HB-4658, As Passed House, July 17, 2003

SUBSTITUTE FOR

HOUSE BILL NO. 4658

                                                                             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             

1998 PA 500.                                                                

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1                               CHAPTER 1                                       

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

3   adopted ordinance that incorporates by reference the uniform city           

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

5   and collect an excise tax on income as provided in the                      

6   ordinance.  The ordinance shall state the rate of the tax which             

7   shall be the rate authorized by 1 of the following:                         

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

9   chapter 2.                                                                  

10      (b) Subsection (2).                                                         

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

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

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

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

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

6   corporations and the following maximum tax rates on resident                

7   individuals and nonresident individuals for the following years:            

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

9   1.50% on nonresident individuals.                                           

10      (b)  Beginning Except as otherwise provided in                             

11  subdivision (c), beginning July 1, 1999 and each July 1 after               

12  1999, the maximum tax rate under this subsection on resident                

13  individuals shall be reduced by 0.1 until the rate on resident              

14  individuals is  2.0% 1.8%.  The tax rate imposed on nonresident            

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

16  individuals.  each year.

17  (c) For the 12-month period beginning January 1, 2004 only,                 

18  the rate on resident individuals that was in effect on January 1,           

19  2003.  The rate shall not be reduced under this subsection on               

20  July 1, 2004.  Beginning January 1, 2005 and through June 30,               

21  2005, the rate that was in effect July 1, 2003.

22      (3) If any  3 2 of the following conditions exist in a city                

23  with a population of 750,000 or more, the city may apply to the             

24  state administrative board for certification that those                     

25  conditions exist and the maximum tax rate under subsection (2)(b)           

26  shall not be further reduced as provided in subsections (4) and             

27  (5):                                                                        

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

2   stabilization fund for 2 or more consecutive city fiscal years or           

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

4   fund.                                                                       

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

6   less.                                                                       

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

8   statewide tax base growth rate.                                             

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

10  to the most recent statistics available from the Michigan jobs              

11  commission.                                                                 

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

13  days of application that any  3 2 of the conditions set forth              

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

15  subsection (2) shall not be further reduced from the date of the            

16  state administrative board's certification until the July 1                 

17  following the expiration of 1 year after the state administrative           

18  board's certification unless the city applies for certification             

19  that the conditions continue to exist.  Before the expiration of            

20  the certification, the city may apply to the state administrative           

21  board to certify that the conditions continue to exist and if the           

22  state administrative board so certifies, the certification may              

23  continue until the July 1 following the expiration of 1 year                

24  after the state administrative board's certification that the               

25  conditions continue to exist.  The city may continue to apply for           

26  certification until the conditions under subsection (3) no longer           

27  exist.                                                                      

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

2   on July 1 the maximum tax rate on resident individuals is reduced           

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

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

5   maximum tax rate on resident individuals shall be the maximum tax           

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

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

8   on resident individuals.  On each subsequent July 1, subsection             

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

10  and (4).                                                                    

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

12  income tax ordinance with the alternative sections as set forth             

13  in chapter 3 instead of the similarly numbered sections as set              

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

15  lawfully adopted or rescinded by the governing body at any time.            

16  The adoption of an ordinance is effective on and after January 1            

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

18  the ordinance, but an ordinance shall not become effective                  

19  earlier than 45 days after adoption or until approved by the                

20  electors if a referendum petition is filed as authorized in this            

21  act or a referendum is otherwise required.  The rescission of an            

22  ordinance shall become effective on the following December 31.              

23  The ordinance may be rescinded at any time by the governing body            

24  in the same manner in which it was adopted and with appropriate             

25  enforcement, collection, and refund provisions with respect to              

26  liabilities incurred prior to the effective date of the                     

27  rescission of the ordinance.  The ordinance shall not be amended            

1   except as provided by the legislature.  A city may amend the                

2   ordinance to change the tax rate to a rate authorized by this               

3   act.                                                                        

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

5   adopting an ordinance adopted by the governing body may be filed            

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

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

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

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

10  voting in the last general municipal election prior to the                  

11  adoption of the ordinance by the governing body.  If proper                 

12  petitions are filed, the question of adopting the ordinance shall           

13  be submitted by the governing body to the city electors at the              

14  next primary or general election or at a special election called            

15  for the purpose, in any case held not less than 45 days nor more            

16  than 90 days after the clerk has reported the filing of the                 

17  referendum petition to the city's governing body.  The checking             

18  of names on the petitions, the counting, canvassing, and return             

19  of the votes on the question, and other procedures for the                  

20  election shall be as provided by law or charter.  Upon a                    

21  favorable vote of the city electors, the ordinance shall be                 

22  effective as specified in the ordinance which may be amended by             

23  the governing body of the city following the election to specify            

24  July 1 or January 1 as the effective date of the ordinance, if              

25  the effective date originally specified in the ordinance is                 

26  considered impractical or inconvenient for any reason.  The                 

27  provisions in this section for a referendum election, and for               

1   delaying the effective date of the ordinance if petitions for a             

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

3   January 1, 1964 had in effect a valid ordinance levying and                 

4   imposing an excise tax levied on or measured by income.                     

5   Notwithstanding any other provision of this act, if an ordinance            

6   becomes effective on any date other than January 1, each tax year           

7   shall end on December 31, and the provisions of the ordinance               

8   based on a full tax year are modified accordingly to be                     

9   applicable to the partial tax year.                                         

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

11  necessary.                                                                  

12      (9) As used in this section:                                                

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

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

15  United States department of labor, bureau of labor statistics,              

16  and as certified by the state treasurer.                                    

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

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

19  the city fiscal year immediately preceding the city's application           

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

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

22  year immediately preceding the city fiscal year used to determine           

23  the numerator multiplied by 1 plus the corresponding percentage             

24  change in the average consumer price index for the calendar year            

25  ending in the city fiscal year used to determine the numerator.             

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

27  value of real property and personal property in the city for the            

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

2   total taxable value of real property and personal property in the           

3   city for the second year immediately preceding the most recent              

4   year for which the data  is are available.                                 

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

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

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

8   the total taxable value of real property and personal property in           

9   the state for the second year immediately preceding the most                

10  recent year for which the data  is are available.