Voters in the Three Rivers Community Schools Board of Education will be asked to approve renewal of an 18-mill ‘Non-Homestead Tax’ for 20 years in a special election on May 7th.
The Three Rivers Community Schools Board of Education set the process in motion Monday evening (February 4th) following a presentation by Superintendent Roger Rathburn regarding the millage, which is only levied on non-homestead property, meaning that homeowners are not taxed on their primary dwelling.
Rathburn addressed the board, utilizing a summary that provided an overview on the topic and outlined three choices available for dealing with the millage renewal. He noted that the 18-mill tax “is a piece from Proposal A, which was the 1994 tax reform that significantly reduced property taxes on homes. Instead, schools began relying on the two percent increase in sales tax. However, as part of the deal, the 18 mills are levied on second homes and commercial/industrial property.”
In discussing the financial impact of the tax locally, Rathburn said the 18 mills, when applied to the total taxable value of non-homestead property in the Three Rivers Community Schools district, generated $3,760,596 in 2012. “However, the 18 mills have fallen to 17.7242 mills over the years. Consequently, the district collects $3,702,975. The difference between the original 18 mills and the current 17.7242 equates to a loss of $57,621.”
Rathburn explained that “The State deducts the total collected from 18 mills from the per pupil foundation provided. This means that any amount less than 18 mills must be removed from the anticipated revenues portion of the district’s budget and offset with a reduction in the expenditures.” And he added, “Obviously, a reduction of $3,760,596 would be a challenge to say the least.”
Rathburn said, “This renewal represents a continuation of taxes already in place. If the Non-Homestead Tax were to fail, the results would be devastating.” (Roger Rathburn audio clip – 2:21 – 2.16 MB)
Rathburn illustrated the importance of the revenue from the Non-Homestead Tax by noting that “even if the total amount budgeted for transportation, athletics, technology and non-title 1 paraprofessionals were removed from the budget, it would not be enough to offset the loss of $3,702,975.”
Rathburn presented three options for renewal of the millage:
Choice 1: Authorize the district to continue collecting the 17.7242 plus an increase of ½ mill to bring the total to 18.2242. The additional ½ mill would only be levied to the extent necessary to bring the levy to 18 mills. Note: This choice adds some protection for the natural reductions which are likely to occur over the 20 year life.
Choice 2: Authorize the district to continue collecting the 17.7242 plus an increase of .2758 to bring the total to 18 mills. Note: This choice brings the total back to the original 18 mill amount. However, it does not provide protection for reductions which are likely to occur over the 20 year life.
Choice 3: Authorize the district to continue collecting the 17.7242. Note: This choice does not bring the amount back to the original 18 mills or provide any protection for continued reductions which are likely to occur over the 20 year life.
The board voted unanimously to go with ‘Choice 1’.
Language associated with the election resolution adopted by the board says the proposal “will allow the school district to levy that statutory rate of 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 .2242mill is only available to be levied to restore millage lost as a result of the 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.”
If approved, the renewed Non-Homestead Tax would be in effect for a period of 20 years – “2014 to 2033, inclusive, to provide funds for operating purposes.”
To view the written summary prepared by Superintendent Roger Rathburn regarding the Non-Homestead Tax as it applies to the Three Rivers Community Schools, click here.
To hear Roger Rathburn’s presentation to the school board on the Non-Homestead Tax issue, click on the following link: Roger Rathburn presentation on Non-Homestead Tax (7:11 – 6.58).