STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6588

June 16, 1989

CONSTITUTIONAL LAW:

Const 1963, art 9, Sec. 6--separate tax limitation rates for school district located within charter township established by resolution of board

Const 1963, art 9, Sec. 31--increasing taxes in charter township established by resolution of board

TAXATION:

Separate property tax limitation rates for local units

In a county where separate tax limitation rates for the county, school districts and townships have been adopted by electors, the separate tax limitation rate for a general law township which becomes a charter township after the effective date of the Headlee Amendment, Const 1963, art 9, Sec. 31, by resolution of the township board but without a vote of the electors, would continue to be allocated to the township and may not be allocated to a school district located entirely within that township.

When the electors of a county adopt a separate tax limitation under MCL 211.205b and 211.205g; MSA 7.65(2) and 7.65(7), the Legislature may not enact changes to these statutes which would affect the separate tax limitation rates adopted by the electors, but the Legislature may make procedural changes in these provisions prospectively.

Honorable Roland G. Niederstadt

House of Representatives

The Capitol

Lansing, MI 48909

You have requested my opinion on two questions, the first of which is:

The tax limitations of townships, inter alia, are governed by Const 1963, art 9, Sec. 6, providing at p 1 for a 15/18/50-mill limitation for any county and for the general law townships and school districts located therein, as follows:

Charter townships, "the tax limitations of which are provided for by charter or by general law," are excepted from Const 1963, art 9, Sec. 6, p 1, and are governed by Const 1963, art 9, Sec. 6, p 2, which provides:

Const 1963, art 9, Sec. 6, p 1, is implemented for general law townships by the Property Tax Limitation Act, 1933 PA 62, MCL 211.201 et seq; MSA 7.61 et seq, (PTLA), providing for a separate tax-limitation rate within the tax-allocation process of PTLA for general law townships. Const 1963, art 9, Sec. 6, p 2, is implemented, upon compliance with Const 1963, art 9, Sec. 31, for charter townships by Sec. 27 of the charter township act, MCL 42.27; MSA 5.46(27), providing a 5-mill limitation for charter townships. In accordance with Const 1963, art 9, Sec. 6, general law townships are within the separate tax-allocation process of PTLA, and charter townships are outside of PTLA's tax-allocation process, the latter being governed, for tax-limitation purposes, by the charter township act. See Butcher v Twp of Grosse Ile, 387 Mich 42; 194 NW2d 845 (1972), app dis, 409 US 814; 93 SCt 69; 34 LEd2d 71 (1972).

PTLA, as amended by 1966 PA 303, Sec. 5b, MCL 211.205b; MSA 7.65(2), and Sec. 5g, MCL 211.205g; MSA 7.65(7), as amended by 1965 PA 104, provides that "a school district located entirely within a city or charter township shall receive in addition [to the school district's allocated millage] millage equal to the township millage," when separate tax limitations are approved by the county's electors pursuant to PTLA. The effect of this change in PTLA was that when a general law township became a charter township, no longer subject to the separate tax-limitation rate as provided in PTLA, the separate millage formerly allocated to that township would thereafter be allocated to the school district located entirely within that township.

From the time of enactment of the charter township act, 1947 PA 359, MCL 42.1 et seq; MSA 5.46(1) et seq, until 1976, charter township incorporation was effected by a vote of the township's electors. The charter township act was amended by 1976 PA 90 to provide as an alternative to incorporation by a vote of the township electors that charter township incorporation could be effected in certain eligible townships by resolution of the township board; the resolution is subject to a right of referendum, and when the right of referendum is not exercised, the incorporation is accomplished without a vote of the township electors. MCL 42.3a; MSA 5.46(3a). See, 1985-1986, OAG No 6285, p 46 (April 17, 1985). Prior to the adoption of the Headlee Amendment in 1978, whenever a charter township was incorporated by either method, the charter township was removed from Const 1963, art 9, Sec. 6, p 1, and PTLA by virtue of its charter incorporation, and, thereafter, was governed by Const 1963, art 9, Sec. 6, p 2, and Sec. 27 of the charter township act. Accordingly, the charter township was no longer subject to the separate tax-allocation process of PTLA because its tax limitation was provided for by general law, the charter township act.

