SB-0970, As Passed House, December 13, 2012

SUBSTITUTE FOR

SENATE BILL NO. 970

     A bill to amend 1964 PA 284, entitled

"City income tax act,"

by amending section 3 of chapter 1 (MCL 141.503), as amended by

2011 PA 56.

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).

     (c) Section 3a, 3b, or 3c of this chapter.

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

(5), in In a city with a population of more than 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 through

July 1, 2012, 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.

     (c) Notwithstanding any other provision of this section, for

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.

     (d) Except as otherwise provided under subdivision (e),

beginning January 1, 2013 and each year after 2013, a rate of not

more than 2.40% on resident individuals and 1.20% on nonresident

individuals.

     (e) Beginning January 1 of the year immediately succeeding the

year that all bonds, obligations, and other evidence of

indebtedness issued by a lighting authority have been fully paid

and each year thereafter, a rate of not more than 2.20% on resident

individuals and 1.10% on nonresident individuals.

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

a population of 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.

     (c) The local tax base growth rate is 80% or less of the

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).

     (3) Notwithstanding any other provision of law or any

ordinance of the city to the contrary, a city that forms a lighting

authority shall deposit an amount equal to the sum of the revenue

collected from 0.2% of the rate levied on resident individuals

pursuant to subsection (2)(d) and 0.1% of the rate levied on

nonresident individuals pursuant to subsection (2)(d) directly into

the budget of the city's police department and use it exclusively

to retain or hire police officers. The transfer and use of the

revenue as provided under this subsection shall continue until all

bonds, obligations, or other evidence of indebtedness issued by a

lighting authority have been fully paid and revenue is no longer

being pledged from taxes levied under the city utility users tax

act, 1990 PA 100, MCL 141.1151 to 141.1177, to the lighting

authority. As used in this subsection, "lighting authority" means a

lighting authority incorporated under the municipal lighting

authority act.

(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.

(5) (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.

     (c) "Local tax base growth rate" means the total taxable value

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.

     Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 96th Legislature are

enacted into law:

     (a) House Bill No. 5688.

     (b) House Bill No. 5705.