SENATE BILL No. 1204

March 14, 2002, Introduced by Senators KOIVISTO, GOUGEON, NORTH, DINGELL,

MC COTTER, DUNASKISS, YOUNG, BULLARD, MC MANUS, GAST, PETERS,

GOSCHKA and SCHWARZ and referred to the Committee on Finance.

A bill to amend 1951 PA 77, entitled

"An act providing for the specific taxation of low grade iron

ore, of low grade iron ore mining property, and of rights to min-

erals in lands containing low grade iron ores; to provide for the

collection and distribution of the specific tax; to make an

appropriation; and to prescribe the powers and duties of the

state geologist and township supervisors and treasurers with

respect to the specific tax,"

by amending sections 3 and 4 (MCL 211.623 and 211.624), section 4

as amended by 1994 PA 367.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 3. (1) Beginning with the first calendar year after

2 production of merchantable ore from a low grade iron ore mining

3 property has been established on a commercial basis, the low

4 grade iron ore mining property shall be subject to a specific tax

5 equal to the average annual production in gross tons during the

6 preceding 5-year period, multiplied by 1.1% OR BEGINNING DECEMBER

7 31, 2001 0.55% of the mine value per gross ton, based on the

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1 average natural iron analysis of shipments for that year of the

2 iron ore pellets or of the concentrated and/or OR agglomerated

3 products. A year in which production did not take place shall be

4 excluded in computing the average production but only until the

5 property has a 5-year record of commercial production. Mine

6 value is determined by subtracting from the published lower lake

7 price of Lake Superior iron ore pellets, or the particular con-

8 centrated and/or OR agglomerated products as of December 31,

9 for the subsequent calendar year, all the transportation and han-

10 dling costs, including any tax charged for transporting or han-

11 dling the iron ore pellets or products, from the mining property

12 to Lake Erie ports.

13 (2) As used in this section, "lower lake price" means the

14 base price of Lake Superior district iron ore pellets or of the

15 particular concentrated and/or OR agglomerated products at rail

16 of vessel at lower lake ports as published in "Iron Age" pub-

17 lished in New York City, New York, and "Industry Week" published

18 in Cleveland, Ohio. If either "Iron Age" or "Industry Week" is

19 not published or does not publish a price, a replacement trade

20 journal recognized and generally accepted as reliable by the iron

21 ore industry shall be substituted. If "Iron Age" or "Industry

22 Week" do not publish the same price, if 1 of the trade journals

23 publishes 2 different prices, or if the replacement trade journal

24 does not publish a price, the price shall be the generally pre-

25 vailing market price at which iron ore pellets or concentrated

26 and/or OR agglomerated products, of comparable quality and

27 utility, are being offered for sale in comparable quantity by or

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1 on behalf of bona fide producers from sources in the continental

2 United States or Canada.

3 Sec. 4. (1) If the specific tax determined under section 3

4 is less than the specific tax determined under section 2, then

5 section 2 shall govern.

6 (2) The township supervisor shall remove from the list of

7 land descriptions assessed and taxed under the general property

8 tax act, Act No. 206 of the Public Acts of 1893, as amended,

9 being sections 211.1 to 211.157 of the Michigan Compiled Laws

10 1893 PA 206, MCL 211.1 TO 211.157, the land descriptions of prop-

11 erty taxed under this act, and shall enter the land descriptions

12 on a separate roll. The township supervisor shall spread the

13 specific tax against the property and the township treasurer

14 shall collect the specific tax at the same time, in the same

15 manner, and subject to the same collection charges as general

16 property taxes UNDER THE GENERAL PROPERTY TAX ACT, 1893 PA 206,

17 MCL 211.1 TO 211.157. Property listed and taxed under this act

18 shall be subject to return and sale for nonpayment of taxes in

19 the same manner, at the same time, and under the same penalties

20 as property returned and sold for nonpayment of taxes levied

21 under Act No. 206 of the Public Acts of 1893, as amended THE

22 GENERAL PROPERTY TAX ACT, 1893 PA 206, MCL 211.1 TO 211.157. A

23 valuation shall not be determined for a description listed under

24 this act and the property shall not be considered by the county

25 board of commissioners or by the state board of equalization in

26 connection with county or state equalization for taxation

27 purposes. If a low grade iron ore mining property is located in

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1 more than 1 township, the state geologist shall determine the

2 portion attributable to each township. Except as provided in

3 subsection SUBSECTIONS (5) AND (6), sums collected under this

4 act shall be distributed by the township treasurer to school dis-

5 tricts and TO LOCAL governmental units in the same proportion as

6 the general property taxes are distributed. The distribution

7 calculations for 1987 shall exclude the value of a power generat-

8 ing facility or a portion of a power generating facility that

9 qualifies as low grade iron ore mining property. The amounts

10 distributed may be used by the school districts and LOCAL govern-

11 mental units for operating expenses, for capital improvements,

12 and for the accumulation of reserves in a building and site fund

13 or for the payment of interest or principal on bonds.

14 (3) The tax provided in this act shall be in lieu of an ad

15 valorem tax on any of the following:

16 (a) The low grade iron ore.

17 (b) The low grade iron ore mining property.

18 (c) The mining of the low grade iron ore mining property.

19 (d) The production of iron ore pellets or other concentrated

20 or agglomerated products.

21 (e) The iron ore pellets or other concentrated or agglomer-

22 ated merchantable products.

23 (f) Land occupied by or used in connection with the mining,

24 transportation, and beneficiation of the ore and shipping of iron

25 ore pellets or other concentrated or agglomerated merchantable

26 products.

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1 (4) For specific taxes levied after 1993, to determine the

2 proportion for the disbursement of taxes under this section and

3 for attribution of taxes under subsection SUBSECTIONS (5) AND

4 (6) for the specific taxes collected pursuant to this act, the

5 number of mills levied for local school district operating pur-

6 poses to be used in the calculation shall equal the number of

7 mills for local school district operating purposes levied in 1993

8 minus the number of mills levied under the state education tax

9 act, Act No. 331 of the Public Acts of 1993, being

10 sections 211.901 to 211.906 of the Michigan Compiled Laws 1993

11 PA 331, MCL 211.901 TO 211.906, for the year for which the dis-

12 bursement is calculated.

13 (5) For specific taxes levied after 1993 and THROUGH 2001

14 FOR school operating purposes, the amount that would otherwise be

15 disbursed to a local school district shall be paid instead to the

16 state treasury and credited to the state school aid fund estab-

17 lished by section 11 of article IX of the state constitution of

18 1963.

19 (6) FOR SPECIFIC TAXES LEVIED AFTER 2001 FOR SCHOOL OPERAT-

20 ING PURPOSES, NO AMOUNT SHALL BE DISBURSED TO A LOCAL SCHOOL DIS-

21 TRICT AND NO AMOUNT SHALL BE PAID TO THE STATE TREASURY AND CRED-

22 ITED TO THE STATE SCHOOL AID FUND ESTABLISHED BY SECTION 11 OF

23 ARTICLE IX OF THE STATE CONSTITUTION OF 1963.

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