Guard Headlee protections
Eight states across the country just passed measures to limit property taxes.
Georgia and Florida capped the rates at which property taxes could go up.
Michigan already has such a limitation, but its protections have been gradually eroded with the acquiescence of the courts.
Michigan enacted what is commonly called “the Headlee Amendment” in 1978.
The law limits the amount that property taxes may be increased and requires local governments to allow a public vote on any new taxes or tax increases.
But local governments have found a way around that.
There has long been a distinction in Michigan between taxes and user fees. While the Headlee Amendment limits taxes, so-called fees are not constrained by the Michigan Constitution. Local governments have been increasing those Headlee-exempt fees without putting them to a vote.
The courts have taken that exception and greatly expanded it.
Originally, when a government charged fees, it was only allowed to raise money to cover the costs of administering regulatory activities — overhead, basically. For example, the state could charge a fee to cover the cost of administering driver’s licenses — clerks, forms, recordkeeping, and things like that.
But those driver’s license fees could not be used to fund road-building.
Fees were only supposed to be a minor burden for the user, not a way to shoulder the cost of major public projects. If the money obtained from a fee was used for more than the cost of running a regulatory scheme and issuing a government-required license, it was a tax.
Public projects and services were to be funded by taxes, not fees.
And, after the Headlee Amendment, those taxes had to be voted on by the public.
Recently, however, the courts have allowed local governments to use new or increased fees to fund major projects if those projects were undertaken at the direction of a regulatory agency. For instance, if a state agency orders local governments to build major infrastructure projects in order to comply with a regulation, courts have let local governments charge fees to build that infrastructure — without holding a public vote.
That completely ignores the constitutional requirement for a vote and leaves taxpayers burdened with increasing costs they never had a say in.
Instead of fees only paying the overhead cost of the regulators, they pay the much-higher costs of everything that regulators oversee, which is pretty much everything.
So, while other states, including the fast-growing economies of Florida and Georgia, are adopting tax-limitation measures like Michigan once had, Michigan has been slowly allowing our own constitutional tax-limitation measure to become an easily bypassed irrelevancy.
Making Michigan a high-tax state will only decrease our population and fuel the exodus of our residents and businesses moving to more tax-friendly states.
To help fight that, the Mackinac Center filed a friend-of-the-court brief at the Michigan Supreme Court, challenging the erosion of the Headlee Amendment.
Voters have a right to have a say in how high their taxes are.
We hope the state’s highest court will agree.
Derk Wilcox is the senior attorney at the Mackinac Center for Public Policy and a member of the Mackinac Center Legal Foundation legal team.