Watchdog group sues county for reviving Civil War tax
Lansing — A taxpayers watchdog group sued Washtenaw County on Thursday for resurrecting three century-old property tax laws related to roads, Civil War veterans and agriculture promotion without voter approval.
Taxpayers United Michigan Foundation and three Washtenaw County residents said the county has collected more than $24 million since 2008 after the Board of Commissioners imposed three “unused tax acts” that date back to 1899 to generate new revenue.
One of the taxes was originally meant to provide aid to veterans of the Civil War. Another rarely used revenue stream for maintaining roads went on the books the year after Henry Ford started mass producing the Model T.
The third tax was designed to promote farm goods and “industrial advantages” at state and international fairs, according to the lawsuit filed in the Michigan Court of Appeals.
Attorney General Bill Schuette issued a non-binding opinion in October that the county was not authorized under the state Constitution to levy the taxes without a vote of the people.
But the county hasn’t ceased levying the millages, so the plaintiffs want a judge to halt the collection of the taxes and order the county to refund taxpayers.
“They were just besides themselves with delight when they researched and found those historic laws,” said Bill McMaster, chairman of the Taxpayers United Michigan Foundation, about county officials. “They’re absolutely arrogant.”
County attorney Curtis Hedger declined to comment on the lawsuit, but said the taxes are legal and no vote of the people was necessary.
“An AG opinion can be persuasive, but can’t be binding on local units of government,” Hedger told The Detroit News.
The three taxes total about 0.6 of a mill and pre-date the 1978 Headlee Amendment to the state Constitution, a voter-imposed limitation on the growth of local property taxes. The taxes amount to about $121 annually for a home valued at $200,000.
“We’ve consistently taken the position that certain taxes are outside of the Headlee amendment,” Hedger said. “We do feel that they’re legitimate.”
In 2008, Washtenaw County first imposed 1/27th of a mill under the Veterans’ Relief Fund Act of 1899 to generate about $393,000 for a county-run program for indigent veterans, according to the lawsuit.
The following year, the county commissioners activated the Advertisement of Agricultural Advantages Act of 1913. The 0.07-mill levy generates about $600,000 annually for the county’s economic development agency, Ann Arbor SPARK, and grants for horticulture and food production initiatives as well as 4-H youth farming programs.
“4-H is probably the one legitimate use,” said Bill Gordon of Scio Township, one of the plaintiffs.
In 2014, the Board of Commissioners imposed a 0.5-mill tax through the Public Highways and Private Roads Act of 1909 to raise $14.6 million in new revenue over the past two years for the county Road Commission, cities and townships.
Roy Townsend, managing director of the Washtenaw County Road Commission, said the commission has asked the county board to place the 0.5-mill road tax on the August ballot for a four-year approval from voters.
County officials decided to use the tax the past two years while the state Legislature hashed out a road funding package that won’t produce noticeable revenue increases until the end of the decade, Townsend said.
“We were hoping the state legislators in Lansing would solve the road funding challenge, but they’ve elected not to,” Townsend said Thursday.
In each case, though, the new taxes have allowed Washtenaw County to relieve its operating budget of various expenses, said Andrew Paterson, a Novi attorney representing the plaintiffs.
“They took it out of the operating budget and made it a millage so they could spend the operating budget on something else,” Paterson said.
There are no readily available public records that indicate the county previously imposed the taxes before the passage of the Headlee Amendment 38 years ago, Paterson said.
“I don’t think they know, to tell you the truth,” he said.
Board of Commissioners resolutions approving the taxes contain summaries of the background of each tax.
For the 105-year-old road tax, the summary notes, “few counties have actually levied a (Public Act) 283 road funding millage.”
“Instead, the have submitted to the electorate of their county at a general election or special election the question of a tax levy for highway, road and street maintenance and repair,” according to the Sept. 17, 2014 analysis.
Under the laws, Washtenaw County could be levying even higher tax rates. The 117-year-old veterans fund law, for instance, allows for a tax of up to one-tenth of a mill, while Washtenaw’s board is billing taxpayers for 1/27th of a mill.
“The Board of Commissioners not only has the authority, but is required under state law, to approve a levy for indigent veteran claims,” according to a Sept. 5, 2012 county board memo.
Washtenaw County’s board Chairwoman Felicia Brabec declined to comment on the issue, directing questions to the county attorney. Vice Chairman Yousef Rabhi did not return a message Thursday seeking comment.
State Sen. Joe Hune, who represents western Washtenaw County, said the county’s strategy appears to be: “throw up every bit of taxes and see what sticks.”
“It shows a lack of respect to the Attorney General’s office ... and a thirst for taxation,” said Hune, R-Hamburg Township.