Michigan-2011-HB4623-Engrossed

HB-4623, As Passed House, June 1, 2011

SUBSTITUTE FOR

HOUSE BILL NO. 4623

A bill to amend 1964 PA 284, entitled

"City income tax act,"

by amending sections 3 and 3c of chapter 1 (MCL 141.503 and

141.503c), section 3 as amended by 2007 PA 209 and section 3c as

amended by 1998 PA 500.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

CHAPTER 1

Sec. 3. (1) The governing body of a city, by a lawfully

adopted ordinance that incorporates by reference the uniform city

income tax ordinance set forth in chapter 2, may levy, assess, and

collect an excise tax on income as provided in the ordinance. The

ordinance shall state the rate of the tax which shall be the rate

authorized by 1 of the following:

(a) The uniform city income tax ordinance under section 11 of

chapter 2.

(b) Subsection (2).

(2) Except as otherwise provided in subsections (3), (4), and

(5), in a city with a population of more than ~~750,000,~~ 600,000, the

governing body may levy and collect a tax at a rate to be

determined from time to time, that rate to be not more than 2% on

corporations and the following maximum tax rates on resident

individuals and nonresident individuals for the following years:

(a) Before July 1, 1999, 3.00% on resident individuals and

1.50% on nonresident individuals.

(b) Beginning July 1, 1999 and each July 1 after 1999, except

for 2008 and 2009, the maximum tax rate under this subsection on

resident individuals shall be reduced by 0.1 until the rate on

resident individuals is 2.0%. The tax rate imposed on nonresident

individuals shall be 50% of the tax rate imposed on resident

individuals each year.

the 2008 and 2009 calendar years, the city shall impose the same

tax rate on resident individuals and nonresident individuals as the

city had imposed for the 2007 calendar year.

(3) If any 3 of the following conditions exist in a city with

a population of ~~750,000~~ 600,000 or more, the city may apply to the

state administrative board for certification that those conditions

exist and the maximum tax rate under subsection (2)(b) shall not be

further reduced as provided in subsections (4) and (5):

(a) Funds have been withdrawn from the city's budget

stabilization fund for 2 or more consecutive city fiscal years or

there is a balance of zero in the city's budget stabilization fund.

(b) The city's income tax revenue growth rate is 0.95 or less.

statewide tax base growth rate.

(d) The city's unemployment rate is 10% or higher according to

the most recent statistics available from the Michigan jobs

commission.

(4) If the state administrative board certifies within 60 days

of application that any 3 of the conditions set forth under

subsection (3) are met, the maximum tax rate under subsection (2)

shall not be further reduced from the date of the state

administrative board's certification until the July 1 following the

expiration of 1 year after the state administrative board's

certification unless the city applies for certification that the

conditions continue to exist. Before the expiration of the

certification, the city may apply to the state administrative board

to certify that the conditions continue to exist and if the state

administrative board so certifies, the certification may continue

until the July 1 following the expiration of 1 year after the state

administrative board's certification that the conditions continue

to exist. The city may continue to apply for certification until

the conditions under subsection (3) no longer exist.

(5) Notwithstanding any other provision of this section, if on

July 1 the maximum tax rate on resident individuals is reduced

under subsection (2) after a year or years in which the maximum tax

rate was not reduced because of subsections (3) and (4), the

maximum tax rate on resident individuals shall be the maximum tax

rate in effect on June 30 of that year reduced by 0.1 and the rate

on nonresident individuals shall be 50% of the rate imposed on

resident individuals. On each subsequent July 1, subsection (2)

applies to the maximum tax rates, subject to subsections (3) and

(4).

