Traverse City Record-Eagle

Archive: Sunday

March 23, 2014

Editorial: Tinkering with system makes no sense

When Michigan voters approved Proposal A in 1994, a key element was the homestead property exemption, which gave the owners of “homestead” properties — “the one place where a person has his or her true, fixed, and permanent home to which, whenever absent he or she intends to return …” an exemption on 18 mills of property taxes.

The aim, of both Proposal A and the homestead exemption, was clear — to shift much of the burden of funding schools off homeowners, who had been dealing with sometimes double-digit property tax increases. That meant “non-homestead” properties, such as businesses, rental homes and second homes didn’t pay more, they just didn’t get to pay less.

Before the ink was dry, thousands of owners of second homes and rental properties appealed. Today, those appeals are an annual rite of spring in places like Leelanau County, where there are hundreds of second homes.

That’s all old news. What’s new is that the Leelanau County board has given county Treasurer John Gallagher III the right to take over the job of auditing what are now called Principal Residence Exemption (PRE in government-speak) requests and issuing denials when they’re deemed to be false.

Last year, Gallagher took it upon himself to send a letter to state officials to announce his office would take over the PRE program as of October. He apparently has the right to do that under a fuzzy state law. Even though the county has a veteran, well-respected equalization director in the person of Laurie Spencer — who has 37 years of assessment administration experience — the county board last week approved Gallagher’s mini coup.

That’s fine, except for a few troubling things. One, the system wasn’t broken. In 2013 the Equalization Department issued 45 PRE denials and collected about $111,896 in extra revenue for schools. Two, Gallagher, who took office in 2013, has essentially zero experience. Three, Gallagher has said he wants to educate the public about the PRE — which is fine — but also curb denials, which isn’t.

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