Property Tax 2009

Property taxes on Beaver Island are not an easy thing to understand. What follows is a brief description, along with some of the legislative history.

SCHOOL TAXES.

In 1993 the State of Michigan passed legislation to eliminate local property taxes for K12 and “Intermediate” (such as vocational and special education schools) school districts. Coincident with this, in order to fund schools, the state increased by 2% the Michigan sales and use tax and levied a 6 mil (this equals $6 per $1000 of “taxable value”) State Education Property Tax. In addition, the state passed legislation allowing local school districts to levy up to an additional 18 mils property tax to support local schools. However, primary residences and actively farmed land were exempted from the 18-mil tax. Secondary residences, land, and commercial operations are not exempt. Further, with local voter approval, additional property taxes may be levied to support school needs. The table, which follows at the end, shows the various school-related levies that have been voted. In total (including the allowed 18-mil tax), school related taxes accounted for 57% of the property taxes in St. James Township in the last year. The figures for Peaine Township are somewhat different, but basically of the same magnitude.

TOWNSHIP OPERATIONS.

Approximately 25% of property taxes are for township administration and to support local operations. The local operations are the Rural Health Center, the Waste Transfer Station, EMS, the Fire Department, the Township Airport, the Library, and the Beaver Island Historical Society. These are the budgeted items that can be controlled by the township supervisors.

CHARLEVOIX COUNTY ASSESSMENTS.

The third leg of the tax structure is the levies from Charlevoix County. These account for about 19% of our property taxes, with the major items representing operations (including the Sheriff’s department), and roads. There are additional levies for the Grandview Nursing Home in East Jordan, Senior Citizens Programs (Meals on Wheels, etc.), Charlevoix Transit, and support of Charlevoix recycling.
For property owners exempt from the 18-mil tax, the percentage of tax that supports local township operations is about 40%, schools about 30%, and Charlevoix County Operations, about 30%.

TAX BILL TIMING.

Currently, the 6-mil State Education levy and the Charlevoix County Operations levy are billed in the summer. All other levies are billed in the winter.

STATE EQUALIZED VALUE AND TAXABLE VALUE.

Property Tax mil rates are applied to “Taxable Value” not the State Equalized Value. To calculate the tax due, multiply the mil rate by the Taxable Value, not the State Equalized Value.

THE STATE EQUALIZED VALUE.

It appears that the major purpose of the State Equalized Value is to determine if a recorded selling price accurately reflects the property value, particularly in cases where the transfer involves related parties. The calculation is the result of a three-step process. First, the local assessor (Kevin White for both townships) assesses every property based upon the condition of the property on December 31 of the previous year. Second, the Board of Commissioners in each county (Charlevoix for Beaver Island) applies an adjustment factor to the assessments of each township whenever local assessments are above or below the required level. Third, the State Tax Commission applies an adjustment factor to the entire county when the adjusted total county assessments fail to meet the required level. (Note: the criteria for county and state adjustments are beyond the scope of this article). The process of equalization is done for each separate category of property: residences, farmland, etc. The Michigan Constitution requires that property be assessed uniformly at a rate not to exceed 50% of “True Cash Value”. True Cash Value is meant to be equal to the expected selling price in an arms length transaction (that is a transaction between unrelated parties).
Taxable Value is initially determined at the time a property changes hands. It is set at 50% of True Cash Value. In 1994 Michigan passed legislation limiting the annual increase in

Taxable Value to the rate of inflation or 5%, whichever is less. Taxable Value cannot decrease unless the property has suffered a loss due to destruction, environmental contamination, etc., or unless the State Equalized Value decreases below the Taxable Value, in which case, the Taxable Value will decrease to the State Equalized Value. Property owners who have owned property for some time will probably note that their Taxable Value is quite a bit lower than the State Equalized Value and even in a time where real estate prices are falling, it is unlikely the Taxable Value will decline.

APPEALS OF ASSESSMENTS.

The first step in appealing an assessment or classification is to the local township Board of Tax Review. The Board meets in March to hear protests. Non-resident taxpayers may file an appeal by letter. If an appeal at the local level is not successful, property owners may then appeal to the Michigan Tax Tribunal, a board of 7 members appointed by the governor. Appeals must be filed before May 31 of the tax year in question. Details of the appeal process and other information may be found on-line in the Michigan 2009 Taxpayers Guide.

COMPLETENESS OF THE LIST OF TAXABLE PROPERTIES.

It is the responsibility of the Township Assessor to insure that all taxable property is included on the list of assessments and that all such property is appraised equitably. The current Assessor, Kevin White, is also the townships’ zoning officer and must approve all building permits, so that all new construction building and addition plans and updates pass through him. There are approximately 3,500 taxable properties on Beaver Island.

– Paul Glendon