Executive Summary of HJR H

Proposal A. placed on the ballot by House Joint Resolution H ("HJR H"), would establish separate tax limitations for different classes of property, and limit annual assessment increases on certain parcels until sold. It would initially result in slightly higher property taxes, and would ultimately -result in higher taxes on some parcels and lower taxes on others.

HJR H has two main provisions, and one special provision:

  • Limit annual assessment increases on "homestead" (principal residence) parcels to 5% or the rate of inflation, whichever is less, until sold;

  • Apply the current Headlee amendment limitations on tax increases caused by assessment growth separately by two classes, (residential & agricultural, and all other), resulting in two separate millage rates; and

  • In 1993, allow property taxes to increase because of assessment growth up to the rate of inflation for the past two years: rather than the one year allowed by the current Headlee amendment; resulting in higher tax rates in many areas of the state.

HJR H would create a hugely confusing array of property tax rates; with two millage rates – one for residential and agricultural property, and another for all other property – for each current millage rate. In most cases, the rate for residential and agricultural property would be equal or higher than the other rate, which would fall mostly on business property.

Property taxes would be initially slightly higher under HJR H than under current law, and might eventually become slightly lower. However, since HJR H could allow citizens or public officials to increase property taxes on business property alone, it might result in higher total property taxes over the long run.

While apparently motivated by a desire to protect homeowners from bearing an unfair burden of property taxation, HJR H's two main provisions work directly against each other. It would ultimately create three classes of property, each facing a different combination of valuation method and milIage rates. Some property owners would pay higher taxes than under the current constitution; others would pay lower, with little rhyme or reason why. In addition; HJR H would create great uncertainty about enforcement of other constitutional provisions, such as the millage limits in Article IX Section 6. Finally, its unequal taxation of similar parcels may not pass federal constitutional scrutiny.