Proposal A Explanation

In 1994, Michigan voters approved a constitutional amendment know as Proposal A.  Proposal A was designed to limit the increase in property taxes to either 5 percent or the annual change in the Consumer Price Index (CPI), whichever is less, until ownership of the property is transferred.

Prior to Proposal A, property taxes were based upon the State Equalized Value (SEV), which is equal to 50% of the market value of your property.  With the implementation of Proposal A, property taxes are now based upon the Taxable Value (TV). Taxable Value is the lower of SEV or Capped Value.

Capped Value (CV) is a mathematical calculation where the assessor must multiply the previous year's Taxable Value by the lesser of CPI or 5%, then compare the two values and choose the lowest to be the new Taxable Value.  The CPI for 2011, as calculated by the State of Michigan, is 1.7 percent statewide.

Under the protection of Proposal A, in any given year, the Taxable Value (TV) will increase no more than the CPI or 5 percent, whichever is less (plus any additional value caused by property improvements). If the State Equalized Value (SEV) is less than the Capped Value (CV) when compared, then the SEV becomes the TV.

The Taxable Value (TV) is uncapped when a transfer of ownership of a property occurs.  This means that the TV will be the same as the State Equalized Value (SEV) in the year following the ownership change.

The Taxable Value (TV) is the value used by the Township Treasurer's Office to apply to the millage rate to calculate your tax bill.