What is a Headlee Override?

What does it mean when a local government unit asks voters to approve a Headlee Override?

This is the third in a series of MSU Extension articles on local property taxes. The first article reviewed the Headlee Amendment (link to Headlee Amendment article), the second reviewed Proposal A of 1994 and this third article will discuss some of their impacts and a ballot proposal called a Headlee Override.

The Headlee Amendment and Proposal A certainly protected property owners from increases in taxes by rolling back the tax rate (millage). They have also limited local government revenue, in some cases, to the point where they contribute to budget constraints. With revenue growth limited, even local units that have been fiscally conservative are finding themselves facing uncertain budget situations. Part of this is due to lower revenue from property taxes. The recent recession caused a reduction in property values, which lead to lower property tax revenue for local units.

Now, as property values have recovered, the Headlee Amendment and Proposal A have prevented property tax revenues from catching up. While Headlee limits the revenue that a local taxing unit can receive from a millage, Proposal A limits the growth in taxable value of an individual parcel, and prevents Headlee roll-ups that local units previously used to retain some of the taxing authority approved by the voters. This creates continued downward pressure on millage rates

Because of this, some local government units turn to what’s known as a Headlee Override. A Headlee Override involves asking the voters to approve raising the millage rate to its original rate after it has been forced to be rolled back because of growth in property values.

Montcalm County asked voters to consider a Headlee Override in March 2016 to restore an operating millage to the original 5 mills. Due to Headlee rollbacks and Proposal A, the county was only able to collect 4.4082 mills in 2015. Voters in Montcalm County rejected this proposal.

Clarendon Township voters approved a Headlee Override in March. The approved proposal restores the property tax rate to 1 mill for the next five years.

In Auburn Hills, the City Charter includes a tax of 2.5 mills designated for fire services. Because of growth in the tax base, the city has had to roll the millage back to 1.7604 mills, maintaining the tax revenues collected. Citing increased costs and growing demand on the Fire Department, the City is asking voters to approve a Headlee Override in August to return the rate to 2.5 mills, the original rate of the millage.

Similarly, Missaukee County voters will be asked to approve a Headlee Override to restore the county’s operating millage to 5.0 mills. Due to rollbacks required by the Headlee Amendment, the millage is currently at 4.9005 mills.

If you live in a county asking for a Headlee Override, or see one on the ballot in the future know that, basically, the local government is asking voters to approve raising a millage above its current rate, but no higher than its original rate authorized by the voters.

This article is part three in a three-part series, for the first two articles, see the links below:

Part one – What is the Headlee Amendment and How Does It Affect Local Taxes?

Part two – A Refresher on Proposal A and Local Property Taxes

Those in Michigan State University Extension that focus on Government and Public Policy provide various training programs, which are available to be presented in your county.  Contact your local Government and Public Policy educator for more information. 

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