County OKs Economic Development Tax, Policy

Two actions related to a tax to support economic development and agriculture were taken at the Nov. 6, 2013 meeting of the Washtenaw County board of commissioners. During public commentary, the board also heard from two people who objected to the tax levy, including Bill McMaster of Taxpayers United.

On a 7-1 vote, the board gave final approval to an increase in the levy of the economic development and agricultural tax, known as Act 88 of 1913. The increase to the Act 88 millage is from 0.06 mills to 0.07 mills. Dan Smith (R-District 2) dissented and Rolland Sizemore Jr. (D-District 5) had left the meeting by the time the vote occurred, just after midnight.

The millage will be levied in December 2013 and raise an estimated $972,635. Initial approval to the increase had been given by the board on Oct. 16, 2013. The funds will be allocated to the following groups:

  • $408,135: Washtenaw County office of community & economic development (OCED)
  • $200,000: Ann Arbor SPARK
  • $100,000: Eastern Leaders Group
  • $52,000: Promotion of Heritage Tourism in Washtenaw County
  • $50,000: SPARK East
  • $50,000: Detroit Region Aerotropolis
  • $82,500: Washtenaw County 4-H
  • $15,000: Washtenaw County 4-H Youth Show
  • $15,000: MSU Extension for food systems-related economic development activities Food System Economic Partnership (FSEP)

The initial approval had allocated $423,135 to OCED. An amendment approved unanimously on Nov. 6 shifted $15,000 from that allocation to fund food systems-related economic development. A second amendment, also passed unanimously, corrected the original resolution, which had stated that the millage would only be assessed against real property in Washtenaw County. The amendment clarified that the millage will be assessed against all taxable property located in the county.

The county’s position is that it is authorized to collect up to 0.5 mills under Act 88 without seeking voter approval. That’s because the state legislation that enables the county to levy this type of tax, which predates the state’s Headlee Amendment.

As he has on previous occasions, Dan Smith raised questions about whether levying this kind of tax is constitutional, because it would exceed constitutional limits on the amount of property tax that can be levied without voter approval. He also questioned whether the language of the Act 88 statute allows the kind of general interpretation the county is using to define eligible uses of funds generated by the levy. Smith has been advocating for written clarification from the county’s corporation counsel, Curtis Hedger, that would explicitly state the county’s position on the legality of this levy. Hedger maintains that he can provide that kind of written legal opinion only under direction from the entire board.

Smith moved to table the item, but that motion failed on a voice vote. Discussion on the resolution lasted about 15 minutes before the final approval passed. Later in the meeting Smith brought forward a resolution directing corporation counsel to provide an opinion on taxes levied in excess of constitutional limits without a vote of the people. That motion died for lack of a second.

McMaster, who led the statewide campaign that resulted in passage of the Headlee Amendment in 1978, noted during public commentary that there’s a provision in the law allowing for legal action in the state court of appeals, “which we will pursue,” he said.

Also on Nov. 6, the board approved a new policy for allocating Act 88 revenues, drafted by Conan Smith (D-District 9) and given initial approval on Oct. 16. [.pdf of Act 88 policy] The policy includes creating an Act 88 advisory committee to make recommendations to the board and prepare an annual report that assesses how Act 88 expenditures have contributed toward progress of goals adopted by the board.

The policy also allows the committee to distribute up to 10% of annual Act 88 revenues without seeking board approval. That was the subject of some discussion on Nov. 6, with Dan Smith noting that Act 88 only authorizes the board to direct how revenues are spent. Hedger responded that by approving this policy, the board would be providing that direction – in essence, delegating it to the advisory committee.

The policy also allocates up to 30% of revenues to the county office of community & economic development, which administers Act 88 funding.

The vote on the Act 88 policy was unanimous. Rolland Sizemore Jr. was absent.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]