(WXYZ) — Call it a double whammy. You are getting hit hard by inflation, and now inflation is being used to calculate how much you will be paying in property taxes.
Michigan uses the Federal Consumer Price Index to set the maximum increase in taxes you will see year to year.
Property owners are opening their mail boxes and finding property tax bills this month that are bigger than they have been in the past. And it is making some wonder: is this system — the one we have for property taxes in Michigan, sustainable?
People around Michigan have a lot weighing on their shoulders. For many — inflation feels like the straw that broke the camel’s back.
"I can’t keep this up on a fixed income," said Carol Wilkinson.
Wilkinson is concerned about how much the tax bill will increase for her one acre property given inflation.
"Property values are through the roof, and in Michigan you are taxed on your property taxes based upon your taxable value," said Kellie Blair, an attorney in Bloomfield Hills.
Blair has an expertise in real estate. We spoke to her about how your rates are set, that taxable value is half of the market value.
But just in case there are times when inflation and home prices sky rocket in Michigan, taxable value can increase by no more than 5% from one year to the next in Michigan based on inflation at a certain point in time.
"Currently it is at 3.3%. So most homeowners are going to see an increase in their taxes this year," said Blair.
Eric Lupher is President of the Citizens Research Council of Michigan.
"We hate paying taxes. We hate hearing taxes are going to go up, but local governments have been surviving with this high rate of inflation that the rest of us have been suffering through," said Lupher.
The Citizens Research Council of Michigan has published reports on property taxes in Michigan offering perspective. He says states generally limit property tax increases with either rate, assessment, or levy limits.
Michigan uses all three creating some of the strictest property tax limitations in the U.S.
"The bad news is you are going to be paying higher taxes. The good news is, but for these limitations, you would already being paying higher taxes," said Lupher.
The Citizens Research Council of Michigan warns that it does not think the property tax system that funds local governments is sustainable. Local governments are limited in how they can increase revenue without new developments that increase property values, regardless of the development’s economic value or even cost.
"Very strong economic growth in this state, but the local governments don't benefit from that," said Lupher.
The Citizens Research Council suggests the state consider allowing local governments to diversify how they get tax revenues in a way that makes sense for that community.
Right now, often the poorest communities are forced to have higher tax rates to make up for lower property values.
"It really does create a system of inequality and perpetuating the income differences among us," said Lupher.
If you are struggling to pay your property taxes there may be relief based on income, age or disability — to help you get through.
It is something attorney Blair says might help people going through hardships — like Carol — and so many others.
"It keeps on going up and I am on a fixed income, and I got cancer, and it doesn’t help," said Blair.
We want to know how you are experiencing this economy. Contact us at krussell@wxyz.com.
You can learn more about property tax exemptions available in Michigan at https://www.michigan.gov/taxes/property/exemptions or at https://www.waynecounty.com/elected/treasurer/tax-exempt-program.aspx.
You can also apply for a deferment to give you more time to pay your taxes through your community’s treasurer. Senior citizens, disabled people, veterans, surviving spouses of veterans and farmers may be eligible to delay paying his/her summer tax bill until his/her winter tax bill is due. The deadline to apply is September 15. Here is the form you would need to fill out to apply.
