Why Is My Winter Property Tax Bill So High?
ELi runs a regular column called Ask ELi to Investigate in which we try to get answers to readers' questions. An ELi reader wrote in yesterday:
“My winter tax bill is up 13.8% over last year's. Last year's winter tax bill was up 1% over the previous year's. I'm not holding my breath that the promised ‘relief’ [from the City of East Lansing property tax reduction that starts next year] will wipe out the 13.8% increase AND provide relief beyond that. I expected the base to be ‘adjusted’ with our new assessments in March to negate any relief, but this is ridiculous. Can't wait to see next year's summer taxes.”
We wrote to East Lansing’s Finance Director Jill Feldpausch to ask for help understanding what property owners are seeing on their tax bills. Feldpausch said she had received similar inquires and responded to our question by providing a press release. Here’s what that tells us.
Your winter bill doesn’t include City of East Lansing taxes. What’s on that winter bill depends on where you live, including whether you live in Ingham or Clinton County (a small portion of East Lansing is in Clinton County), but if you look at the “description” on the bill, it will tell you what taxes your bill includes. You’ll see your winter bill doesn’t include the City of East Lansing. That property tax bill comes in the summer.
The winter and summer bills come from the City of East Lansing because the City functions as the collecting agency for your property taxes. Even though your winter tax bill doesn’t include property taxes paid to the City, it comes from the City and you pay it to the City. The City then sends it on to other agencies.
The City explains that, “For Ingham County residents with a home in the East Lansing school district, the jurisdictions include Ingham County, the East Lansing Public Schools, the State Education Tax, Lansing Community College, the Ingham Intermediate School District, the Capital Area Transportation Authority and the Capital Regional Airport.”
The City’s press release adds, “The Finance Department has seen steady increases in the Ingham County millage over the past several years, including a voter-approved increase of 0.8500 mills in winter 2018 for the Ingham County Jail and an increase of 0.4158 mills in summer 2018 for the County’s general operating millage. The recent, voter-approved East Lansing Public Schools Bond for the rebuilding and improvements to area elementary schools has also been a contributing factor to tax bills going up.” (The Schools bill doesn't show up until Summer.)
For Ingham County residents, the millage rate went up from 3.69 for Winter 2017 bills to 4.54 for Winter 2018. That accounts for a large part of the increase in bills for Ingham County residents in the City of East Lansing. (Read on for what else caused it to go up.)
You’ll see your City of East Lansing property tax millage has gone down when your property tax bill comes next summer. Voters approved a City of East Lansing property tax millage reduction for the period in which an income tax is in effect, which is the next twelve years, starting January 1, 2019. Your next City tax bill comes next summer, so that’s when you’ll see the City tax go down in terms of millage rate (from about 17.5 to about 12.5).
City leaders said, prior to the income tax vote, that if the income tax vote passed and the millage rate for the City dropped as a result, homeowners in East Lansing would see an effective drop in their total property tax bills of about 10%.
But a drop in the millage rate doesn’t necessarily mean your tax bill goes down. How much you pay in taxes is calculated by multiplying the taxable value of your home by the millage rate. If your home goes up in taxable value, then even if the millage rate goes down, you might pay about the same as before the millage rate went down – or even pay more.
The City notes in the press release that, under Michigan law, taxable value of properties can go up annually by either 5% or the rate of inflation as defined by the Consumer Price Index (CPI), whichever is less. The economy has been doing better, so the CPI has picked up, and that’s made the taxable value of your home go up.
According to the City, “The CPI amount was 0.3 percent for 2016, 0.9 percent for 2017 and 2.1 percent for 2018.”
So, the spike in Winter 2018 tax bills for Ingham County residents can be explained by the County millage increase plus the CPI increase.
Here’s how Feldpausch explains what you’re seeing when you see your winter property tax bill is higher than last year’s: “A number of outside agencies that we collect for have had voter-approved millage increases over the past few years. This, combined with increases in taxable value due to the improving economy, are a big part of why winter tax bills are going up.”