DIA Seeks Millage Renewal

Throughout the Metro-Detroit region there are multiple millages being levied to support regional entities, most of which were born out of Detroit’s bankruptcy and the economic downturn. When some of these millages were originally levied, the initial intentions expressed to the public were that they were for only a specific amount of time, such as with the Detroit Institute of Authority (DIA). However, the Detroit Zoo for example passed a 0.1 millage in 2008, and then came back to voters in 2016, two years before the 10 year millage was set to expire, and asked for a renewal. The 0.1 millage renewal passed, and this public support for the Detroit Zoo continues to be levied; the cost of the Zoo millage for a home valued at $100,000 ($50,000 taxable value), is $5. We have also seen the Suburban Mobility Authority for Regional Transportation (SMART) continuously seek millage renewals and increases, the most recent being a 1 mill renewal for four years that was approved by voters in 2018.

Now, as the end of 2019 nears, the Detroit Institute of Arts (DIA) recently announced it is up against the clock to put millage renewal language on the March 2020 ballot. The 10-year millage was originally approved by voters in Macomb, Oakland and Wayne counties in 2012, and it was stated at that time that it was a one time request, allowing the museum time to build up its endowment for long-term financial support of operations, according to news articles of 2012 and present. Now seven years into the one-time millage, DIA officials have announced a 10-year renewal is necessary to continue offering the services the public has come to expect. In order to do this the three Art Authorities in Macomb, Oakland and Wayne counties (which were born out of articles of incorporation crafted and approved by the corresponding Board of Commissioners) must approve the ballot language. Just last week the Wayne County Art Authority approved putting the 0.2 mill renewal on the ballot, Oakland County is expected to debate the potential millage renewal later this month and the Macomb Art Authority will do so on Dec. 3.

As discussions again begin to ramp up over whether another regional millage renewal is necessary, it is important to consider what benefits the current tax dollars levied for the DIA may have created the region. In addition to free general admission for Macomb, Oakland and Wayne residents additional benefits can be covered under three main areas: investment in schools (free field trips with bussing, teacher professional development, and curriculum development), investment in the senior population (free group visits for older adults on Thursdays with free transportation and special programs), and investment in community partnerships (Inside/Out program, partnerships with area non-profits).

The first chart below shows the amount of money invested into the schools in the region by county and by year. In total, between 2013 and 2018 392,231 students in the tri-county region have had access to the school programs now offered by the DIA, with that investment totaling about $4.3 million. Of the three counties the most amount of money has been invested into the Wayne County schools, with that total being about $2.2 million. Wayne County has the highest population of the three counties.  It should also be noted though that investment into these various programs in the counties requires participation from the residents.

When looking at the amount invested in the senior programs since 2013 that total is about $1.7 million with the total number of seniors being reached by these special programs being 32,422. The largest investment with the senior programs since the millage has been in Oakland County with a total of  $725,362 being invested into the senior population.

Finally, the area where the most investment has been made is in the community partnerships area. Between 2013 and 2018 about $5.3 million was invested. The largest investment was in Oakland County at about $2 million. In Wayne County $1.9 million was invested, and in Macomb County about $1.3 million was invested.

It appears a new trend is emerging where millages will be needed to support regional entities and interests (the Zoo, the DIA, transit) along with day-to-day services in some cities and counties. For example, in Detroit there are currently discussions about a March ballot proposal to levy additional funds to move blight removal in the city along at a much faster pace. In Macomb County residents will asked to decide if they want to pay additional taxes in order to build a new jail. So it may be even more important for taxpayers to understand what additional taxes are appearing on their tax bill and what their priorities are. In the coming weeks we will look at the additional taxes residents pay in certain communities throughout the region to shed further light on what tax bills are now looking like.

Michigan ranked 31 nationwide for amount of taxes per capita

The chart above compares the taxes per capita in Michigan, which is $2.50, to the 10 states with the highest taxes per capita. Michigan ranked 31 out of 50 and North Dakota came in at number 1 with its taxes per capita at $8.28.

Other states in the Great Lakes region with higher taxes per capita than Michigan were: Minnesota ($4.24), New York ($3.90), Illinois ($3.04), Wisconsin ($2.85) and Indiana ($2.55).

Nationwide, New Hampshire had the lowest taxes per capita in 2014 at $1.72.

As seen in the graph below, the State of Michigan’s tax revenues come from four primary categories: Sales and Gross Receipt Taxes, Income Taxes, Property Taxes, and License Taxes. All other taxes, which include death and Gift Taxes, Documentary and Stock Transfer Taxes, and Severance Taxes, fall into the “Other” category. This category accounted for only 1 percent of the state’s tax revenue in 2014 while sales and gross receipt taxes accounted for 50 percent, or about $12 billion, of the state’s tax revenue.

The information for this post was taken from the 2014 Annual Survey of State Government Tax Collections.

As noted, half of Michigan’s tax revenue generated in 2014 was from sales and gross receipt taxes, a category that is made up of more than just general sales and gross receipt taxes. General sales and gross receipt taxes accounted for 68 percent of the overall sales and gross receipts of $12 billion brought in 2014 while about 8 percent of those monies were earned through the motor fuel tax.

Michigan also relies on income tax monies to fund state operations; 35 percent of Michigan’s tax revenue generated in 2014 (about $8.7 billion) came from income taxes. Of that, 89 percent came from personal income taxes and the remainder was generated from corporation net income taxes.

Overall, according to the National Conference of State Legislatures, states earn about a third of their tax base through income taxes. Though this varies substantially as discussed below.

The majority of Oregon’s tax base (74%) was earned through its income tax in 2014, while Michigan only derived 35 percent of its tax base from income tax. Oregon’s income tax is divided into four brackets depending on a person/family’s earning. In addition, Oregonians are able to subtract what they pay in federal taxes from their state taxable income results, according to an article from The Oregonian.

Michigan has a flat income tax. In Michigan the income tax rate is 4.25 percent, however Republicans in the State Legislature have been working to reduce it to 3.9 percent, according to the Michigan League for Public Policy (MLPP). Such action, according to the MLPP, would reduce revenue flow to areas such as education and infrastructure. Michigan also has an Earned Income Tax Credit that allows lower income workers to retain more of their income. The State Legislature intends to eliminate this credit and instead push those funds into Michigan’s roads.

In addition to the Earned Income Tax Credit that exists in Michigan, and 23 other states (including Oregon), there is also a federal one, according to the National Center for Children in Poverty.

The importance of income taxes has grown since reliance on property tax values has declined in recent years, according to the National Conference of State Legislatures.

With Michigan’s sales and gross receipt taxes making up 50 percent of the state’s tax generated revenue in 2014, it ranked 19th for percent of sales tax making up a state’s tax base. Texas ranked first with 83 percent of its tax base being made up of sales taxes. Texas is one of the 17 states in the U.S. that does not levy property taxes at the state level, though it does have property taxes at the municipal and county level. Other states that do not levy property taxes (at the state level) and are among the 10 states with the highest percentage of revenue derived from sales taxes include: Florida (2), South Dakota (3), Tennessee (6) and Hawaii (7). Indiana was the only Midwestern state of the 10 states with the largest portion of their tax base being made up of sales taxes. In 2014, 62 percent of Indiana’s tax revenue was earned through sales taxes.

Out of the 33 states in the U.S. that levy property taxes, Michigan ranked seventh for the percent of tax revenues derived from property taxes. In total, about 8 percent of the state of Michigan’s tax revenues, or $1.8 billion, came from property taxes. Vermont ranked at the top, with 33 percent of its state tax revenues comprised of property taxes.