Personal Property Tax Reimbursements

Beginning for calendar year 2016, the Local Community Stabilization Authority (LCSA) Act, 2014 Public Act 86, (MCL 123.1341 to 123.1362) requires personal property tax reimbursement for all operating and debt millages. 

Personal Property Tax 2016 Reimbursement Presentation

Local School Districts and Intermediate School Districts

Other Municipalities

Tax Increment Finance Authorities

Reimbursement Priority

The Local Community Stabilization Authority shall distribute reimbursements in the following order of priority:

  1. 100% reimbursement for:
    1. Local school district and intermediate school district (ISD) school debt loss in the current year and local school district sinking funding millage and public recreation and playground millage;
    2. ISD operating millage;
    3. School operating loss not reimbursed by the school aid fund;
    4. Millages used to fund essential services (police, fire, ambulance, and jails);
    5. Decline in the tax increment finance (TIF) plan captured value of commercial and industrial personal property; and
    6. 2015 small taxpayer exemption loss.
  2. Reimbursement for other millages are prorated and may be less than or more than 100%, depending on total calculated losses compared to available Local Community Stabilization Share (LCSS) revenue. The LCSS revenue is derived from the State Use Tax.

The Michigan Department of Treasury has estimated that the LCSS revenues should be sufficient for 100% reimbursement of all calculated 2016 losses.

How to Calculate Reimbursements

School Districts/Intermediate School Districts (ISDs) Debt Millage

The school debt loss reimbursement to local school districts and ISDs is the eligible debt millage rate multiplied by the personal property exemption loss (PPEL) reported by county equalization directors. The eligible debt millage rate is the current year’s debt millage rate for millages levied for the payment of principal and interest of obligations approved by the voters before January 1, 2013 or obligations pledging the unlimited taxing power that were incurred before January 1, 2013.  School districts and ISDs must file Form 5451 (see link below), by August 15, to report their current year debt millage rate and to be eligible to receive reimbursement for debt millages.

All Other Millages

Except for school district debt millages, ISD debt millages, and tax increment finance (TIF) plans, the calculation is complex, however, the basic reimbursement calculation is the personal property exemption loss (PPEL) reported by county equalization directors multiplied by the lowest of each millage rate levied in the period between 2012 and the year immediately preceding the current year. These millage rates are posted below under the heading titled “Millage Rate Comparison Reporting Requirement”.

In order to calculate the reimbursement for millages used to fund essential services, the Michigan Department of Treasury has requested cities, townships, counties, villages, and authorities to file Form 5448 – FYE 2012 Percentage of General Operating Millage Used to Fund Essential Services (see link below), by July 15, 2016.

Local units will not have to file a form with the Michigan Department of Treasury to request reimbursement.

Tax Increment Finance (TIF) Plans

TIF plans must file Form 5176, Form 5176BR, or Form 5176ICV (see links below) to claim reimbursement for the decline in the captured value of commercial personal property and industrial personal property. The personal property tax reimbursement to a local unit is reduced by the payments to TIF plans for that local unit’s millage.

How to Calculate the Debt Millage Rate Reported on the L-4029

Beginning for calendar year 2016, the LCSA Act requires that the calculation of debt millage rate(s) must reflect the personal property tax reimbursement for the debt millage. School districts and intermediate school districts (ISDs) adjust the calculation of their debt millage rate by increasing their total taxable value by their personal property exemption loss (PPEL).  For local units other than school districts and ISDs, local units must multiply their PPEL by the debt millage rate(s) being reimbursed (see heading titled “Millage Rate Comparison Reporting Requirement” below) to estimate their debt millage reimbursement, and reduce their annual debt service requirement by this amount. 

How to Calculate the Personal Property Exemption Loss (PPEL)

The PPEL is calculated by subtracting the current year taxable value of commercial personal property and industrial personal property from the 2013 taxable value of commercial personal property and industrial personal property. Calculations include Industrial Facilities Tax (IFT) property (new facilities at 50%). For operating millage reimbursement calculations, Treasury will subtract renaissance zone personal property taxable value from the PPEL calculations.

Distribution Calculation Information

Millage Rate Comparison Reporting Requirement

 

Forms for Calculation of Reimbursement
 

Form Number Form Title Due Dates Frequently Asked Questions (FAQs)
5176 2017 Tax Increment Financing Personal Property Loss Reimbursement - Non-Brownfield Authorities June 15, 2017  
5176BR 2017 Tax Increment Financing TIF Loss Reimbursement - Brownfield Authorities

June 15, 2017

 
5176ICV  2017 Tax Increment Financing Personal Property Loss Reimbursement for Authorities with Increased Captured Value Loss – For a copy of the form, contact Treas-StateSharePropTaxes@michigan.gov

June 15, 2017

 
5451 Personal Property Exemption Loss 2017 Debt Millage Reimbursement Claim for School Districts & Intermediate School Districts (ISDs) August 15, 2017
 
 

Questions Regarding ESA?

Contact Information

Personal Property Tax Reimbursement Questions

Phone: 517-373-2697

Email: TreasORTAPPT@michigan.gov

**NOTE: The email address for PPT Reimbursement communications has changed**