In a recent post here titled “Lansing Builds a ‘Scaffolding for Plunder,” I wrote about House Bill 5667 sponsored by Rep. Joe Haveman, R-Holland, which would authorize “neighborhood enhancement” authorities with the power to impose higher property taxes (called “special assessments”) for various government spending projects including “pavilions,” sidewalk improvements, etc.
In a response posted at Mlive.com recently, government officials in Grand Rapids rather angrily disputed that the proposed levies would be “taxes,” contending that the bill would only authorize “a voluntary assessment, not a tax increase.”
Which is true? Some language in the bill is more than a little murky, but other provisions nevertheless make clear that these impositions would be anything but voluntary, and so are properly labeled “taxes.” (Emphasis added.)
First, the proposed law reads: “The creation of a district may be initiated as follows: (i) The governing body may initiate the creation of a district by adopting a resolution of intent to create a district.” In other words, a vote of the people isn’t even required should a governing body wish to impose its “enhancement” will. That is pretty far from being voluntary.
If that is not enough evidence, consider that the bill also provides for a mechanism through which objections by property owners to the creation of this new district (and higher assessments) can protest its creation and how those protests can be overcome. If this is a voluntary assessment as officials claim, why the need for legal acrobatics? In a truly voluntary system, one simply would not pay.
Second, the bill refers to a tax deferral procedure “that is available to persons for whom paying the special assessment would constitute a hardship.” Similar provisions appear in the state law that authorizes regular local property taxes, giving government ruling bodies the power to grant what are essentially “widows and orphan” exemptions to homeowners of limited means.
But if this “assessment” is actually voluntary, why would special provisions need to be made for financial hardship? Why couldn’t a property owner just say, “No thanks.” The proposed deferral does not make the tax liability go away, but instead establishes a lien against the owner’s property. Rather than anything “voluntary,” this is a straightforward “pay up or else” tax imposition. A hardship-tested exception proves the rule.
Third, local units of government need not take the lead in creation of an enhancement district. The proposed law also empowers “property owners who own at least 51 percent of the assessable property within the district” to force the initiation of the district without a vote of the people. Note that this language doesn’t say “51 percent of the property owners,” but simply the person or persons holding 51 percent of the property. Depending on the district boundaries this could be a single corporation or developer.
At the risk of beating a dead tax horse, if this were truly a voluntary assessment, why would it not require 100 percent of property owners to agree to the new, higher assessment? The answer is obvious: This is a tax enhancement bill first and a neighborhood one a distant second.
The best outcome is probably for this one to go into that dark and quiet place that is the fate of most “I’m just a bill.” If it does advance hopefully it will be subjected to careful scrutiny and questioning by members of the House Committee on Local, Intergovernmental, and Regional Affairs to which it has been referred.