Michigan Advisory Opinions September 17, 1979: AGO 5562 (September 17, 1979)

AGO 5562.

You have asked for my opinion concerning three questions involving the Headlee Amendment which amended Const 1963, art 9, Sec. 6 and added sections 25 through 34 to Const 1963, art 9. Your questions are:

1. What is the meaning of the term 'maximum authorized rate' employed in Const 1963, art 9, Sec. 31?

2. Does Const 1963, art 9, Sec. 31 require a 'rollback' of taxes allocated under the 15 mill limitation, or of the separate 18 mill tax limitation?

3. Are special assessments, apportioned on an ad valorem basis, such as those for police protection, fire protection, garbage collection, street lighting, etc., subject to the limitations of Const 19863, art 9, Sec. 31?

Before addressing each of your questions seriatim, it should be noted that the Headlee Amendment represents a new departure in terms of a constitutional limitation on government taxing and spending. No Michigan court has yet addressed itself to interpreting the sections added by the adoption of this proposition. In addition, our research has failed to disclose any similar constitutional provisions which have been interpreted by the appellate courts of other states.

1. What is the meaning of the term 'maximum authorized rate' employed in Const 1963, art 9, Sec. 31?

Pertinent portions of Const 1963, art 9, Sec. 31 provide:

'Units of Local Government are hereby prohibited . . . from increasing the rate of an existing tax above that rate authorized by law or charter when this section is ratified, without the approval of a majority of the qualified electors of that unit of Local Government voting thereon . . . If the assessed valuation of property as finally equalized, . . . increases by a larger percentage than the increase in the General Price Level from the previous year, the maximum authorized rate applied thereto in each unit of Local Government shall be reduced to yield the same gross revenue from existing property, adjusted for changes in the General Price Level, as could have been collected at the existing authorized rate on the prior assessed value.' [Emphasis added]

It is my opinion that the term 'maximum authorized rate' refers to 'that rate authorized by law or charter when this section is ratified'; it consists of the basic 15 mills which may be levied without voter approval, any tax voted by the electors, and any tax authorized in a charter adopted by the qualified electors and may exceed the amount being levied when the section was ratified. Thus, where a city, village or charter authority has levied a property tax rate below the rate authorized by their charters, the tax rate permitted by their charters constitutes the maximum authorized rate.

2. Does Const 1963, art 9, Sec. 31 require a 'rollback' of taxes allocated under the 15 mill limitation, or of the separate 18 mill tax limitation?

In my opinion, millage allocated from the basic 15 mills established by Const 1963, art 9, Sec. 6 or separate tax limitations adopted by a county's qualified electors pursuant to Const 1963, art 9, Sec. 6, are not excepted from the rollback provisions of Const 1963, art 9, Sec. 31. Thus, for example, if the property tax revenue of a township is generated by one of the 15 mills received from the annual allocation and the assessed valuation as equalized of property in the township increases by a greater percentage than the increase in the General Price Level, that one mill rate must be 'rolled back' as provided in Const 1963, art 9, Sec. 31 unless the qualified electors in that township vote to restore that tax rate or vote for additional millage.

3. Are special assessments, apportioned on an ad valorem basis, such as those for police protection, fire protection, garbage collection, street lighting, etc., subject to the limitations of Const 1963, art 9, Sec. 31?

Your third question warrants a negative answer. As indicated by Const 1963, art 9, Sec. 25, the tax limitations of the Headlee Amendment only apply to 'property taxes and other local taxes and state taxation and spending.' A charge imposed only on property owners benefited has been held to be a special assessment and not a tax. Blake v Metropolitan Chain Stores, 247 Mich 73; 225 NW 587 (1939).

It is, therefore, my opinion that special assessments are not limited by the Headlee Amendment.

Frank J. Kelley

Attorney General