The Huron Valley School District plans on crafting language to be included on the Nov. 6 general election ballot requesting a renewal of the district’s non-homestead millage collection that is set to expire in June 2013.
The district is moving forward with the ballot issue now to avoid a special election in an off-year election cycle.
“We don’t want to pay for a special election because it’s costly and want the question resolved now,” said Huron Valley Director of Communications Kim Root.
If approved, owners of non-homestead property — primarily business and industrial properties — will not be taxed under the renewed millage until the summer of 2013. The renewed millage would collect $9 million per year to help support the district’s budget. District officials are still discussing the duration of the renewal proposal — such millages have typically been collected for 10-year periods.
“This represents 10 percent of the budget that the state expects us to ask voters for,” Root said. “We must do this every 10 years as part of Proposal A.”
In effect since 1994, Proposal A, in part, mandates that property owners can only claim one homestead property tax exemption on their principal residence. The homestead property tax rate is capped at 6 mills. All other properties — including residential properties that aren’t claimed as a principal residence, and commercial and industrial properties — are taxed the non-homestead rate, which is capped at 18 mills.
Voters in the district approved a Headlee Amendment override of up to 2 mills on the non-homestead millage back in May 2006. While currently the non-homestead rate in the district is 17.6652 mills, the 0.3348-mill Headlee override will remain in place, allowing the district collect 18 mills, according to Assistant Superintendent of Administrative Services Donna Welch.
A Headlee rollback occurs when property tax revenues increase faster than the rate of inflation or 5 percent, whichever is less, from one year to the next. When this occurs, the taxing unit’s millage rate is rolled back so that the resulting growth in property tax revenue collected by the taxing unit increases at no greater than the rate of inflation or 5 percent — except for increased revenue brought about by new construction in the taxing district.
A mill is equal to $1 for every $1,000 of a property’s taxable value, which is generally equal to half the property’s market value. The owner of a non-homestead property in the district with a taxable value of $100,000 ($200,000 market value) pays $1,800 a year in taxes under the non-homestead levy.
Currently the district is in the process of drafting ballot language in time for the June 7 deadline.
“This creates a unique challenge,” said Board of Education President Sean Carlson. “The last ballot initiative in 2009 showed that when there’s higher voter turnout, predictability goes down.”
However, Carlson said he’s confident that the bulk of those who would be impacted will opt for the renewal.
“It’s not an increase, merely a renewal,” Carlson said. “HVS is the second-largest employer here that demonstrates good business acumen and we have a financially secure district with an AA- rating.”
Moreover, Carlson said the district has been a solid steward of the taxpayers’ money.
“We don’t take a loan out to pay our first payroll, but pay it with the fund balance, and for our size and per-pupil allowance, we are good financial stewards,” he said. “Our auditors have also gone on record saying there are no material deficiencies. All of these are strong indicators of our financial confidence.”
As the election draws near, the district will be reaching out to businesses through local chambers of commerce and other organizations.
“We need to renew what is already being paid out,” Root said. “It’s a strong message, but one can’t take that for granted, especially when there is high voter turnout in an election cycle.”