Truth-in-Taxation and Budget Hearing Reminder

May 13th, 2019

Michigan law requires that public schools adopt their annual budgets before the beginning of the fiscal year (July 1). A taxing entity, including a school district or ISD, must follow a “truth-in-taxation” process if its anticipated tax revenue will exceed what it collected in the previous fiscal year (with exceptions for certain tax­able additions). This process includes publishing a newspaper notice, holding a truth-in-taxation public hearing, and adopting resolutions proposing and adopting additional millage rates. A school district or ISD, however, may avoid the truth-in-taxation process if it takes the following steps during budget adoption.

First, a school district or ISD may levy its full authorized operating millage rate without following the truth-in-taxation process if it complies with Section 16 of the Uniform Budgeting and Accounting Act. Section 16 requires that a taxing unit’s “general appropriations act” (i.e., the adopted budget) state the total number of mills of ad valorem property taxes to be levied and the purposes for which that millage will be levied.

Second, a description of the tax base on which the operating millage will be levied must be included in the budget. Examples include: (1) non-principal residence, non-qualified agricultural property, non-qualified for­est property, non-supportive housing property, and non-industrial property; (2) all property; or (3) princi­pal residence, qualified agricultural property, qualified forest property, supportive housing property, and industrial personal property.

Third, the notice for the budget hearing, which must be published in a newspaper of general circula­tion within the school district or ISD 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 or ISD may levy its full operating millage rate(s) without going through the more complex truth-in-taxation process by satisfying the following requirements:

  1. At least six calendar days before the hearing, publish a notice of budget hearing with the following information:
    • time, date, and place of the hearing;
    • location where the budget is available for public inspection; and
    • boldfaced language referencing the proposed millage rate as 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;
    • the purpose(s) for which the millage will be levied; and
    • a description of the tax base on which the millage will be levied.

A school district or ISD seeking to levy an operating 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 ISD voting on a regional enhancement millage should consult with legal counsel about incorporating that millage into the truth-in-taxation process.

Because public school academies, schools of excellence, urban high school academies, and strict dis­cipline academies have no authority to levy a school op­erating millage, their annual budget hearing notice need not include the 11-point boldface type statement or any reference to a proposed property tax millage rate.

Please note that no specific form of resolution for budget adoption is re­quired. Schools may continue to use budget adoption resolutions used in past years.