It would not be fun to be part of the Michigan Tax Tribunal right around now.
The Detroit News reported in this story that the tax tribunal has a backlog of 41,000 property tax assessment appeals to wade through, completely overwhelming staff and causing major concerns about just where potential refunds are going to come from.
The appeals represent billions of dollars in challenged assessments that go back several years and could result in refunds – including interest – of millions of dollars in taxes received. That’s bad news for one of the states hit hardest by the economic collapse. The number of appeals has nearly doubled since 2008.
A 2010 audit found that the backlog wasn’t just a case of having a record number of appeals. It also had to do with poor management. Kimbal Smith III, the new Chairman of the Michigan Tax Tribunal and a former deputy state treasurer, said his office is spending an extra $450,000 for overtime, hiring temporary help and recruiting, training and paying more hearing officers in order to catch up. The normal budget for the tribunal is just under $3 million.
Oakland County, home to the city of Pontiac, has set aside money to cover about $8 million in potential tax losses over three years. It has $3.9 billion in challenged assessments to be heard. But other counties have not put money aside to cover potential losses.
The biggest problem is that the money previously collected on property taxes has in many cases already been spent to finance improvements. In that case, money owed to homeowners simply isn’t there anymore.
A sudden rise in property values wouldn’t do much good, either. Even if they went up quickly, the state constitution limits annual growth in taxable value to 5 percent, or the rate of inflation, whichever is less. So that would offer little relief. So if a property does succeed in getting its assessment lowered, it will stay low for years, which is great news for the homeowner, not so great for the counties.
As is the case with seemingly everything in Michigan, the auto industry is a big player in the current problem. General Motors Corp., Ford Motor Co. and Chrysler Group LLC all filed large property tax appeals and if they are successful, it would have a major impact on large cities such as Detroit, Pontiac, Flint, Livonia, Dearborn and Trenton.
Smith, the tribunal chair, said his office is trying to speed up the claims they get to and how quickly they are dealt with. He said the longest a resolution should take is 14 months. The tribunal is going from 11 small claims hearing officers (who typically deal in residential appeals) to 24, and each will get about 14 cases a day, up from 10 previously. The chief clerk will also begin hearing cases about twice a month. Staff who typically deal in commercial and industrial cases – such as judges – will also hear more residential cases.
Smith also said he’s encouraging more settlements before appeals reach a hearing stage. That has show itself out as settlements are on the rise in Michigan.
All of this is good news for Michigan property owners. Those who already have appeals finally have a light at the end of the tunnel, and there’s a good chance that it could turn out favorable. At this point, it seems that the priority is simply getting through them and getting settlements is the fastest, easiest and cheapest way to do it. It also shows that Michigan residents are seriously taking control of what they pay in property taxes, and that’s exciting to see. And it’s a trend we’re seeing all over, as county after county is reporting a big rise in property tax appeals.
If you’d like to join the growing segment of homeowners who believe they are paying too much and want to do something about it, there’s help out there for you. Log on to ValueAppeal and see if you might be able to save.