SENATE BILL NO. 421 March 10, 1999, Introduced by Senators JAYE and SHUGARS and referred to the Committee on Finance. 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; and to repeal acts and parts of acts. 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 by1 of the following: (a) The8 THE uniform city income tax ordinance under section 11 of chapter 9 2. 01572'99 FDD 2 1(b) Subsection (2).2(c) Section 3a, 3b, or 3c of this chapter.3(2) Except as otherwise provided in subsections (3), (4),4and (5), in a city with a population of more than 750,000, the5governing body may levy and collect a tax at a rate to be deter-6mined from time to time, that rate to be not more than 2% on cor-7porations and the following maximum tax rates on resident indi-8viduals and nonresident individuals for the following years:9(a) Before July 1, 1999, 3.00% on resident individuals and101.50% on nonresident individuals.11(b) Beginning July 1, 1999 and each July 1 after 1999, the12maximum tax rate under this subsection on resident individuals13shall be reduced by 0.1 until the rate on resident individuals is142.0%. The tax rate imposed on nonresident individuals shall be1550% of the tax rate imposed on resident individuals each year.16(3) If any 3 of the following conditions exist in a city17with a population of 750,000 or more, the city may apply to the18state administrative board for certification that those condi-19tions exist and the maximum tax rate under subsection (2)(b)20shall not be further reduced as provided in subsections (4) and21(5):22(a) Funds have been withdrawn from the city's budget stabi-23lization fund for 2 or more consecutive city fiscal years or24there is a balance of zero in the city's budget stabilization25fund.26(b) The city's income tax revenue growth rate is 0.95 or27less.01572'99 3 1(c) The local tax base growth rate is 80% or less of the2statewide tax base growth rate.3(d) The city's unemployment rate is 10% or higher according4to the most recent statistics available from the Michigan jobs5commission.6(4) If the state administrative board certifies within 607days of application that any 3 of the conditions set forth under8subsection (3) are met, the maximum tax rate under subsection (2)9shall not be further reduced from the date of the state adminis-10trative board's certification until the July 1 following the11expiration of 1 year after the state administrative board's cer-12tification unless the city applies for certification that the13conditions continue to exist. Before the expiration of the cer-14tification, the city may apply to the state administrative board15to certify that the conditions continue to exist and if the state16administrative board so certifies, the certification may continue17until the July 1 following the expiration of 1 year after the18state administrative board's certification that the conditions19continue to exist. The city may continue to apply for certifica-20tion until the conditions under subsection (3) no longer exist.21(5) Notwithstanding any other provision of this section, if22on July 1 the maximum tax rate on resident individuals is reduced23under subsection (2) after a year or years in which the maximum24tax rate was not reduced because of subsections (3) and (4), the25maximum tax rate on resident individuals shall be the maximum tax26rate in effect on June 30 of that year reduced by 0.1 and the27rate on nonresident individuals shall be 50% of the rate imposed01572'99 4 1on resident individuals. On each subsequent July 1, subsection2(2) applies to the maximum tax rates, subject to subsections (3)3and (4).4 (2)(6)The governing body of a city may adopt the uniform 5 city income tax ordinance with the alternative sections as set 6 forth in chapter 3 instead of the similarly numbered sections as 7 set forth in chapter 2. The uniform city income tax ordinance 8 may be lawfully adopted or rescinded by the governing body at any 9 time. The adoption of an ordinance is effective on and after 10 January 1 or July 1 following adoption of the ordinance, as spec- 11 ified in the ordinance, but an ordinance shall not become effec- 12 tive earlier than 45 days after adoption or until approved by the 13 electors if a referendum petition is filed as authorized in this 14 act or a referendum is otherwise required. The rescission of an 15 ordinance shall become effective on the following December 31. 