Michigan Advisory Opinions January 09, 1986: AGO 6332 (January 9, 1986)

AGO 6332.

You have requested my opinion concerning the constitutionality of two recent statutory enactments imposing taxes on hotel-motel accommodations and liquor under Const 1963, art 9, Secs. 25-34. In particular, you inquire whether 1985 PA 106, MCL 207.621 et seq; MSA 7.559(21) et seq, and 1985 PA 107; MCL 436.141 et seq; MSA 7.559(41) et seq, violate the provisions of the 'Headlee Amendment,' Const 1963, art 9, Secs. 25-34 inclusive.

MCL 207.621 et seq; MSA 7.559(21) et seq, imposes a state excise tax on persons engaged in providing accommodations to transient guests in a 'convention hotel' as provided in the Act. Revenue from the hotel-motel tax shall be deposited in the state treasury and credited to the convention facility development fund to be distributed by the State Treasurer consistent with provisions of the Act.

MCL 436.141 et seq; MSA 7.559(41) et seq, levies a state excise tax on the retail selling price of spirits for consumption on the premises, and a state excise tax on the price of spirits sold for consumption off-premises. Revenue from the new liquor tax would also be deposited to the credit of the convention facility development fund. Moneys in the fund are to be distributed to local units of government consistent with provisions of MCL 207.621 et seq; MSA 7.559(21) et seq.

Applicable to your question are Const 1963, art 9, Secs. 25 and 26, which, in pertinent part, provide:

'Sec. 25. [S]tate taxation and spending may not be increased above the limitations specified herein without direct voter approval. . . . Implementation of this section is specified in Sections 26 through 34, inclusive, of this Article.

'Sec. 26. There is hereby established a limit on the total amount of taxes which may be imposed by the legislature in any fiscal year on the taxpayers of this state. This limit shall not be changed without approval of the majority of the qualified electors voting thereon, as provided for in Article 12 of the Constitution. Effective with fiscal year 1979-1980, and for each fiscal year thereafter, the legislature shall not impose taxes of any kind which, together with all other revenues of the state, federal aid excluded, exceed the revenue limit established in this section. The revenue limit shall be equal to the product of the ratio of Total State Revenues in fiscal year 1978-1979 divided by the Personal Income of Michigan in calendar year 1977 multiplied by the Personal Income of Michigan in either the prior calendar year or the average of Personal Income of Michigan in the previous three calendar years, whichever is greater.

'For any fiscal year in the event that Total State Revenues exceed the revenue limit established in this section by 1% or more, the excess revenues shall be refunded pro rata based on the liability reported on the Michigan income tax and single business tax (or its successor tax or taxes) annual returns filed following the close of each fiscal year. If the excess is less than 1% this excess may be transferred to the State Budget Stabilization Fund.' (Emphasis added.)

Const 1963, art 9, Secs. 25 and 26, the 'Headlee Amendment,' does not preclude the imposition of new state taxes, provided that the projected revenues therefrom, together with all other state revenues, do not exceed the revenue limitation specified in Const 1963, art 9, Sec. 26. State revenue from taxes and other sources may not, without voter approval, in any fiscal year exceed revenue limitations established by Const 1963, art 9, Sec. 26, without refunding any amounts exceeding such limits by one percent to those persons paying state income taxes or single business taxes.

The House Legislative Analysis Section reported an estimated total amount of such taxes to be $38.55 million a year. Bill Analysis, House Bill 4799 and House Bill 4800 (June 13, 1985).

Based upon projections for the 1986 fiscal year (1985-1986), revenues and revenue ceiling revenues collected, including those projected for collection through imposition of the new and increased taxes, will not result in exceeding the revenue limitations of the 'Headlee Amendment.' For 1985-1986 (FY 1986), the Senate Fiscal Agency projects:

Revenue $10.461 billion

Revenue Ceiling $11.451 billion

It is my opinion, therefore, that MCL 207.621 et seq; MSA 7.559(21) et seq, which imposes a state excise tax on persons engaged in providing accommodations to transient guests in a convention hotel, and MCL 436.141 et seq; MSA 7.559(41) et seq, which levies a state excise tax on the retail sale of spirits for consumption on the premises and a state excise tax on the sale of spirits for consumption off the premises, do not violate Const 1963, art 9, Secs. 25 and 26.

Frank J. Kelley

Attorney General