Advocacy News – March 21, 2025
What’s new: Recently some special interest groups have started talking about avenues to increase funding for local units of government — and seemingly have their sights set on repealing tax limits set forth in Proposal A.
Why it matters: In March 1994, Michigan voters approved Proposal A, a landmark constitutional amendment aimed at reforming the state’s educational finance system and addressing the frustrations of residents over high property taxes and funding inequities among local school districts. This proposal brought significant changes to both school funding and property taxation, reshaping the landscape of Michigan’s public education, and quelling the unchecked tax increases businesses and individuals paid for the “privilege” of owning property.
Proposal A had two primary objectives:
- Property tax relief: Proposal A aimed to reduce the burden of property taxes on Michigan residents by limiting the annual increases in property tax assessments to the lesser of inflation or 5%. This measure was intended to provide property tax relief to homeowners by preventing rapid increases in their tax bills.
- When property was sold or transferred, its taxable value was reset to equal the state equalized value, which is half of the property’s cash value. This process, known as “uncapping,” ensured that new property owners paid taxes based on the current market value of the property.
- Additionally, Proposal A eliminated Headlee roll-ups Prior to Proposal A, local governments could “roll-up” their millage rates to recapture tax base lost due to forced rollbacks. Proposal A eliminated this mechanism, preventing local governments from increasing millage rates beyond the original rate.
- School finance reform: Proposal A sought to create a more equitable funding system for Michigan’s schools. It implemented a minimum per pupil foundation allowance, ensuring that all school districts receive a baseline level of funding. This change was intended to ensure that all students, regardless of their district’s wealth, had access to a quality education.
- Part of the reforms introduced measures to increase school accountability and transparency. It required schools to report on their performance and use of funds, fostering a culture of accountability in Michigan’s public education system.
What we’re saying: The Michigan Chamber continues to be a strong supporter of Proposal A and protecting Michigan property owners.
- Proposal A was a transformative measure that addressed critical issues in the state’s education finance and property tax systems. By providing property tax relief and creating a more equitable funding system for schools, Proposal A has had a lasting impact on the financial well-being of Michigan residents and businesses.
- Proposal A has had a notable impact on property values in Michigan, primarily through its mechanisms for limiting property tax increases and resetting taxable values upon property transfers.
- Overall, Proposal A has contributed to a more stable and predictable property tax environment for property owners.
What’s next: The Michigan Chamber will continue to monitor the status of this potential constitutional amendment. If you have questions, please contact Randy Gross, senior director of legislative affairs and associate general counsel.