DEARBORN — Homeowners in Dearborn will see a welcome, though temporary, decrease in the tax rate levied on their properties.
A 4 mill reduction comes from a supplemental operating millage that was voted down by resident in November. That reduction did leave the city in a large spending hole, which has been largely balanced out by the city’s new administration in its new budget.
A 6 mill reduction comes from the state providing extra funding for the Dearborn School district, but also mandating in its new budget that the district cannot levy a certain millage.
Dearborn’s Mayor Hammoud was a state representative when the legislature passed the budget that provided increased funding for Dearborn Schools.
This millage reduction is temporary and will fluctuate based on funding in future state budgets. The 4 mill decrease due to the supplemental operating millage will also see small fluctuations each year.
Hammoud said on a social media post that property tax bills will be mailed out soon and that the reduction is for homestead properties only. The school millages don’t apply to non-homestead properties, but those should still expect around a 4-mill reduction.
A homestead is the property where someone has their permanent home, while a home that you rent to someone else or a cottage or vacant land is known as a non-homstead property.
A mill is $1 of tax for every $1,000 of taxable value on a home.
We had budgeted for an increase in general fund revenue from the state, but then discovered we actually were facing $4 million less in unrestricted revenue. — Tom Wall, Dearborn School District
The Dearborn Schools have received increased funding from the state’s budget. But that budget also has a condition that the school district must axe its 6 mill Hold Harmless tax on the property tax bills for district homeowners this year in Dearborn and Dearborn Heights in order to receive those funds.
But though the administration has touted the state’s new budget as an increase in school funding, the district said because of complicated changes in how the Dearborn Public Schools received state aid this fiscal year it actually resulted in millions less for the district in per pupil funding.
First, while the district is still expecting tens of millions in additional COVID relief funding, that money can only be spent on very limited items.
Secondly, with the removal of the Hold Harmless millage this year, the district says it will not be able to collect the $594 per student it expected, and that the district is now capped at $313 per student.
“That means a $171 per student increase in state funding cost Dearborn Schools a $281 per pupil decrease in Hold Harmless funding,” the District said in an announcement.
“This change caught us unaware since none of our contacts in the state initially realized it was part of the state’s budget,” said Tom Wall, executive director of Business Services and Operations. “We had budgeted for an increase in general fund revenue from the state, but then discovered we actually were facing $4 million less in unrestricted revenue.”
The district residents will see another school tax fall off next year when it pays off a bond that levied a 2.28 mill tax, approved in 2002. Another millage, currently 1.22 mill, will stay on the school tax bill for the next several years to pay off the bond voters approved in 2013.
The school district has called the Hold Homestead millage a “sliver of funding.”
That millage dates back to 1994, when Proposal A passed to revamp school funding in the state. Dearborn and about 50 other districts were allowed to continue a portion of their local property tax so they could keep the higher per pupil funding that district voters had approved in the past and now reapproved every 10 years.
Dearborn residents pay all of their school taxes as part of their summer tax bill issued on July 1.
By the time the tax law was signed in late September 2021, those local tax payments had already been collected. Dearborn Heights residents have their school taxes divided evenly between the summer and winter tax bills.
To rectify what turned out to be an overcollection on the last tax bills, the district’s 6.17 mill Hold Harmless tax will not be on the property tax bills for district homeowners this year in Dearborn and Dearborn Heights. Non-Homestead properties will still pay the full 18 mills, although for this year they will not see the portion broken out for Hold Harmless.
Next year, the Hold Harmless will return, but at a lower rate, likely closer to 3 or 4 mills, the District said. The exact rate will be determined next year based on enrollment and total taxable value in the District.