(6) The governing body of a city may adopt the uniform city

income tax ordinance with the alternative sections as set forth in

chapter 3 instead of the similarly numbered sections as set forth

in chapter 2. The uniform city income tax ordinance may be lawfully

adopted or rescinded by the governing body at any time. The

adoption of an ordinance is effective on and after January 1 or

July 1 following adoption of the ordinance, as specified in the

ordinance, but an ordinance shall not become effective earlier than

45 days after adoption or until approved by the electors if a

referendum petition is filed as authorized in this act or a

referendum is otherwise required. The rescission of an ordinance

shall become effective on the following December 31. The ordinance

may be rescinded at any time by the governing body in the same

manner in which it was adopted and with appropriate enforcement,

collection, and refund provisions with respect to liabilities

incurred prior to the effective date of the rescission of the

ordinance. The ordinance shall not be amended except as provided by

the legislature. A city may amend the ordinance to change the tax

rate to a rate authorized by this act.

(7) Petitions for a referendum election on the question of

adopting an ordinance adopted by the governing body may be filed

with the city clerk not later than the sixth Monday following the

adoption of the ordinance. The petitions shall be signed by a

number of registered electors of the city equal to at least 10%,

but not more than 20%, of the registered electors of the city

voting in the last general municipal election prior to the adoption

of the ordinance by the governing body. If proper petitions are

filed, the question of adopting the ordinance shall be submitted by

the governing body to the city electors at the next primary or

general election or at a special election called for the purpose,

in any case held not less than 45 days nor more than 90 days after

the clerk has reported the filing of the referendum petition to the

city's governing body. The checking of names on the petitions, the

counting, canvassing, and return of the votes on the question, and

other procedures for the election shall be as provided by law or

charter. Upon a favorable vote of the city electors, the ordinance

shall be effective as specified in the ordinance which may be

amended by the governing body of the city following the election to

specify July 1 or January 1 as the effective date of the ordinance,

if the effective date originally specified in the ordinance is

considered impractical or inconvenient for any reason. The

provisions in this section for a referendum election, and for

delaying the effective date of the ordinance if petitions for a

referendum are filed, are not applicable to a city that on January

1, 1964 had in effect a valid ordinance levying and imposing an

excise tax levied on or measured by income. Notwithstanding any

other provision of this act, if an ordinance becomes effective on

any date other than January 1, each tax year shall end on December

31, and the provisions of the ordinance based on a full tax year

are modified accordingly to be applicable to the partial tax year.

(8) The city shall annualize the rates under this section as

necessary.

(9) As used in this section:

(a) "Consumer price index" means the Detroit consumer price

index for all urban consumers as defined and reported by the United

States department of labor, bureau of labor statistics, and as

certified by the state treasurer.

(b) "Income tax revenue growth rate" means a number the

numerator of which is the income tax collections of the city for

the city fiscal year immediately preceding the city's application

under subsection (3) and the denominator of which is the product of

the income tax collections of the city for the city fiscal year

immediately preceding the city fiscal year used to determine the

numerator multiplied by 1 plus the corresponding percentage change

in the average consumer price index for the calendar year ending in

the city fiscal year used to determine the numerator.

of real property and personal property in the city for the most

recent year for which data is available divided by the total

taxable value of real property and personal property in the city

for the second year immediately preceding the most recent year for

which the data is available.

(d) "Statewide tax base growth rate" means the total taxable

value of real property and personal property in the state for the

most recent year for which the data is available divided by the

total taxable value of real property and personal property in the

state for the second year immediately preceding the most recent

year for which the data is available.

Sec. 3c. A city that levied the tax authorized by this act

before March 30, 1989 may amend the ordinance to increase the rate

to an annual tax of not more than 1-1/2% on corporations and

resident individuals and not more than 3/4% on nonresident

individuals, but not more than 1/2 of the tax rate imposed on

resident individuals. An amendment to the city income tax ordinance

under this section is not effective unless the amendment is

approved by a majority of the qualified electors voting on the

question. Before November 10, 1989, an amendment under this section

shall not be placed before the voters for approval more than once

in any 12-month period. This section applies only to a city with a

population of more than 140,000 and less than ~~750,000~~ 600,000 or a

city with a population of more than 65,000 and less than 100,000 in

a county with a population less than 300,000.