Court judgments forcing municipalities to raise taxes can push them over their taxing limits, in violation of state constitution

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Taxes should be levied by the people or their representatives, not a by a court. And yet twice this summer a judge has ordered special taxes to cover court judgments.

The nonprofit, non-partisan Citizens Research Council of Michigan argues for changing a 1961 Michigan law that allows judges to force communities to pay court judgments through special tax assessments.

The assessments often push a community's tax levy above its constitutional limit, resulting in an extra monetary burden on already stressed taxpayers. Lawmakers need to correct this problem.

"We (taxpayers) shouldn't have to pay more taxes because of judicial decisions," says Eric W. Lupher, president of the CRC. "Judges work under the same constitution we do."

Lupher says this has been an ongoing issue for his organization over the past few decades but recent developments in Inkster and Wayne County are again spotlighting the unfair and costly practice.

Inkster will levy an extra 6.45 mills this summer to pay for settlements involving police abuse. Similarly, cash-strapped Wayne County will assess a new tax to fund a court-ordered $49 million payment into a county retirement fund. In each case, the levies create a tax rate higher than the statutory and voter-approved millage limits.

Judges have been using the almost 55-year-old law to justify the assessment and are ignoring more recent law changes, such as the Headlee Amendment, which imposes restrictions on a governmental unit's taxing powers.

Lupher says a much more equitable and constitutional system would be to amend the 1961 law and allow judges to garnish funds from what a municipality collects to pay a court judgment. The governmental unit would be forced to operate on what is left. Lupher concedes it could make for tight fiscal budgets, but it would leave taxing power in the hands of the people, who could approve a levy if they choose.

Under the CRC's proposal, if the settlement was too high to allow a governmental unit to operate after the garnishment, it would be allowed to issue bonds to pay the judgment as long as there is debt service capacity. But the local government would need to get voter approval.

The CRC's proposal is much more democratic than the existing system. It would instill accountability in local officials, who would be required to finance government operations with existing revenue sources.

Also, requiring judgments to be within tax limits would turn the statute from what could be interpreted as a law that grants the judiciary independent taxing authority to legislation merely granting the judiciary power to garnish some property taxes.

Legislators need to fix this troublesome statute. But even before that, they should ask the attorney general for an official opinion on whether courts have the power to exceed taxing limits in imposing judgments against local governments.

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