Beaver Island Property Taxes: Points To Ponder

In July 2010 the BIA Board of Directors of the Beaver Island Association reviewed extensive island tax data. The table on the next page summarizes state, county and school district property taxes based on official records from tax year 2009. Township tax levies are tabulated and discussed separately on the page following the first table.

As these numbers show, Charlevoix County and the state of Michigan together levied property taxes on Beaver Islanders totaling $3.807 million. One obvious question raised by this data is whether Beaver Islanders receive fair value for the taxes we pay to the County. For example, we paid $119 thousand to Charlevoix County in 2009 for roads, far more than was spent on BI roads, along with $153 thousand for the Grandview Nursing Home in East Jordan and $48 thousand for the county-wide Senior Citizens fund.

A larger issue is education funding, particularly the amount spent on the BI Community School relative to number of students. Total BI school taxes are about $2.443 million, which is almost $35,000 per student for an enrollment of 70 children in the Beaver Island Community School, with slightly over 60% coming from taxes on non-primary residential property.

Owners of many if not most of those properties cannot vote on Beaver Island. This logically can be called "taxation without representation" – not a great situation, as our country's founders recognized. Shouldn't all taxpayers be eligible to vote in local school funding elections? This is a question for the State Legislature, of course; but still one worth asking.
Another issue is that capping of taxable values beginning around 1990 has had the result that new construction properties (or any property whose legal ownership changes) are more heavily taxed than older properties of similar assessed value.

It seems likely these tax issues, in conjunction with the poor state of the Michigan economy, have significantly curtailed new investment in BI property and negatively affected property values and island service businesses, including real estate and construction organizations, many of which have closed or left Beaver Island in the last several years. The Beaver Island Association would like to hear ideas from members and other interested citizens for dealing with this situation.

In addition to state and county taxes, there are interesting issues related to township taxes. The taxes levied by Peaine and St. James Townships (not the state or county) represent only about 20% of total Beaver Island property taxes. It is interesting to look at the differences between St. James and Peaine Township millage rates and tax amounts (note these refer only to the local taxes levied by the two townships for Beaver Island operations, not Charlevoix County or the state of Michigan), as shown in the table below.

In summary, the Taxable Value of property in Peaine ($71.6 million) is 51% higher than St. James ($47.4 million). In order to raise the same revenue, St. James levies a millage 51% higher than Peaine. As a result, both townships raise approximately $581 thousand to support local operations. Both townships levy approximately the same millage to support the Rural Health Center, but they contribute equal dollar amounts to support the Transfer Station, Airport, EMS, Fire Protection and the Historical Society. The result is that property owners with properties of equal taxable value pay more for such services in St. James than Peaine. Also St. James, with more paved roads, spends more on road maintenance and town operations than does Peaine. While the percentage difference is large (51%), total dollars involved are less so. If millage rates were equalized in the townships by weighted average property owners in Peaine would see an annual increase of $169 for each $100,000 of taxable value ($200,000 assessed value) and St. James property owners would see a $249 annual decrease. Since the services provided are the same, doesn't a single island-wide millage rate for township services and operations support make sense?

-Peter Igoe