 HOWARD R. HEIDEMAN, ADMINISTRATOR, TAX ANALYSIS DIVISION, OFFICE OF REVENUE AND TAX ANALYSIS, MI DEPT. OF TREASURY KARI K. SHAY, ATTORNEY, THRUN LAW FIRM, P.C . 1 Caution These slides reflect general legal standards for the related presentation and are not intended as legal advice for specific situations Future legal developments may affect these topics This document may not be reproduced or redistributed, in whole or in part, without the written permission of The Michigan Department of Treasury and Thrun Law Firm, P.C. 2 Topic Overview Terminology Millage Reductions and Headlee Addressing Millage Reductions Election Process Strategies for Millage Elections School Board Member Elections 3

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School Elections and Operating Millage Renewals

MASB  ANNUAL  CONFERENCE,  NOVEMBER  11,  2017

HOWARD  R.  HEIDEMAN,  ADMINISTRATOR,  TAX  ANALYSIS  DIVIS ION,

OFFICE  OF  REVENUE  AND  TAX  ANALYSIS ,  MI  DEPT.  OF  TREASURY

KARI  K.  SHAY,  ATTORNEY,  THRUN LAW  F IRM,  P.C.

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CautionThese slides reflect general legal standards forthe related presentation and are not intendedas legal advice for specific situationsFuture legal developments may affect thesetopicsThis document may not be reproduced orredistributed, in whole or in part, without thewritten permission of The Michigan Departmentof Treasury and Thrun Law Firm, P.C.

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Topic Overview

TerminologyMillage Reductions and HeadleeAddressing Millage ReductionsElection ProcessStrategies for Millage ElectionsSchool Board Member Elections

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Terminology: Millage Rate(s)

BRIEFLY EXPLAIN:

A. AUTHORIZED OPERATING MILLAGE RATE

B. PERMANENTLY REDUCED OPERATINGMILLAGE RATE

C. MAXIMUM ALLOWABLE OPERATINGMILLAGE RATE

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Terminology: Millage Rate(s)

AUTHORIZED MILLAGE RATE:

Millage rate or levy authorized by specific statute, charter or vote of the electorate.

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Terminology: Millage Rate(s)

PERMANENTLY REDUCED MILLAGE RATE:

Beginning in 1994, if an authorized millage was subject to a “Headlee” rollback, the resulting reduced millage was carried forward to serve as the beginning levy for the following year’s calculation.

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Terminology: Millage Rate(s)

MAXIMUM ALLOWABLE MILLAGE RATE:

Prior year permanently reduced millage rate as factored by the applicable current year millage reduction fractions for “Headlee” limitation, Truth in Equalization* and/or Truth in Assessing*.

*K-12 & ISD operating levies are not subject to Truth in Equalization or Truth in Assessing Rollbacks

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Millage Reduction Fractions

“Headlee” Millage Reduction FractionMCL 211.34d

InflationMRF = (Prior Year Taxable Value -”LOSSES”) X Rate

(Current Year Taxable Value -”ADDITIONS”

Inflation rate to be utilized for calculation of2017 MRF is 0.9% (expressed as 1.009)2018 MRF is 2.1% (expressed as 1.021)

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Millage Reduction Fractions

“Headlee” Millage Reduction FractionMCL 211.34d

For K-12 General Operating, the “Headlee” MRF is calculated using 100% non-homestead & 100% non-qualified agricultural (Real & Utility Personal) properties located within the local school district only. Effective date set by local assessing officer.For: K-12 Hold Harmless, Sinking Fund, and Recreation; & ISD levies, the “Headlee” MRF is calculated using ALL properties (Real & Personal) located within the specific district.

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Millage Reduction Fractions

“Headlee” Millage Reduction FractionMCL 211.34d

Renaissance zone (RZ) property is excluded from the MRF calculations, except for sinking fund mills and ISD enhancement mills.

For a local district with (RZ) property, there can be a different MRF for general operating (non-PRE only, no RZ);sinking fund (all property, with RZ); and hold-harmless and recreation mills (all property, no RZ).

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Millage Reduction Fractions

Base Tax Rate Fraction - Truth in Taxation

MCL 211.24e

BTRF = (Prior Year Taxable - “LOSSES”) (Current Year Taxable - “ADDITIONS”)

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Millage Reduction Fractions

CALCULATION OF BASE TAX RATE

BTR = Prior Year Operating Levy times BTRF

Note: A tax authority may forego the requirementsof Truth in Taxation if it meets the optional requirements of Truth in Budgeting

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Millage Reduction Fractions

“LOSSES”MCL 211.34d(1)(h)

Property Destroyed Property RemovedExempt Property Decrease in Occupancy

Environmental Contamination

“LOSSES” NOT:

Platting, Splits, Combinations, Zoning Changes

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“ADDITIONS”MCL 211.34d(1)(b)

Omitted Real Property Omitted Personal Property

New ConstructionPreviously Exempt PropertyReplacement Construction

Remediation of Environmental ContaminationIncrease in Occupancy (Ruled unconstitutional, WpW)Public Services (Ruled unconstitutional, Toll Northville)

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Millage Reduction Fractions

“ADDITIONS” NOT:

Platting, Splits, CombinationsZoning Changes

Transfers of Ownership

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Addressing Headlee Reductions/Millage Rollbacks

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Millage Strategies for Headlee

Can’t prevent Headlee reductionsProactive vs. reactive approachesTiming issuesElection costs & related expensesVoter education issues

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PROCESS FOR MILLAGE ELECTION

School determines type, amount and term of millage.Counsel drafts ballot for approval by school administration and insertion of Dollars ($) expected in first year of levy.Board adopts resolution calling election.Adopted resolution filed with County Cerk.

