The revenues from the proposed millage are generated by the joint actions of the ten local districts. The revenue goes entirely to the ten local districts. The gross tax generated by each district does not equal its receipts for providing education.

Once knowledgeable about the above facts, some people reach the mistaken conclusion that at least one district must be a “winner” in the sense of receiving more funds than its taxpayers generate and at least one district must be a “loser.” The conclusion is mistaken because the proposed millage generates flows into the WISD from outside. Every district is a “winner.”

The discussion of the contributions and receipts of AAPS and of the remaining nine districts will begin with the contribution of business and industrial property and then address homestead property. The material on exporting of property taxes is used in this essay; for a detailed treatment of tax exporting see the essay on “Local Taxpayers Receive a Rebate of a Substantial Portion of Their Property Taxes: The `Exporting’ of Property Taxes.”

Business and Industrial Property

The Ann Arbor District has 60 percent of the total business and industrial property within the WISD, which exceeds by a significant margin the 47 percent of homestead property in AAPS. The central dense, urban core of a metropolitan area often contains a higher proportion of the business and industrial facilities than of population and residential property. We should not be surprised to find this in the WISD.

Businesses and industries located in the AAPS area are intimately linked to the entire WISD area, and beyond, with respect to their employees and their markets. Many people living outside the Ann Arbor School District work within the boundaries of the district. Many businesses located within the Ann Arbor School District provide goods and services to people living outside the boundaries of the district.

The business and industrial tax base should be regarded as an asset to the entire region. The tax base is built upon the work force of the region and relies in major part on providing goods and services to the region. Economic development theory and practice recognize this. For example, the exciting work of Ann Arbor Region Success (see http://annarborregionsuccess.org/) recognizes the economy of the region is the correct frame for effective work.

Approval of the millage would set in motion flows of funds that would multiply the positive impact on school funding beyond the net tax paid on business and industrial property within WISD. Business and commercial property within WISD has a taxable value of $6,225 million. The gross tax from a 2 mill levy would be $12.45 million per year. Of this, 30 percent would be exported from WISD. The net tax would be $8.72 million. The difference between the gross and net tax, $3.73 million, is an infusion to schools within WISD from outside the WISD.

Summarizing, business and commercial property is intimately tied to the entire WISD in both its employees and its sales. The owners of this property would pay a net tax of $8.72 million per year if the proposed millage passes. Their contribution to funding education would be enhanced by $3.73 million from outside the WISD for a total of $12.45 million for education within WISD. The benefits of the net tax of $8.72 million include, but are not limited to, a) $30.3 million for maintaining the quality of education in this area, b) greater ease in attracting and retaining employees who value education, c) enhanced ability of the area to attract businesses that thereby expand local markets and sales, d) enhanced ability of the area to attract residents who value education and thereby expand the local customer base and sales, and e) greater likelihood of stable or increasing property values due to the enhanced attractiveness of the area to businesses and people.

Homestead and Qualified Property

WISD contains homestead and qualified agricultural and forestry property, henceforth “homestead property,” with a taxable value of $8,933 million. The following table displays the financial flows directly related to homestead property that would be created by passage of the proposed countywide millage.

Financial Flows Directly Related to Homestead Property, million $

The gross taxes on homestead property in AAPS and in the other nine districts within WISD would be $8.5 million and $9.4 million, respectively. As described elsewhere in detail, the Michigan Property Tax Credit and the deduction of property taxes on the Federal Income Tax rebate 27 percent of the gross tax of AAPS and 33 percent of the gross tax of the other nine local districts. The net taxes on homestead property in AAPS and the other ten districts would be $6.2 million and $6.3 million, respectively.

AAPS and the other nine local districts would receive shares of the gross revenue equal to their shares of student enrollment. Of the $17.9 million generated by the tax on homestead property, AAPS would receive $6.7 million and the other nine districts would receive $11.2 million.

All local districts would receive more funding from the tax on homestead property than the net tax paid by homeowners within the district. AAPS would receive $6.7 million, which would exceed the net tax of $6.2 million on homestead property by $0.5 million. The other nine districts would receive $11.2 million, which would exceed the net tax of $6.3 million on homestead property by $4.9 million.

The differences between funds that would be received and the net taxes that would be paid are the infusions of funding from outside WISD. The average local district within WISD would receive over $500,000 in such funds. AAPS would be about average in this respect.

In conclusion, all districts would experience net gains with respect to the taxation of homestead property. If the millage proposal were approved, the average district would receive from its homeowners the net tax paid by them plus $540,000 from sources outside of WISD. AAPS would be typical of this average – receiving the net tax of $6.2 million paid by its homeowners plus $0.5 million from sources outside WISD. None of the net taxes paid by homeowners within AAPS would be used to support education in other districts within WISD.