Proposal A: An Analysis of the June 2, 1993, Statewide Ballot Question

In 1993, Michigan voters were asked to consider a plan that would cut property taxes and cap property assessments, raise the sales tax, and establish a $4,800 per-pupil guarantee for the public schools. "Proposal A" was defeated, but not without intensive debate in which this study figured prominently. The report identifies both pros and cons of "A," including independent, in-depth analysis of its likely impact on the state budget, schools, and property owners. Although "A" is now consigned to the history books, this study is a useful tool for understanding school finance, the economics of property taxation, and related constitutional questions. 40 pages.

Contents

• Executive Summary
• I. Description of the Proposal
  • Property Tax Limitation
  • The Cap on Assessment Increases
  • 1993 Property Taxes: The "Double Rollback"
  • Reduction in Property Tax Rates and the Michigan Economy
  • Who Benefits?
  • Fairness and the Sales Tax
  • Federal Taxes
  • Voter Control of Public School Expenditures
  • Sales and Use Tax Rates Increase
  • Per-pupil School Funding Guarantee
• II. Revenue Estimates
  • Taxes Under Proposal A
  • What If? Analysis
  • Headlee Amendment Protections Under Proposal A
• III. Conclusion
  • Does It Truly Reduce and Limit Taxes?
  • Does It Repeat the Mistakes of Past Proposals?
  • The Worrisome Part: Legislative Implementation
  • Let Every Taxpayer Decide for Themselves
• Appendix I: The Michigan Property Tax System
  • Michigan's Property Tax Burden
  • Tax Reduction and the Michigan Economy
  • Your Property Tax Bill Explained
  • The Headlee Amendment
• Appendix II: Tax Capitalization
• Appendix III: Assessment & Tax Rate Model
• Appendix IV: Text of the Proposal
• About the Author
• Endnotes