Dearborn homeowners will see a large drop in property taxes
Property owners in the city of Dearborn will see a substantially lower property tax bill this summer thanks to changes in school funding and the expiration of a city millage.
The two taxes add up to 10 mills -- or savings of around $1,300 for the owner of a home with a taxable value of $134,000. Of all cities and townships in the state, Dearborn has the 15th-highest property tax rate, according to MLive.com.
But the reprieve is only temporary. Next summer, taxpayers will see the return of the school tax, but with a lower rate than in 2021, depending on state funding.
Four of the 10-mill reduction is coming from the city, while 6 mills reduction coming from Dearborn Public Schools. Non-homestead properties will not receive the 6-mill reduction as the school savings do not apply to them.
The Dearborn School District had budgeted for an increase in general funding from the state, but then discovered it was facing a loss of $4 million in unrestricted revenue, said Tom Wall, executive director of business services and operations.
Though the district is still set to receive tens of millions in COVID-19 relief funding from the federal government, that funding can only be put to limited use. On the other hand, general funding can be put towards any district expenses, like salaries, utilities, and supplies.
Last year, legislators approved another $171 per student in funding, bringing each student to $8,951. This meant an additional $3.4 million for the district from the state.
However, in order to collect this extra funding, districts needed to reduce the Hold Harmless tax that they receive from their residents. The Hold Harmless tax is a continued portion of the local property tax that serves as extra per-student funding. It was passed in 1994 and is renewed every 10 years.
This meant a $7.4 million reduction in funding for the Dearborn district. The per-student cap decreased from $594 to $313, meaning the $171 per student increase in state funding cost $281 per student in Hold Harmless funding.
Because this change was made in September of last year after Dearborn residents had paid all of their school taxes on July 1, there was an overcollection in taxes. Therefore, the Hold Harmless millage will not be on property tax bills this summer for homeowners in Dearborn and Dearborn Heights.
The millage will return next year, though at a lower rate of 3-4 mills as opposed to 6.17 mills. The next time it will be up for a vote is 2024.
A 3.5 mill tax for the city of Dearborn is also no longer on property owner’s bills, after voters last summer did not renew the operating tax at a lower 2.75 mill rate.
A 2.28 mill tax will also fall off next year after a bond voted for in 2002 will be paid off in the upcoming year.
The district’s total budget for next year will be $449 million. $263 million of the budget comes from general fund revenues.