16 The ordinance may be rescinded at any time by the governing body 17 in the same manner in which it was adopted and with appropriate 18 enforcement, collection, and refund provisions with respect to 19 liabilities incurred prior to the effective date of the rescis- 20 sion of the ordinance. The ordinance shall not be amended except 21 as provided by the legislature.AAFTER THE EFFECTIVE DATE OF 22 THE AMENDATORY ACT THAT REPEALED SECTIONS 3A, 3B, AND 3C, A city 23maySHALL amend the ordinance to change the tax rate toaTHE 24 TAX rate authorized by this act IF THE TAX RATE IN THE ORDINANCE 25 IS GREATER THAN THE TAX RATE AUTHORIZED BY THIS ACT, AND MAY 26 AMEND THE ORDINANCE TO CHANGE THE TAX RATE TO A TAX RATE LESS 27 THAN THE MAXIMUM TAX RATE AUTHORIZED BY THIS ACT. 01572'99 5 1 (3)(7)Petitions for a referendum election on the 2 question of adopting an ordinance adopted by the governing body 3 may be filed with the city clerk not later than the sixth Monday 4 following the adoption of the ordinance. The petitions shall be 5 signed by a number of registered electors of the city equal to at 6 least 10%, but not more than 20%, of the registered electors of 7 the city voting in the last general municipal election prior to 8 the adoption of the ordinance by the governing body. If proper 9 petitions are filed, the question of adopting the ordinance shall 10 be submitted by the governing body to the city electors at the 11 next primary or general election or at a special election called 12 for the purpose, in any case held not less than 45 days nor more 13 than 90 days after the clerk has reported the filing of the ref- 14 erendum petition to the city's governing body. The checking of 15 names on the petitions, the counting, canvassing, and return of 16 the votes on the question, and other procedures for the election 17 shall be as provided by law or charter. Upon a favorable vote of 18 the city electors, the ordinance shall be effective as specified 19 in the ordinance, which may be amended by the governing body of 20 the city following the election to specify July 1 or January 1 as 21 the effective date of the ordinance,if the effective date 22 originally specified in the ordinance is considered impractical 23 or inconvenient for any reason. The provisions in this section 24 for a referendum election,and for delaying the effective date 25 of the ordinance if petitions for a referendum are filed,are 26 not applicable to a city that on January 1, 1964 had in effect a 27 valid ordinance levying and imposing an excise tax levied on or 01572'99 6 1 measured by income. Notwithstanding any other provision of this 2 act, if an ordinance becomes effective on any date other than 3 January 1, each tax year shall end on December 31, and the provi- 4 sions of the ordinance based on a full tax year are modified 5 accordingly to be applicable to the partial tax year. 6 (4)(8)The city shall annualize the rates under this sec- 7 tion as necessary. 8(9) As used in this section:9(a) "Consumer price index" means the Detroit consumer price10index for all urban consumers as defined and reported by the11United States department of labor, bureau of labor statistics,12and as certified by the state treasurer.13(b) "Income tax revenue growth rate" means a number the14numerator of which is the income tax collections of the city for15the city fiscal year immediately preceding the city's application16under subsection (3) and the denominator of which is the product17of the income tax collections of the city for the city fiscal18year immediately preceding the city fiscal year used to determine19the numerator multiplied by 1 plus the corresponding percentage20change in the average consumer price index for the calendar year21ending in the city fiscal year used to determine the numerator.22(c) "Local tax base growth rate" means the total taxable23value of real property and personal property in the city for the24most recent year for which data is available divided by the total25taxable value of real property and personal property in the city26for the second year immediately preceding the most recent year27for which the data is available.01572'99 7 1(d) "Statewide tax base growth rate" means the total taxable2value of real property and personal property in the state for the3most recent year for which the data is available divided by the4total taxable value of real property and personal property in the5state for the second year immediately preceding the most recent6year for which the data is available.7 Enacting section 1. Sections 3a, 3b, and 3c of chapter 1 of 8 the city income tax act, 1964 PA 284, MCL 141.503a, 141.503b, and 9 141.503c, are repealed. 01572'99 Final page. FDD