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Village Tax Concerns Looking Sunnier

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There is “more sunshine this week than there was last week” Village Manager David Trent said about the Village’s current tax situation.

In March of this year, the Village Council adopted a resolution increasing the current operating millage 2.444 mils. At the time, council members indicated that 2 mils would go directly into the equipment fund with the remainder going into the general fund. The millage increase would generate an additional $66,947.30 of tax revenue annually.

The new tax was part of the adopted budget and added to taxpayer’s summer taxes. As promised, the council used the additional revenues to replace an aging snow plow that used an old stop sign as a floorboard. The Village took delivery of a new snowplow on October 13th of this year. The truck was paid for with a downpayment of $60,000 and financed the remainder over the next 6 years. Additional revenues will be included in the capital improvment plan to replace additional aging equipment as funds become available.

On November 1st, Jackson County dropped a bombshell on the Council and new Village Manager. Under the Headlee Amendment, any increase to an established millage cannot be raised above the Headlee rollback, thus making the tax increase improper. The Village was facing a loss of already collected revenues in an already fragile budget.

Under Headlee, the property tax revenue limitation requires that if the assessed value of a local tax unit’s total taxable property increases by more than the inflation rate, the maximum property tax millage must be reduced so that the local unit’s total taxable property yields the same gross revenue, adjusted for inflation. Basically, as home values increased, the taxation rate decreases. This is done looking at the total state equalized value (SEV) change from one year to the next.

The Council authorized Trent to hire attorney Gerald Fisher to research options for the council. Fisher determined that the correct course of action for the Village should have been to implement a new millage for General Highway Fund, which is allowed under the General Law Village Act of 1895.  He was able to cite case law that showed that Headlee Amendment, adopted in 1978, did not prohibit new millages allowed by statue, only existing taxes.

Working with the county and the state, the Village Council is hopeful that they will be able to file an amended L-4029 with the County. All local tax millages must be approved by the Jackson County  Board of Commissioners.

The Council was able to show, through their budget hearing, public meetings and meeting minutes that their intent was always to add millages for the purpose of General  Highway Fund, which includes equipment used to maintain the roads. Additionally the Village’s general fund includes contributions to road funding within the Village.

At Tuesday nights regularly scheduled meeting, the Village Council adopted a resolution “clarifying intent”. “This is Step 1 in the process” said Trent. The Village adopted the resolution levying up to 5 mils, higher than the original 2.444 mils, however the Village intends to only collect the original 2.444 mils, so taxpayers will not see an increase in their taxes because of the new resolution. “This just allows us to make modifications in the future to account for the Headlee Amendment rollback if necessary or if we have a disaster like we saw in Fraser (the giant sink hole from a failed sewer) said Trent.

It next goes to the Ways and Means committee of Jackson County next month.

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