The Manchester Enterprise
A Heritage Newspaper
Weekly Publication
Where are all your taxes going?
Townships, schools dissect the money trail for operations budget
By Crystal Hayduk, Special Writer
PUBLISHED: May 8, 2008
The bill comes twice a year -- once in the winter and once in the summer. When it arrives, we look at the envelope, noting the return address. There's often a sigh as we contemplate the best time to open it. Should we file it for later, or submit ourselves to the pain immediately?
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When we finally open it, we look over the numbers. We think: How and when shall we pay it? Shall we deliver it in person or mail it?
Many people pay their property taxes twice a year, but have only the vaguest notion of what they're paying for, and absolutely no understanding of how the bill is calculated.
Certainly having to pay taxes is a necessary aggravation. It was once said, "People who complain about taxes can be divided into two classes: men and women."
The property tax system in the United States is based on the system used in Britain beginning in the 14th century. At that time, tax assessors estimated a person's ability to pay taxes based on ownership of property.
As the country grew, a general property tax seemed to be a good choice to provide revenue for the local governments that were developing. States divided into counties, which assumed many responsibilities.
From there, townships and cities were formed, as well as school districts and other specialized districts. A tax on real estate, with its fixed location and well known value, was suited to the situation of overlapping governments. Money from the property would go to the unit in which it was located.
While federal and state aid and grants also make up part of the local government budget, property taxes account for about 44 percent of the local budget, according to the 1999 United States Census of Governments.
What are we paying for?
Residents who live in cities or villages pay a higher property tax than those in townships because they receive more services. For example, in town people have access to city water and sewage as well as trash collection. But many people who live in the rural areas of the county assume these costs on their own through drilling and maintaining wells and septic systems, and by contracting privately for their own trash collection.
Treasurers of the cities of Chelsea, Milan, Saline and Ypsilanti, as well as the villages of Dexter and Manchester, were asked about the taxes in their areas (see table).
Every community has a general fund that makes up the majority of the income. The general fund pays for a variety of services, which may vary slightly from city to city, but usually includes police and fire protection, local administration workers (salaries and benefits), planning commission, garbage collection, building and grounds maintenance, street lighting and repairs, and the Department of Public Works.
Marie Sherry, treasurer/finance director for the village of Dexter, said Dexter's overall millage rate has dropped 0.8936 mills since 2002. Previously, the last increase was in 1996, when voters approved a bond for downtown street improvements.
Other improvements in Dexter include such items as a new DPW facility, creation of a community park, a farmers' market on Alpine Street, tree planting and maintenance, and improvements and reconstruction to Dexter-Ann Arbor Street, Third Street, Kensington Street, and Wall Court, which are planned for 2008.
Local taxes are also helping to pay for the bus service that connects Dexter to Ann Arbor and Chelsea, and van service for senior citizens and disabled residents, both of which are operated by the W.A.V.E. Community Connector.
Chelsea saw a 1.25-mill increase in 2007 to help pay for fire service charges, increased pension costs, retiree health care costs and to bring the general fund closer to a desired target of 15 percent of reserve in the general fund, according to a report by Terri Burtch, Chelsea's clerk/treasurer. Chelsea also has a Downtown Development Authority that assesses properties within its district at a rate of 1.6727 mills.
Ypsilanti's last increase was in 2006, up by 1.219 mills, for police and fire services.
Manchester Village Manager Jeff Wallace reported that the last millage increase of 1.2998 occurred in 2000 by voter approval to purchase the building that houses village offices, the Manchester Senior Group, the Manchester District Library, contracted sheriff's department personnel, Western Washtenaw Construction Authority, DPW storage space and meeting space.
Wallace said that the three biggest changes the village has experienced in the last 10 years include reduced revenue coming from the state, the requirement to contract with Washtenaw County for police protection, and a struggling industrial tax base that affects the entire budget. However, Wallace said, "We are still able to deliver services we did 10 years ago with the economic pressures put upon us."
Although Milan saw a 1-mill increase in 1999 for debt and streets, the city was able to reduce it by 0.25 mills in 2006. Sherry Steinwedel, the city's clerk/treasurer, said that Milan, like other communities, has budget woes related to higher costs and less income.
Saline's last millage increase was in 2005 for general city operations.
"Tax dollars have been used to issue new bonds for buildings, including the city hall, police, Department of Public Works, recreation complex improvements, historic farm and barn, and ongoing street repairs," said Mickie Jo Bennett, city treasurer.
Townships pay their share
While people who live in cities or villages seem to have a better understanding of the services their taxes pay for, people who live in townships commonly think that they don't receive much and can't understand why their tax bills seem so high.
"I think the taxes are too high. I don't think they've articulated too well what we're getting for our money," said Sue McMillan of Lodi Township.
"Property tax bills are issued and payable to the local treasurer of cities and townships; however, it should be noted that a majority of that bill is for other taxing authorities, including, but not limited to, schools, colleges, county and state education," Bennett said.
So, while a person living in the city of Ypsilanti, for example, pays 29.5795 mills in city taxes, plus taxes from other local jurisdictions to make the total millage 58.0817 mills, a person living in Ypsilanti Township who resides in the Ypsilanti school district pays a total of 38.9022 mills.
District libraries are local windows to the world
Townships and cities collect the library millage, and send it to their district library (see table). Augusta and Sharon townships do not have an agreement with any library. If a resident of one of those townships want to sue a library's services, then a card may be purchased. The price of a non-resident card is set by the library, and that price will allow anyone in the household to access services.
