Traverse City Record-Eagle

April 23, 2013

College approves millage request

BY ANNE STANTON astanton@record-eagle.com
Traverse City Record-Eagle

---- — The Northwestern Michigan College board approved a millage request that will ask voters to raise their property tax rate by .4 mills for 15 years.

The millage vote to support college operations will most likely come in August. The timing didn’t sit well with trustee Cheryl Gore Follette, who cast the single dissenting vote in the 5-1 decision Monday night. She preferred a November election, saying that a special election would cost $80,000.

“My only hesitation is the timing,” said Follette, adding that she strongly supported the request. “I’m extremely concerned about the timing.”

The board could decide to hold the election in November if it determines that it could still levy the new tax in 2013. If approved, the increase would be certified 45 days after the election, but tax bills go out on December 1.

A “yes” vote would mean a $1.7 million annual boost in college coffers for the first first year.

The ballot will explain that the Headlee amendment reduced NMC’s tax levy from 2.5742 to 2.1700 mills. A “yes” vote will increase the tax rate by .4042 mills. That means the owner of a home with a taxable value of $200,000 would pay an additional $80 in annual property taxes.

The 15-year limit for the new rate was proposed by trustee Ross Childs. Bill Myers, who was sitting in as board chair, pointed out that the current tax levy for operations is perpetual.

“But I don’t expect to be here,” said Childs, laughing along with other board members.

After the meeting, he explained that he wanted to put a time limit on the millage.

“Who knows if the Headlee amendment will be around in 15 years,” he said.

The Headlee amendment limits property tax revenue increases to the rate of inflation and rolls back the millage rate to adjust dollars.

Trustee Kennard Weaver said the amendment has not allowed property tax revenues to keep pace with inflation. Declining property values have meant a drop in revenues from $9.3 million in fiscal year 2011 to $9.1 million last year. It’s expected to stay at that level until fiscal year 2017, when it’s projected to increase to $9.2 million.

Vicki Cook, vice president for finance and administration, projected a darkening economic picture after years of surpluses. NMC would suffer an estimated $259,765 deficit in 2014. Within four years, the college’s deficit would reach nearly $1.8 million, even as tuition revenues steadily climb from a projected $23.4 million this year to $25.7 million in fiscal year 2018.

“Without significant changes, we are on a slope going in the wrong direction,” NMC President Tim Nelson said.

The deficits are based on assumptions of property taxes and state aid staying flat, Cook later explained.

Nelson said earlier that the millage would help NMC transform itself for the future, but state law bans him from saying exactly how the money would be used. Technology has been NMC’s major focus, with new specialty degrees in robotics. The college plans to use the new programs to recruit new students from around the country and the world.

In related news, voters may also be asked to decide on another millage this year. Voters soundly defeated an.8-mill increase request in November by the Traverse City Area Public Schools for capital improvements. On May 6, the board will hear recommendations on whether to ask again for a millage, and what the request should look like.

NMC’s fund balance is $16.1 million, nearly 38 percent of its $42.6 million operating budget. Since 1999, tax revenues from the millage increased from $2.1 million to nearly $4.3 million. NMC also has a construction bond millage of .77 that will be retired in 2020.