I can imagine the confusion in the minds of taxpayers when they received their assessment notices for the year 2009. Some saw the assessments go down and their taxable value increased. Some will see the assessments go down and their taxable value go down, and some will see their assessments go up and their taxable go up. With our economy in a failing condition and you can't sell your house, I know you're asking yourself, 'How can taxes go up?' Well, I hope this explanation may help you understand the system.
The county equalization departments do a Sale Study. This study compares the sales to the assessments. When the study is completed for a certain government unit there is a percentage that states the assessment of that certain unit and indicates what it should be. So if the study indicates an increase in values then the assessor's values are too low. The study increases the assessments between 40 to 50 percent, which the state says they must be at. Naturally, the assessors, in the case of increases, are more realistic to today's values, but the system has to be followed and the increases are put in place.
In 1994 the voters of Michigan went to the polls and approved Proposal A. Proposal A added two new regulations to the taxing and assessing systems in the state. One was the Homestead Exemption which is now called the Principal Residence Exemption and the other is the Taxable Value figure. The Principal Residence Exemption lowered the taxes for the principle (main) residence of a taxpayer. The other was the Taxable Value. This reads that the Taxable Value will be 5 percent or the rate of inflation (Consumer Price Index), whichever may be the lowest. As we now know the Taxable Value increase for 2009 is 4.4 percent. The State Tax Commission sends every taxing unit in the state a notice stating the increase or decrease in the Taxable Value. There has never been a decrease since this started in 1995. The Taxable Value is a figure that cannot be adjusted just because it is too high. If a building is removed from the property, your taxable can be lowered. The year after the property is sold the taxable value will become uncapped and match the assessed value. If a new building is added to the property, the taxable value will increase. The confusion comes in when people think their taxes are based on the assessment (SEV) for their property. The property taxes are based on the Taxable Value. Multiply your Taxable Value by the total millage of your government and the school district you are located in and this will give you your property taxes.
One thing that is never explained to taxpayers is that the Board of Review is held to a certain amount of assessed value they can lower for the government unit they are working for. They cannot lower the total assessment for a certain classification of property below the 49 percent value. If they do the county or state will add a factor back on and raise all the property assessments again to get them back between the 40 and 50 percent figure. So remember the state raises the taxable value and the county raises or lowers your assessments. The final resort is always the Michigan Tax Tribunal.
Thomas Lupo, Lapeer County Assessors Association, Imlay City
March 04, 2009