Property Tax Revenue on the Rise

Property tax revenue in the state of Michigan is starting to recover from the nationwide mortgage crisis and Great Recession of 2007 to 2009 as revenue has increased for consecutive years for the first time in eight years.

The amount of property tax collected in this state for counties, townships, cities, villages and schools peaked at $14.25 billion in 2007. Then from 2008 to 2012 the amount of property tax revenue declined each year.

Property tax revenues increased 0.48 percent in 2013, rising from $12.75 billion the previous year to $12.82 billion, according to a state report. Then it increased again in 2014 to $13.03 billion, which was a 1.68 percent increase. That increase was larger than inflation (1.0 percent) in 2014 in the Detroit metro area, according to the Bureau of Labor Statistics.

“Broad economic improvement is increasing Michigan’s property values,” said James Hohman, the assistant director of fiscal policy for the Mackinac Center for Public Policy, in an email. “This has provided more property tax revenue for the state, schools and local governments and eases the strains they felt from the recession.”

Anthony Minghine, associate executive director of the Michigan Municipal League, said Michigan has a broken municipal finance system.

“Minimal increases in local taxable values don’t really provide much relief to communities that are struggling under Michigan’s broken municipal finance system,” Minghine said in an email. “It is good to see the state’s economy improving, but because taxable values are now reset at the significantly diminished values, there can be no real climb out because of the Proposal A capping. The costs to local government did not decline with the diminishment in tax revenues, but the inability to return taxable values to the pre-drop levels are the real villain.”

“Communities have little to no ability to generate new revenues unless you have new construction in a greenfield,” Minghine said. “This essentially means that we can only cut services to balance budgets and Michigan can no longer afford to cut its way to prosperity.”