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Court ruling may impact tax collection locally, statewide

August 07, 2013 - Atlas Twp.-A State of Michigan Court of Appeals recently overturned a Michigan Tax Tribunal judgment which invalidated the levy of a special assessment for police protection. The decision could impact how future taxes are collected both in the township and municipalities statewide.

At issue is the use of a flat fees or special assessments rather than ad valorem, Latin for "according to value," a tax based on the value of real estate or personal property, to pay for police services by a township or municipality.

The impact locally stems from a contract with the Genesee County Sheriff's Department established about 13 years ago, then funded by 1 mill from area property owners. Since 2007 the cost for police protection has risen from $432,205 to $565,653 in 2012, about a 24 percent increase. In 2005 the township board of trustees implemented a $50 tax for improved lots and $25 for unimproved lots to help fund the police contract.

In May area voters approved 2.1 mills for four years to fund police coverage for the community. The approved millage replaced the 1 mill levy along with the township special assessment. However, the debate continued to spark controversy.

The use of special assessment for police coverage was challenged in the township on several levels over the past years. In 2006, when the $50/$25 special assessment was first implemented, resident Jim Ellis challenged the township in Michigan Tax Tribunal Small Claims Division. They judged in his favor from 2006 through 2011. Some argued, too, that when the governing board OKs a special assessment like the $50/$25, the voters lose the ability to decide.

Conversely, the supporters of the special assessment maintain police service should not be based on the value of property—bigger homes don't get more police protection than someone with a smaller house, thus everyone should pay the same.

State Rep. Joseph Graves (R-Argentine) also supported the special assessment usage and sponsored House Bill 4147 which gives township boards flexibility to choose how they would pay for local police and fire services. Under the legislation, townships would have options of determining their assessments on a per-parcel basis, on the taxable value of the land or premises ad valorem, or on another basis determined by the township board. Current law requires townships to only base special assessments for police and fire on the value of a resident's land. HB 4147 currently is in the Senate committee of finance.

However, before the full Senate even had a chance to debate the issue, the state Court of Appeals overturned a tax tribunal ruling from a case in Williamstown Township. The three-judge panel said that because all properties in Williamstown Township benefit the same from police services—a flat fee is reasonable

"If a township determines that the properties in the (special assessment) district are all to benefit equally, then those properties will need to be assessed equal amounts as a matter of a law," Judge Kurtis T. Wilder wrote in the unanimous opinion. Judges Joel P. Hoekstra and Michael J. Talbot also presided over the case.

Williamstown Township residents had voted in November 2010 to allow the township to create a special assessment of $150 on residential property, $250 on commercial property and nothing on vacant land to raise funds for police services that now are provided by Meridian Township.

"The state Court of Appeals decision confirms my position from the beginning," said Rep. Graves. "This is about local control for townships. Local elected officials know their communities and what is best for them. This unanimous ruling will provide more local control to townships across Michigan."

Several constituents have expressed concern about losing their ability to vote on changes in tax rates, added Graves.

"This does not change when or if a special assessment can be used by a township to fund police and fire services. Rather, this is simply about allowing local elected officials to determine if a flat rate or an ad valorem assessment is best. Moving forward, townships will have an additional option at their disposal to determine the best way to fund public safety. Every community is different and this will allow townships to implement the best option for them."

In addition to the township, Village of Goodrich residents also help fund the police protection.

"The primary concern for me and the council is, 'What is the best scenario for the residents of the village we are elected to represent?," said Richard Saroli, Goodrich councilmember. "This decision by the Court of Appeals takes away the right of self-determination. The second concern is the degree of authority is limited to a body of government bureaucrats. Now after a vote of the people for a 4-year millage the township could override that and increase taxes without the people's consent."

Township Clerk Tere Onica was pleased with the ruling.

"We are happy to see a unanimous ruling made by the appellate court upholding a decision we made in 2006 to flat rate assess in Atlas Township," she said. "It has always been our position that flat rate assessment for police service is a better representation of cost because there is no other benefit to the property except for the payment for services rendered. The service itself is not based on the value per household or property."

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