Businesses that have successfully argued for reduced property tax rates at the State Tax Tribunal, homestead classification changes and other issues can have a detrimental effect on schools and other institutions that have to pay the county back when collections don’t match up, and that’s exactly what is happening to the Benton Harbor Area Schools this year.
Benton Harbor Area Schools Superintendent Dr. Shelly Walker has issued a statement today on the matter to help explain the Berrien County chargebacks the schools face. Here is what she had to say about the matter:
“It is common for Michigan public school districts to have property tax chargebacks each year. These chargebacks include property foreclosures, taxable value appeals to the local board of review and/or to the Michigan Tax Tribunal, State Tax Commission decisions, and property type reclassifications.
Benton Harbor Area Schools budgets for property tax chargebacks. The current General Fund budget includes $175,000 for such costs. A TV news station recently reported that the 2016 chargebacks for BHAS will be $315,000. The additional $140,000 of costs will be factored into the spring budget revision, along with updates to other revenue and expenditure amounts. The additional $140,000 represents less than one-half of one per cent of the total General Fund expenditure budget. The chargeback for the sinking fund is computed separately, and the amount reported by Berrien County is $23,726.
The amount budgeted in the current year is higher than the actual chargebacks incurred in both of the previous two fiscal years ($132,000 and $160,000). While property tax chargebacks are expected and incurred each year, the amounts vary from year to year, sometimes by significant amounts.
Property tax chargebacks include the following types of changes that impact school property taxes:
- Foreclosures in which the County auctions off these properties and receives less than the full price (taxes owed) on these properties
- Property taxable values to the local board of review in each unit of government (we have eight)
- Property taxable value appeals to the Michigan Tax Tribunal
- State Tax Commission changes to taxable value
- Changes in homestead classification
The impact of the 2016 chargebacks will occur in June of 2017, when the County remits the annual payment for delinquent property taxes reduced by the 2016 chargebacks.”