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Categorized | City Hall Corner, News

Property Taxes and Proposal “A”


In 1994, Michigan voters approved the constitutional amendment known as Proposal “A.” Proposal “A” established Taxable Value as the basis for the calculation of property taxes, in place of the previous Assessed Value. Under Proposal “A”, increases in Taxable Value are limited to the percent change in the rate of inflation (Consumer Price Index) or 5 percent, whichever is less for the year, in other words, your home’s taxable value never increases more than 5% each year and is often less. However, this does not apply in a year that the property is sold when the home’s taxable value is set at 50 percent of its cash value for the new homeowner.

Every year, prior to the March meeting of the local Board of Review, the Assessor will mail each homeowner a Notice of Assessment that includes information about each home such as the tentative taxable value, State Equalized Value, any exemptions and information related to any ownership transfers.  The notice will also include information related to the Board of Review, which is a local board of citizens that hears appeals regarding property taxable values and other property tax matters.

So, how do you know what your property taxes are going to be next year? The first place that you start is figuring out the current taxable value of your home. Thankfully, the City keeps that information online for you to look at any time through our BS&A software, just go to the City’s website and click on the “Click to Pay” button under “Pay Bill.” You then click on “Assessing Search” on the left-hand side and input your home address into the search bar, this will bring up information related to the assessed value, taxable value and tax bills for previous years. For example, a home with a taxable value of $56,220 could only see their taxable value go up $56,220 X 1.05=$59,031 maximum if it were to go up the full 5 percent.  However, the most recent Consumer Price Index was 2 percent so the home will likely see its taxable value increase from $56,220 X 1.02=$57,344.  Then, to determine the actual tax bill, you would divide the taxable value by 1000 and multiply it by the millage rate. The millage rate in the City is expected to increase approximately 3.4 mills next year due to the fire station vote, which brings the total millage rate in the City to approximately 47.5411 mills.  This means that a home with a taxable value of $56,220 that paid $2,378.37 in Summer taxes last year will see its taxable value increase to $57,344 and pay approximately $2,726 in Summer taxes next year.  This same math formula can be used for other proposed millage requests such as the recent school bond request, which purported to raise the millage rate 0.9 mills.  To determine how that would affect your home’s taxes, you would take your taxable value, divide it by 1000 and multiply it by 0.9 or in the case of the $56,220 home it would be 56.22 X 0.9=$50.60 tax increase for the year or under the estimated next year taxable value of $57,344 it would be 57.344 X 0.9=$51.61 tax increase.

As a side note, sometimes banks will increase your home’s required escrow payments to cover expected property taxes, PMI and homeowner’s insurance payments. Your bank’s estimate of escrow payments for the year could be high or low compared to actual costs and may result in a refund or a shortage bill at the end of the year, the City has no control over what your bank does with escrow payments.

As always, City Hall staff are happy to help try and answer any questions you might have related to property taxes, please call 616-696-1330 and we can assist you.

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