Const 1963, art 9, Sec. 6, was amended, and Secs. 25 through 34 were added by Proposal E, the Headlee Amendment, effective December 23, 1978. Const 1963, art 9, Sec. 31, provides, in pertinent part:

By operation of law, the effect of the Headlee requirement for voter approval of a new or increased tax was to preclude the change in the millage limitation, from 1 to 5 mills, when a general law township became a charter township by resolution of the township board, but without a vote of the electors. This was considered in OAG, 1985-1986, No 6285, supra, at 50, where the Opinion stated:

The Headlee Amendment, Const 1963, art 9, Sec. 31, vote requirement for a voted millage increase superseded the ability of a township to increase its millage limitation by means of charter township incorporation when charter township incorporation was by resolution without a vote of the electors. A township which becomes a charter township without a vote of the electors subsequent to the Headlee Amendment does not have the authority to levy the higher millage (5 mills) provided for by the charter township act, Sec. 27, merely by resolution of the township board; for purposes of its tax limitation, this township "would continue as a general law township" with the 1-mill limitation authorized and allocated by PTLA pursuant to Const 1963, art 9, Sec. 6, p 1. OAG 1985-1986, No 6285, supra, at 50.

A voted separate tax limitation pursuant to Const 1963, art 9, Sec. 6, p 1, and PTLA involves the maximum authorized millage limitation, 15/18/50 mills, and the designation of separate tax-limitation votes for the county and the general law townships and school districts in that county. The vote upon a separate tax limitation is by the registered and qualified electors of the county, including the electors of townships in that county. It is noted that pursuant to Const 1963, art 9, Sec. 6, p 1, second sentence, and PTLA, Secs. 3(3) and 11(f), MCL 211.203(3) and 211.211(f); MSA 7.63(3) and 7.71(f), there is also a capability for a local unit to submit a voted tax increase for that unit, in addition to the voted separate tax limitation and allocation within the county. See also, Butcher, supra, 387 Mich at 70, T.M. Kavanagh, CJ, concurring, and OAG, 1975-1976, No 5043, pp 516, 519 (June 24, 1976). The voted separate tax limitation has no effect upon the millage limitation of a charter township that was incorporated by vote of the electors, or upon a charter township that was incorporated by resolution of the township board but without a vote prior to Headlee; however, the voted separate tax-limitation rate does affect adoption of the tax limitation and allocation of millage of general law townships, and of charter townships that were incorporated without a vote of the electors after Headlee.

By contrast, when a general law township incorporates as a charter township pursuant to the charter township act, the change in millage limitation is not one within Const 1963, art 9, Sec. 6, p 1, for an increase in the 15/18/50-mill limitation and the allocation of that millage; it is a change to except the township from the 15/18/50-mill limitation and to increase the township's limitation from 1 mill (under Const 1963, art 9, Sec. 6, p 1, and PTLA) to 5 mills under Const 1963, art 9, Sec. 6, p 2, and Sec. 27 of the charter township act. Since December 22, 1978, this increase must be by a vote of the township electors.

The function and intended result or effect of a voted separate tax limitation is different and distinct from a voted charter township incorporation with the consequent millage increase, although both voted propositions do involve the tax limitations of townships. A voted separate tax limitation by the electors of the county operates within Const 1963, art 9, Sec. 6, p 1, and PTLA, whereas a voted charter incorporation by the electors of the township operates within Const 1963, art 9, Sec. 6, p 2, and Sec. 27 of the charter township act. Because of this distinction between the two types of voted propositions, a vote on a separate tax limitation by the electors of the county cannot suffice under Headlee as the requisite vote to accomplish full charter township status for tax limitation purposes when a township is incorporated by resolution without a vote of the electors. Separate tax limitation rates voted by the electors of the county do not remove such a township from Const 1963, art 9, Sec. 6, p 1, and the separate tax-allocation process of PTLA.

