Michigan Constitution Article IX - FINANCE AND TAXATION
Michigan Constitution – Article IX: Finance and Taxation
Overview:
Article IX of the Michigan Constitution (1963) governs the state’s fiscal policies, including taxation, state and local government finance, budgeting, and public debt. It ensures that Michigan's fiscal practices are transparent, responsible, and accountable to the public.
Key Sections & Provisions:
Here are the major themes and provisions found in Article IX:
1. Taxation Principles
Section 1: The power of taxation must be used fairly and equitably.
Section 3: Real and tangible personal property must be uniformly assessed and taxed at its true cash value.
Section 7: The state may not impose a property tax for state purposes—only local governments may do so.
2. Sales and Use Taxes
Section 8: Limits the state sales tax rate to 4%, with revenue distribution specified (later amended by voters via proposals to raise rates, e.g., to 6%).
Section 10: Describes the distribution of sales tax revenue, especially for school aid and revenue sharing with local governments.
3. Budget Process
Section 17: The Governor must submit a balanced budget to the Legislature annually.
Section 18: Appropriations may not exceed estimated revenue; Michigan must maintain a balanced budget.
4. State and Local Debt
Section 15: Limits on how much debt the state may incur without voter approval.
Section 16: Requirements for full faith and credit bonds—must be approved by a 2/3 vote of the Legislature and a majority vote of the electorate.
5. Revenue Sharing
Section 10: A portion of state revenue from sales taxes must be shared with local governments, supporting their fiscal health and services.
6. School Funding – Headlee and Proposal A
Section 26 (Headlee Amendment): Limits the growth of state revenue and requires voter approval for new or increased local taxes.
Section 33 (Proposal A of 1994): Shifted school funding away from property taxes to statewide sales tax, created the State School Aid Fund, and capped local property tax rates for schools.
7. Tax Limitation and Refunds
Section 30: Requires the state to return excess revenue collected beyond constitutional limits to taxpayers.
Purpose and Impact:
Promotes fiscal discipline and prevents unchecked growth of government.
Protects taxpayers by requiring voter approval for new taxes and borrowing.
Provides for equitable funding of public education and stability in municipal finance.
Establishes Michigan as a balanced-budget state with strict rules for appropriations and debt.
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