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Proactive vs. Reactive

Only ask voters to restore millage after there’s been a Headlee reduction?

Or take a proactive approach to protect your levy?

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Vote Millage Annually

Option:  Vote millage for 1 year, every year

Pros:Expiration of millage at end of year & subsequent renewal provides “clean break” for Headlee purposes Ballot language favorable:“Renewal” language – millage renewals have high passage rateNo mention of “Headlee”

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Vote Millage Annually (cont.)

Cons:

Expensive (election costs & other expenses)Bucking the trend of fewer electionsFewer districts using this strategy

Election date options not optimal for summer levy districtsNeed voters to cooperate every yearWhat if they don’t?

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Headlee Restoration

Option: Headlee Restoration Ballot Prop

Reactive strategy

Request that voters restore millage (back to 18 mills, for example)

Restores Headlee reduction; doesn’t protect against future reductions

Cons:Ballot language mentions millage “increase” and “Headlee”Voter education needed?

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Headlee HedgeOption: Headlee Hedge Ballot PropRequest that voters approve additional millage to provide a “buffer” against Headlee reductionsExample: request an additional 2 mills of Headlee“hedge” millageLevy the maximum statutory millage rateRemaining millage only levied if/when there is a Headleereduction  

Reactive or proactive strategyHedge millage could be requested before or after a Headlee reduction

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Headlee Hedge (cont.)

Pros:◦Restores reduction◦ Protects against future reductions

Cons:◦Ballot language mentions millage “increase” and “Headlee”

◦Voter education needed?

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Renewal w/ Headlee Increase

Option: Millage Renewal with Headlee Hedge 

Headlee restoration or hedge millage requested in conjunction with millage renewal.5 mill max increase in same proposal as millage renewalOne proposal or two?

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Renewal w/ Headlee Increase (cont.)

Pros:◦Restores reduction◦Protects against future reductions (if additional millage requested)◦ “Single ballot” approach “bootstraps” Headlee increase into millage renewal◦ Less costly than requesting Headlee millage at a separate election

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Renewal w/ Headlee Increase (cont.)

Cons:◦Ballot language◦Mentions millage “increase” and “Headlee”◦With “single ballot” approach, some “renewal” language lost◦Ballot language not as optimal compared to a “pure” renewal of millage

◦Voter education needed?

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Millage Increase Strategy

Ask voters to approve millage increase w/ millage rate higher than maximum statutory rateUnconventional strategy?Recent examples◦Reactive◦Proactive

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Millage Increase Strategy (cont.)

Pros:◦ Simple, straightforward◦ Single ballot◦ No mention of “Headlee” in ballot

Cons:◦ Ballot language mentions millage “increase”◦ No reference to “renewal” in ballot◦ Voter education needed?◦ Newsletters, mailings, website◦ Don’t focus on Headlee

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Timing of Election

Available election dates:March (only in presidential election years, i.e., 2020, 2024, etc.)MayAugustNovember (Note: school board elections November in even years)

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Timing of Election (cont.)

Other timing issues:Start working on millage election 5‐6 months before desired election dateStrategy – what else will be on the ballot?Another local issue or millage request?Possible adverse impact on school district millage proposal? Bring “no” voters to the polls? 

Long ballots for presidential and gubernatorial primary and general elections – voter fatigue?

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Election CostsElection costs:◦ Full cost of election◦ Split costs with another local jurisdiction◦ “Subsidized” elections ‐‐ presidential and gubernatorial primary and general elections◦ Pay the “incremental” cost for the school election

Other cost considerations:◦ Legal and administrative costs◦ Add up all costs and compare to the cost of Headleereduction – is it cost effective to seek Headlee millage?

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SCHOOLBOARD

ELECTIONS

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Getting on the BoardPetition$100 feeAffidavit of Identity

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NOVEMBER 6, 2018SCHOOL BOARD ELECTION

ACTION DEADLINE

Nomination of Board Candidate(s) (Affidavit of Identity and Petition or $100 Filing Fee)

Tuesday, July 24, 2018 ‐ 4:00 p.m.(with County Clerk/Election Coordinator)

Withdrawal of Board Candidate(s), in Writing

Friday, July 27, 2018 ‐ 4:00 p.m.

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NOVEMBER 6, 2018MILLAGE/BOND ELECTION

ACTION DEADLINE

Election Resolution must be adopted at a legal meeting nolater than Monday, August 13, 2018

Election Resolution, Including Ballot Language, filed with Election Coordinator/Election Clerk

on or before Tuesday, August 14, 2018 ‐ 4:00 p.m.

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Post‐Election Responsibilities

File acceptance of office with board sec. Within 10 business days of election coordinator’s notificationBoard secretary provides copy of acceptance to election coordinator

Take oath of office after filing acceptanceBefore being seatedNote: only certain people may administer oath of office (e.g., notary)

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Board Vacancy Is Automatic

◦ Death◦ Resignation◦ Felony conviction◦ Becomes nonresident of school district◦ Failure to timely file acceptance of office or take oath of office

◦ Other events in Election Law

MCL 168.31060

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Board Appointment

Board appoints person to fill vacancy within 30 daysAppointee serves until next regular electionIf vacated seat was not set to expire at next regular election, successor elected to that seat serves a partial termISD appoints if:

A majority of seats vacant, or Seat not filled within 30 days

MCL 168.31161

Questions?

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