Inasmuch as a charter township incorporated after the effective date of Headlee, Const 1963, art 9, Sec. 31, without a vote of the electors of the township, continues as a general law township for tax-limitation purposes, and thus continues under Const 1963, art 9, Sec. 6, p 1, and PTLA, the township would continue to be allocated its millage within the 15/18/50-mill limitation. The above-quoted provisions of PTLA, Secs. 5b and 5g (for allocation of a charter township's millage to a school district entirely within that township) cannot be operative because the township continues to be allocated its millage under the 15/18/50-mill limit as though it is still a general law township, and such millage cannot be reallocated from the township to the school district. The determinative factor for the operation of PTLA, Secs. 5b and 5g, is not merely that a general law township has become a charter township; it is that the charter township, without the vote required by Const 1963, art 9, Sec. 31, remains within Const 1963, art 9, Sec. 6, p 1, and the tax-allocation process of PTLA and, as such, continues to be allocated its millage so that such millage is not available to the school district. The diversion of such a township's millage to a school district would result in a tax increase without a vote and, thus, be in a violation of Headlee, Const 1963, art 9, Sec. 31.

It is my opinion, in answer to your first question, that the separate tax-limitation rate allocated to a general law township, which becomes a charter township after December 22, 1978, by resolution of the township board, but without a vote of the township electors, would continue to be allocated to that township under PTLA, and should not be allocated to a school district entirely within that township.

Your second question is:

Your question inquires generally, in the event of a statutory change in the language of PTLA Secs. 5b and 5g, whether the change in legislation would effect a change in the separate tax-limitation rates voted by the county electors prior to the legislative change. Your correspondence does not indicate any specific type of change in such language.

As indicated above, the authority for separate tax limitations is conferred upon the electors by Const 1963, art 9, Sec. 6, p 1:

While the constitutional article does state "under procedures provided by law," which the Legislature has implemented in PTLA, the Constitution does guarantee the right of initiative to the electors to vote to adopt and thereafter alter separate tax limitations within the specified 15/18/50-mill limit, with a 20-year limitation. Absent an amendment to this constitutional article, subsequent legislation may not effectively abrogate the electors' right of initiative or their right by initiative to adopt or thereafter alter their voted tax limitations within the 15/18/50-mill constitutional limit. A change of legislation that modified or rescinded the previously exercised right of initiative would contravene the constitutionally-conferred right to do so. Similarly, the voters having the constitutionally-conferred right to "thereafter alter" their voted tax limitation, any legislative change would be ineffectual because whatever change the Legislature might make would be subject to the electors' right to alter their tax limitation.

It will be noted that Const 1963, art 9, Sec. 6, p 1, refers to "procedures provided by law." (Emphasis added.) The Legislature has provided for such procedures in certain sections of PTLA; for example, Sec. 5a, MCL 211.205a; MSA 7.65(1), prescribes the percentage of signatures requisite for a petition, and the place and time of the filing of the petition; Sec. 5b, MCL 211.205b; MSA 7.65(2), specifies the form of the petition; Sec. 5c, MCL 211.205c; MSA 7.65(3), provides for initiation of a petition by resolution of a majority of the members of the county tax allocation board; Sec. 5d, MCL 211.205d; MSA 7.65(4), provides for the sufficiency of such petition and for an order by the county board of commissioners for the election; Sec. 5e, MCL 211.205e; MSA 7.65(5), provides for the submission of a recommendation by the county tax allocation board; Sec. 5f, MCL 211.205f; MSA 7.65(6), provides for transmission of documents to city and township clerks; and Sec. 5g, MCL 211.205g; MSA 7.65(7), specifies the form of ballot. The Legislature has the authority to amend this legislation and to change the procedures for the implementation of a separately-voted tax limitation.

While such a legislative change could not abrogate the voters' right of initiative for a previously-voted separate tax limitation under Const 1963, art 9, Sec. 6, p 1, as discussed above, procedural changes could be enacted which might affect a voted separate tax limitation; such changes would operate prospectively to change the procedure under which the electors might thereafter alter their separately-voted tax limitation. To illustrate, the change might be one requiring a higher or lower percentage of signatures on the petition, or change the time for filing the petition, etc. These types of changes would operate prospectively; that is, when implemented subsequent to a change in the legislation.

It is my opinion, in answer to your second question, that when the electors of a local unit adopt a separate tax limitation under the language of the Property Tax Limitation Act, Secs. 5b and 5g, MCL 211.205b and 211.205g; MSA 7.65(2) and 7.65(7), and if the Legislature subsequently enacts changes in such language, the amendatory changes would not change the substance of the constitutionally-conferred rights of the electors, but the Legislature may make procedural changes prospectively.

Frank J. Kelley

Attorney General