Frequently Asked Questions

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The LCSA Act requires a school district and intermediate school district to reduce its debt millage rate to reflect the school debt loss reimbursement that will be received (MCL 123.1353(4)).  The Michigan Department of Treasury will calculate a school debt loss reimbursement based on the personal property exemption loss reported by the county equalization director and either the debt millage rate reported on the Form 5451 or the debt millage rate calculated by the Michigan Department of Treasury (see the Millage Rate Comparison Reporting Requirement section for a specific PPT Reimbursement year.)

Below is an example of how to calculate the debt millage rate.

The personal property exemption loss (PPEL) and small taxpayer exemption loss (STEL) calculations use the taxable value of personal property classified as commercial personal property and industrial personal property.  Personal property subject to the industrial facilities tax (IFT) for new facilities is valued at 50% of the taxable value.

The commercial personal property and industrial personal property taxable values are reported to Treasury on the Personal Property Summary Report (PPSR) by the County Equalization Director. The 2013, 2014, and 2015 personal property taxable values are the taxable values as of June 15, 2015. The current year personal property taxable values are the taxable values as of May 10.

The taxable values must be modified to exclude commercial personal property and industrial personal property that is classified as real property or utility personal property after 2012 (see Form 5658).  Additionally, taxable values must be modified for municipality boundary changes to the extent that the boundary change affects the property taxes levied by the municipality.

The PPEL and STEL calculations for operating millage reimbursements must be adjusted to exclude the taxable value of commercial personal property and industrial personal property subject to a renaissance zone exemption. The personal property taxable values subject to a renaissance zone exemption are reported to Treasury on Form 3369 – Renaissance Zone Tax Data by the Assessor.

For Local School Districts, Intermediate School Districts, and Tax Increment Finance Authorities

The PPEL is calculated by subtracting the current year taxable value of commercial personal property and industrial personal property from the 2013 taxable value of commercial personal property and industrial personal property.

The PPT reimbursement calculations for school districts, intermediate school districts, and tax increment finance authorities do not use the STEL.

For All Other Municipalities

The STEL is the greater of:

The 2013 taxable value of commercial personal property and industrial personal property minus the 2014 taxable value of commercial personal property and industrial personal property

OR

The 2013 taxable value of commercial personal property and industrial personal property minus the 2015 taxable value of commercial personal property and industrial personal property.

In order to estimate the personal property tax reimbursements, the Michigan Department of Treasury needs to know all the input factors necessary to calculate the reimbursements as the reimbursements are prorated.  These input factors include the total statewide personal property taxable value of commercial personal property and industrial personal property, total acquisition cost of eligible manufacturing personal property, millage rates, and tax increment finance authority captured reimbursements.  This information is collected by the Michigan Department of Treasury between February and late-August.  As a result, the Michigan Department of Treasury is unable to provide future reimbursement projections.

For counties, cities, villages, townships, libraries, authorities, and tax increment finance authorities, the personal property tax reimbursement revenue should be recorded to revenue account 573, Local Community Stabilization Share. 

For local school districts and intermediate school districts, the personal property tax reimbursement revenue should be recorded to revenue major class code 321, suffix 0000.

The Local Community Stabilization Authority Act requires the following restricted related to the personal property tax reimbursements:

Total PPT Reimbursement at 100% (MCL 123.1357(7)(a))

The PPT reimbursement received, up to 100% reimbursement, shall be allocated based on the portion of the municipality’s payment attributable to each millage levied by the municipality. The portion of the payment allocated to each millage other than the general operating millage shall be considered restricted and recorded by the municipality in the same manner as the millage levied.

Total Essential Services Reimbursement (MCL 123.1357(4)(a)(iv))

The total essential services reimbursement shall be used to fund essential services (i.e. ambulance services, fire services, police services, jail operations, and the funding of pensions for personnel providing those services.)

PPT Reimbursement for Debt Millage (MCL 123.1361(2))

For the total PPT reimbursement for debt millage, a municipality shall use the amount received for debt millage to pay debt. If the total PPT reimbursement for debt millage is not used to pay any outstanding debt, the amount of the PPT reimbursement for debt millage not used to pay debt shall be deducted from a future PPT reimbursement. However, if the municipality does not have outstanding debt, then the municipality may use the PPT reimbursement for debt millage in any manner and the amount shall not be deducted from a future PPT reimbursement.

PPT Reimbursement for County Road Millage (MCL 123.1357(7)(b))

For the total PPT reimbursement to a county for county road millage levied under Section 20b of 1909 PA 283, MCL 224.20b, the cities, villages, and county road commission shall agree by March 31 to a formula to allocate a portion of the PPT reimbursement to each city and village. The allocation shall be based on the city and village share of the losses and acquisition cost used to calculate the PPT reimbursement to the county and each city’s and village’s portion of that share. Once the formula is established it will be in effect until the effective date of any subsequent agreement. If a formula is not established by the municipalities, the Department of Treasury may determine a formula for allocating the payments.

Municipalities Participating in a 425 Agreement (MCL 123.1357(7)(c))

For the total PPT reimbursement to a municipality participating in an intergovernmental conditional transfer by contract under 1984 PA 425, MCL 124.21 to 124.30, or any other interlocal agreement that provides for a millage-based sharing of revenue, the municipality receiving the PPT reimbursement shall allocate the PPT reimbursement between the parties based on a proportionate share of the payment as it is attributable to the area subject to the agreement.