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Opinion No. 6758

April 7, 1993


State payments to local units of government for providing fire protection services for unused state buildings

The state does not incur a liability under 1977 PA 289 to compensate local units of government for fire protection services afforded to a state building which is completed but remains unused for one of the purposes enumerated in that statute.

Honorable Jon Cisky

State Senator

The Capitol

Lansing, MI

You have asked a question which may be phrased as follows:

When a state building is completed but remains unused, does the state incur a liability to compensate the relevant municipality for fire protection under 1977 PA 289?

1977 PA 289, MCL 141.951 et seq; MSA 4.208(1) et seq, provides for state payments to municipalities that provide fire protection to state facilities based on the estimated equalized value of the facility.

Your request arises in respect to the Saginaw Regional Correctional Facility. You indicate that Tittabawassee Township has been providing fire protection for the facility since its construction began in 1990. However, the Department of Management and Budget has indicated that state payments for fire protection, pursuant to 1977 PA 289, will not be made until the facility is occupied as a prison.

Analysis of your question must start with the recognition that the Legislature has, with certain narrow exceptions, made all state property exempt from the general property tax. MCL 211.7-1; MSA 7.7(4i). Local governmental units, therefore, cannot use their taxing authority to finance police and fire protection or other services provided for such property. Lucking v People, 320 Mich 495, 504; 31 NW2d 707 (1948).

However, while the Legislature has not required the state to pay property taxes to local units of government, it has choosen to reimburse them for fire protection services by enacting 1977 PA 289. That act authorizes payments for fire protection services, in section 2(1), "in lieu of taxes." Section 2 requires the Director of the Department of Management and Budget to make an annual determination of the estimated equalized value of each state facility in consultation with the State Tax Commission, the Director of the Bureau of Facilities in the Department of Management and Budget and the assessor of the affected city, village or township. The estimated equalized value of the state facilities located in the city, village or township is then used to compute the payment to the local unit of government in accord with the formula set forth in section 4 of the statute. Under section 6 of 1977 PA 289, the actual payment is dependent upon an annual legislative appropriation of funds for that purpose.

The base for the calculation of these payments differs significantly from the base utilized to determine assessments under the General Property Tax Act, MCL 211.1 et seq; MSA 7.1 et seq. Real property for purposes of the property tax is broadly defined in section 2 of that statute as including:

[A]ll lands within the state, and all buildings and fixtures thereon, and appurtenances thereto ... and shall include all real property owned by the state or heretofore purchased or condemned for public highway purposes....

In contrast, payments under 1977 PA 289 are based on the value of each "state facility" which term is defined, in section 1(d), to include only:

[S]tate owned real property associated with buildings primarily used for office purposes, state prisons, or hospitals, institutions of higher education, and state owned real and inventory personal property associated with a state proprietary function, the inventory personal property of which shall be valued on the basis of the average monthly inventory for the preceding state fiscal year. [ Emphasis added.]

The question, thus, becomes whether the Legislature intended this latter definition to include buildings that have not yet been used for one of the statutorily enumerated functions.

Where the provisions of a statute are clear and unambiguous, they are to be applied as written without further interpretation. Owendale-Gagetown School Dist v Bd of Education, 413 Mich 1, 8; 317 NW2d 529 (1982). An interpretation which included new buildings that have not yet been used for any of the purposes enumerated in 1977 PA 289 would effectively negate the "used for" clause of the statute's "state facility" definition. It could also result in state funds being paid for fire protection services for a facility which is never used for one of the enumerated functions set forth in 1977 PA 289, as in the case of an abandoned project or one subsequently modified to a non-covered purpose. The general rule of statutory construction is that every word and phrase of a statute should be given meaning and not treated as mere surplusage or rendered nugatory. Stowers v Wolodzko, 386 Mich 119, 133; 191 NW2d 355 (1971).

Reference to the history of the legislation sheds light on the underlying intent of the Legislature. Luttrell v Dep't of Corrections, 421 Mich 93, 103; 365 NW2d 74 (1984). Where the process of enactment reveals significant language changes, those changes can be strong evidence of legislative intent. People v Adamowski, 340 Mich 422, 427-429; 65 NW2d 753 (1954). The version of SB 602 originally introduced in the Senate (1) defined "state facility" as "state owned real property, except a park, game area, forest, recreation area, or tax reverted property." This version also defined "value" to mean "true cash value as established for general property tax purposes" and designated the Michigan Tax Tribunal as the final arbiter in this regard. The House substitute adopted the narrower definition noted above which focuses on use for specified purposes and vests the determination of value in the discretion of the Director of the Department of Management and Budget.

Even aside from this history, if the Legislature had intended to include unused buildings within the definition of "state facility" under 1977 PA 289, it would have been a simple matter to incorporate language to that effect. Alternatively, the Legislature could have adopted the broader definition of "state facility" which appeared in the original Senate Bill and which did not include a utilization requirement. Its employment of restrictive language in these circumstances suggests an intent to limit payment for services to completed buildings actually used for the specified purposes.

It is my opinion, therefore, that the state does not incur a liability under 1977 PA 289 to compensate local units of government for fire protection services afforded to a state building which is completed but remains unused for one of the purposes enumerated in that statute. The Legislature may, if it so desires, amend section 1(d) of 1977 PA 289 to expand the definition of "state facility" to include completed state buildings that remain unused.

Frank J. Kelley

Attorney General

(1 1977 PA 289 was introduced on May 19, 1977, as Senate Bill 602 and passed by the Senate, after minor amendments, on October 18, 1977) 1977 Journal of the Senate 764, 1262 and 1754. The House passed a substitute on November 29, 1977. 1977 Journal of the House 3296. The Senate concurred in the House substitute on December 6, 1977. 1977 Journal of the Senate 2126, 2183.