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City of Howell Headlee Override: Get the facts before the November 6 election

As we anticipate the election on November 6, city residents and businesses need to know what the City of Howell Headlee Override really means before we hit the polls. If approved, a Headlee Override would allow the City of Howell to increase its authorized millage rate for five years by an additional 4.5003 mills. The request would restore the authorized millage amount, which has been reduced by the Headlee Amendment. The proposal would generate approximately $1.4 (m) million per year, beginning in July of 2019. The millage will serve to maintain current levels of service as well as re-establishing infrastructure funding. The City of Howell currently operates at a structural deficit of $200,000 – $300,000 a year.

The Howell Area Chamber of Commerce is not taking a formal position on the important proposal. However, we do endeavor to educate our membership by gathering published information so that you can be better informed before going to the polls. The following information is provided from City of Howell, supporting group and opposition group sources.

Precise ballot language for the City of Howell Headlee Override:

Shall the City of Howell, Michigan, be permitted to increase its authorized millage rate in 2019 for a term of five (5) years ending December 31, 2023, by an additional 4.5003 mills ($4.5003 per $1,000) on each dollar of the taxable value of all real and personal property in the City of Howell, which will restore to the City the Charter-authorized millage amount to be used to restore infrastructure funding and maintain services, which has been reduced by the Headlee Amendment. The proposal would generate approximately $1,401,143 per year, beginning July of 2019, subject to any future reductions of the Headlee Amendment.

 

The Howell Chamber is gathering sourced information so that you can compare the information, given from the City of Howell, the opposition and the support:

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From the City of Howell:

www.cityofhowell.org/Headlee
Why is the City of Howell pursuing a Headlee Override at this time?
After several years of analysis and discussion, there are four main factors contributing to the need for a Headlee Override at this time.
  • The State of Michigan continues to abdicate its responsibility in funding local municipalities, forcing local governments to make service cuts and/or consider new revenue sources.
  • The 2008 Great Recession reduced taxable values by 27.6%.
  • The combination of Proposal A and the Headlee Amendment, the controlling factors for tax collections in the State, do not allow taxable values to recover after the drop from the Great Recession, putting City taxable value at early 2000s levels.
  • The City has managed our pension liabilities effectively, but the Municipal Employee Retirement System changed the City’s required contributions, forcing unanticipated accelerated payments.
Revenue generated from the Headlee would support the community via:
  • Road repairs over the next 11 years
  • Police: well-funded police departments to reduce crime and increase response times
  • Snow removal, curbside leaf pick-up and tree trimming
  • Street and Park Maintenance: upkeep of neighborhoods to increase property values
What infrastructure projects will occur as a result of the additional funds?
The City will begin rehabilitating local roads and increasing maintenance throughout the community, rather than waiting until the roads need full reconstruction, which is a costlier process. Restoring funding for infrastructure maintenance will prolong the life of the City’s roads, reducing long-term costs. The first series of roads to be rehabilitated will be National Street (south of East Sibley), Chestnut Street (between Grand River and Clinton), Warbler Way (between Fowler and Meadowlark), and East Brooks Street (between Isbell and Gregory).
Looking forward, the City has identified approximately $18,000,000 of needed roadwork through out the community. A map of these areas can be found at www.cityofhowell.org/headlee
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The Supporting Team: The Committee for a Strong Howell

The Committee for a Strong Howell’s website is at https://www.howellstrong.com/. You can check out the Facebook page at https://www.facebook.com/HowellStrongCommittee/, follow the committee’s Twitter feed at https://twitter.com/StrongHowell, and on Instagram at https://www.instagram.com/howellstrong/

When the Headlee Amendment passed in 1978, (and later, Proposal A), the aim was to protect Michigan homeowners from rapidly escalating property taxes. The legislation was based on the assumption of continually increasing property values; what no one could know back then was that the economic meltdown three decades later would expose its structural weakness.

Think about what happened to the housing market when the Great Recession hit: Some homeowners were plunged underwater on their mortgages; others lost the equity they had built up over the years; and too many lost their homes to foreclosure. Property values plummeted, taking the assessments on which taxes are determined with them. Additionally, the State of Michigan cut state-shared revenue to cities in its effort to balance its budget.

While the economy in general has recovered, cities took it on the chin with lower property tax revenues, and for them there will never be a complete recovery. It’s mathematically impossible because of how Headlee and Proposal A work.

To cope with the Great Recession, Howell reduced its staffing levels by 25 percent, and worked with its remaining employees to freeze wages for several years and have them contribute more to their health care plans. The city also purchased more technology to offset the loss of personnel, and began sharing services to help reduce costs.

The city also deferred investments in its infrastructure by $1 million a year.

“As city streets and infrastructure needs demand attention, the city is faced with two choices: cut more services like police protection, leaf pickup, and snow plowing; or increase revenue through a Headlee Override,” said Randall Greene, chairperson of Citizens for a Strong Howell. “Without the extra revenue, the city will never fully recover from the Great Recession.”

With the Headlee Override, 80 percent of the money raised will go directly to streets and infrastructure, with some streets needing basic maintenance while others require a complete overhaul because they are at the end of their 20-30 year life cycle.

“The Headlee Override is truly an investment in our city that will keep it a desirable, safe community in which to live,” said Kathleen Goetsch, co-chair of Citizens for a Strong Howell. “It will keep our property values rising.”

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The Opposition of the Headlee Override: What a YES vote really means for Howell City Residents and Businesses

Currently, residents pay 15.5 mills to the city. Should this be passed, the millage rate would be restored to its City Charter authorized 20 mill for five years – which would be 4.5003 mills.  It would not rise by 4.50 mills each year – but would hold at the 20 mil level for five years – subject to any relevant Headlee rollbacks.  At the end of the five years, residents will be asked to sustain the full 20 mil authorization to continue with existing services and infrastructure improvements.  If after the five years, residents vote the the Headlee down, rates would return to the current 15.5 level. (click here to view current millage rates)

REAL EXAMPLE should this Headlee Override Pass:

A PRE Property (Principal Residential Exemption aka Homestead) with a True Cash Value of $125,000 would have an assessed value (AV) of $62,500.  For arguments sake the person has lived in their house for five years so their taxable value (TV) would be lower say $58,000.  To calculate the increase take TV/1000 * 4.5 mills = increase, 58,000/1000 * 4.5 = $261/year.

As TV can only grow at rate of inflation (aka CPI) we would project that additional $261 would grow 2% a year, given that assumption of 2%/year their additional amount would be as follows: 2019 – $261, 2020 – $266, 2021 – $271, 2022 – $276, 2023 – $283.  Just to add to the mix, these increases assume there is no additional Headlee millage rollback during this same time period.

This examples current total tax bill would be 58,000/1000 * 38.729 = $2,246.

 

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