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Truth-in-Taxation and Budget Hearing Reminder
Michigan law requires a school board to adopt its budget before the beginning of the fiscal year (July 1). School officials should be aware of budget adoption legislation that took effect in 1995 (PA 40 of 1995), which significantly altered a school district’s obligations for truth-in-taxation and budget adoption procedures. That legislation permits a school district to dispense with the truth-in-taxation process if it takes certain steps as part of the budget adoption process.
First, a taxing unit such as a school district may levy the full authorized operating millage without following the truth-in-taxation process (i.e., newspaper notice, hearing, and resolutions proposing and adopting additional millage rates) if the taxing unit complies with Section 16 of the Uniform Budgeting and Accounting Act.
Second, PA 40 of 1995 amended Section 16 of the Uniform Budgeting and Accounting Act to require a taxing unit’s “general appropriations act” (i.e., the adopted budget) to set forth the total number of mills of ad valorem property taxes to be levied and the purposes for which that millage will be levied. A description of the tax base on which the millage will be levied should be included in the budget as well [e.g., (1) non-principal residence, non-qualified agricultural property, and non-qualified forest property; (2) all property; or (3) principal residence, qualified agricultural property, and qualified forest property].
Third, the notice for the budget hearing, which must be published in a newspaper of general circulation within the school district at least six calendar days before the hearing, must include the following statement, printed in 11-point boldfaced type:
The property tax millage rate proposed to be levied to support the proposed budget will be a subject of this hearing.
In summary, a school district may levy its full millage rate(s) without going through the truth-in-taxation hearing process by satisfying the following requirements:
1. At least six calendar days before the hearing, publish a notice of budget hearing containing the following information:
a. the time, date, and place of the hearing;
b. the location where the budget is available for public inspection; and
c. the boldfaced language referencing the proposed millage rate that is set forth above.
2. After the hearing concludes, adopt a budget that includes a statement of the total number of mills of ad valorem property taxes to be levied and the purposes for which the millage will be levied.
It is Thrun Law Firm’s opinion that a school district seeking to levy millage approved by voters after the adoption of the budget may avoid the truth-in-taxation process by: (1) publishing the appropriate budget hearing notice, holding a second public hearing, and amending the budget to include the additional millage; or (2) providing a millage rate in the original hearing notice and budget that includes the proposed millage to be voted on, if known.
An intermediate school district voting on a regional enhancement millage should consult with legal counsel about the incorporation of the enhancement millage in the truth-in-taxation process.
A form for the budget hearing notice that complies with the above-described requirements is attached to this edition of School Law Notes. Please note that no specific form of resolution for adoption of the budget is required. School districts may continue to use budget adoption resolutions that have been used in past years.
Because public school academies, schools of excellence, urban high school academies, and strict discipline academies (“charter schools”) are without authority to levy a school operating millage, the annual budget hearing notice for charter schools need not include the 11-point boldface type notice.