Chelsea District Library has the highest millage in Washtenaw County at 2.3321. The general fund is only 1.6321, but voters passed a bond debt of 0.7 in 2004 to pay for the addition and renovation of the McKune building.
Chelsea District Library has the special honor of being named the "Best Small Library in America." Patrons have a multitude of choices when it comes to borrowing materials, including books, tapes, CDs, DVDs, MP-3s, magazines, and newspapers. They can participate in programs such as art, dance, women's health, and parenting. There are computer stations set up for every age group with high-speed Internet and access to both black-and-white and color printing, and wireless high speed access for those who bring their own laptop.
The library also offers free delivery of materials to people who are physically unable to visit the library, including the elderly, the disabled, and those who are temporarily incapacitated by illness or accident, said Wendy Smith, marketing and development coordinator for the Chelsea District Library.
After-hours lockers are available for pick-up of materials, as well. The library is central to many community festivals and events, and it partners with other local facilities through the Books to Babies literacy program.
"Then there is our staff, all of whom are more than willing to help find what you need, if you don't happen to find it," Smith said. "Got a question? They can get an answer!"
The total millage for the Dexter District Library is 1.6486. Of that amount, 0.52 was voter approved in 2005 for the construction of a new building that is scheduled to open in the fall of 2008.
"The new facility will provide enhanced computer resources and more traditional materials for borrowing, as well as better quiet study and reading space, more room for casual readers, space to grow our collections for years to come and larger meeting room facilities," said Dexter Library Director Paul McCann.
The Dexter District Library serves the residents of eight townships, in addition to the village of Dexter. In addition to the traditional materials, it offers programs, including those for children and families, informational programs, and book discussion groups.
The Manchester District Library millage is 1.05. Because the library is small, not as many materials can be held as at the larger libraries, but it is part of The Library Network, which allows people to request materials to be borrowed from other libraries and delivered to Manchester.
The library also offers high-speed wireless access at the library. Heather Sturm, director of the Manchester District Library, said that because many of the library's patrons live in rural areas, high-speed access is not even possible from their homes.
"We're all about service. Access and convenience are the watchwords of our strategic plan," said Donna DeButts, community relations coordinator for the Ypsilanti District Library.
For 1.5 operating mills, people in the city of Ypsilanti and Ypsilanti Township can utilize the materials and programs of their library. They also pay 0.6479 mills for a bond debt from 1998. Superior Township pays 1.6 mills because it joined the library district in 2006. Eventually, that number will come down based on the Headlee rollback.
The Ypsilanti library is nearly ready to join an interlibrary loan system called Michigan Electronic Library Catalog, which will make it easier for patrons to request books.
The Ypsilanti District Library runs three branches and two bookmobiles with a $4 million budget. It also offers delivery to the homebound and after-hours lockers. Fifteen percent of the budget is put aside for new materials and subscriptions to computer databases.
Strong schools mean strong communities
Operating funds for schools come primarily from the School Aid Fund. Every year, the state Legislature decides how much money each school district is permitted to receive per student, and that amount is called the foundation allowance. The total dollars a district is permitted to receive is determined by multiplying the foundation allowance by the number of pupils enrolled in the school district.
About 22 percent of the School Aid Fund is funded by local property taxes, but the rest comes from other sources (see graph). The foundation allowance (based on the amount authorized per pupil) provides the majority of the local school revenue. Other money comes through federal and state grants and the Washtenaw Intermediate School District. Only about 2 percent comes directly from other local sources.
Because almost half of the money in the School Aid Fund comes from sales tax, declining product sales have led to a decrease in money available for schools. The money that the state gives to schools each year has not kept up with inflation. In the last six years, school funding has risen 8.8 percent, while inflation has risen 16 percent, said Sharon Raschke, executive director for business and finances for Dexter Community Schools.
"People still have a preconceived notion that new business or subdivisions in a district will help schools financially. Property taxes are part of the formula, but unless there are more children attending the schools, it won't impact the general operations of the schools directly," said Teresa Zigman, executive director of business and operations for Chelsea School District.
Non-homestead property tax, at a rate of 18 mills, goes directly to the school district. However, if a district has many non-homestead properties, it doesn't have more funding than other schools because the state will reduce its aid by the same amount that the district gained from local property taxes on non-homestead properties.
Every homestead property pays 6 mills for schools. Sinking funds and bond funds, which are voter-approved sources of revenue that are over and above the regular school taxes, do help schools with other costs that are unrelated to the day-to-day operations, such as building renovation, technology, equipment and playgrounds.
County services benefit everyone.
The county levies a tax of 5.6768 mills that is the same for every property in Washtenaw County. Washtenaw County Treasurer Catherine McCLary said that county services include the court system, the sheriff's department and jail, Washtenaw Department of Public Health, social and human services and programs, Community Mental Health, Veteran Services, Vital Records, Washtenaw County Parks and Recreation, and many more.
The Washtenaw Intermediate School Distract millage is 3.9745, payable by every property in the county. WISD is a regional educational service agency that was created in 1962 by Michigan law to help local school districts make the best use of district resources. This is done by coordinating programs and services that are highly specialized or too expensive for any one school district to offer. Among many services to the local schools, WISD supports special education for more than 7,000 students throughout the county.
Every property also pays a millage to the local community college. In all but a few outlying areas, the millage is 3.6956 to Washtenaw Community College.
Wallace said that because of escrow accounts on home loans, many people don't see their individual tax bill except for a total.
"It's very important that people understand their property taxes and assessments," Sherry said.
The area's local tax structure and its relationship with the state, as well as the overlapping governments and district divisions, make taxes complex. If you have questions about your property taxes or assessments, don't hesitate to contact your local municipality for help.
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