The Headlee Amendment to the Michigan Constitution, approved by voters in 1978, sets three fiscal limits that still shape every property tax bill in the state: it caps how much revenue the state can collect and spend, it automatically rolls back local property tax rates when property values grow faster than inflation, and it forbids the state from ordering local governments to do new things without paying for them. It also requires voter approval for new or higher local taxes and lets any Michigan taxpayer sue to enforce these rules.1Michigan Legislature. Executive Order 1993-1 – Headlee Amendment Blue Ribbon Commission The amendment added Sections 25 through 34 to Article IX and amended Section 6. Section 25 states the core principle: no property, local, or state tax may increase above the specified limits without a direct vote of the people.2Michigan Legislature. Michigan Constitution Article IX – Section 25
Automatic Rollback of Local Property Tax Rates
This is where most homeowners feel the amendment directly. Section 31 requires an automatic reduction in a local government’s maximum millage rate whenever the total assessed value of existing property in that jurisdiction rises faster than inflation. The rollback prevents local governments from collecting a revenue windfall just because real estate prices went up.3Michigan Legislature. Michigan Constitution Article IX – Section 31
The math runs through what practitioners call the Millage Reduction Fraction. If the assessed value of existing property, excluding new construction and improvements, grew by more than the General Price Level, the millage rate is permanently reduced so the taxing unit collects roughly the same inflation-adjusted revenue it collected the year before. Once reduced, that rate stays lower until voters approve a restoration. Look at your tax bill and you may see a millage rate noticeably below what voters originally authorized years earlier. That gap is Headlee at work.
The “General Price Level” is defined in Section 33 as the Consumer Price Index for all urban consumers reported by the U.S. Bureau of Labor Statistics.4Michigan Legislature. Michigan Constitution Article IX – Section 33 The threshold tracks broad consumer inflation, not housing-specific price movements.
How Proposal A Fits In
Proposal A, approved by Michigan voters in 1994, added a separate cap that limits the increase in each individual parcel’s taxable value to the lesser of five percent or the change in CPI, until ownership transfers. At that point, taxable value resets to the full assessed value. Headlee operates at the jurisdiction level, capping the overall millage rate. Proposal A operates at the parcel level, capping the taxable value that rate is applied to.3Michigan Legislature. Michigan Constitution Article IX – Section 31
Because Proposal A already restrains taxable value growth, the Headlee rollback triggers less frequently than it did before 1994. Both protections still stand, and they can compound: a jurisdiction may see its millage rate rolled back under Headlee while individual taxable values are simultaneously capped under Proposal A. For homeowners who have owned their property for many years, the combined effect can keep tax bills well below what a new buyer would pay on the same house.
Voter Approval and Headlee Overrides
Section 31 prohibits local governments from levying any tax that was not authorized by law or charter when the amendment was ratified, or from raising the rate of an existing tax above its authorized level at that time, unless a majority of voters in that jurisdiction approve the change.3Michigan Legislature. Michigan Constitution Article IX – Section 31 This covers counties, cities, villages, townships, school districts, and every other unit of local government.
Once a Headlee rollback has reduced a millage rate, a local government can ask voters for what’s known as a Headlee override to restore the rate back up to the original authorization. Override elections are common across Michigan, particularly when local services face budget pressure. Without a majority yes vote, the rate stays at the rolled-back level regardless of the government’s needs. An override cannot push the rate higher than what was originally authorized. It simply undoes the automatic reduction.
Ceilings on State Revenue and Spending
Section 26 caps the total taxes the state can collect in a fiscal year. The limit is calculated by comparing total state revenues to the aggregate personal income of Michigan residents, using fiscal year 1978–1979 as the baseline. The formula multiplies the ratio of state revenues to personal income from that base year by either the prior calendar year’s personal income or the average of the three previous years, whichever produces a higher number.5Michigan Legislature. Michigan Constitution Article IX – Section 26 The effect is straightforward. State tax collections cannot grow faster than the incomes of Michigan residents.
If actual revenues exceed that ceiling by one percent or more, the state must refund the surplus, distributed proportionally based on income tax and business tax returns filed for the year in question.5Michigan Legislature. Michigan Constitution Article IX – Section 26 That has actually happened. State revenues exceeded the constitutional limit in fiscal years 1994–1995, 1998–1999, and 1999–2000, triggering refund obligations each time.6Michigan Senate Fiscal Agency. State Revenue Limit Article IX Section 26
Section 28 closes the obvious workaround. The state cannot spend more in any fiscal year than the Section 26 revenue limit plus federal aid and any surplus carried forward.7Michigan Legislature. Michigan Constitution Article IX – Section 28 Without it, the legislature could issue debt to get around the revenue cap. Together the two sections keep both intake and outflow tethered to Michigan’s economy.
No Unfunded Mandates on Local Governments
Section 29 bars the state legislature from requiring any new service or expanding an existing one without appropriating and disbursing the money to pay for it. It also prohibits the state from reducing its share of funding for any activity or service it already requires of local governments.8Michigan Legislature. Michigan Constitution Article IX – Section 29
This provision has generated significant litigation. In Durant v. State of Michigan (1997), the Michigan Supreme Court held that special education and special education transportation were state-mandated activities requiring full state funding under Section 29. The Court ordered the state to pay a money judgment covering the full amount of underfunding for three fiscal years and confirmed that school districts could use the recovered funds for taxpayer refunds, tax relief, or other public purposes.9Justia Law. Durant v. State of Michigan The practical effect is that the state cannot quietly shift costs to local property taxpayers. If the legislature wants local governments to do something new, the state has to write the check.
Any Taxpayer Can Sue to Enforce It
The enforcement mechanism gives the amendment its teeth. Section 32 grants any Michigan taxpayer standing to file suit directly in the Michigan Court of Appeals to enforce Sections 25 through 31. If the taxpayer prevails, the government must pay the taxpayer’s costs.10Michigan Legislature. Michigan Constitution Article IX – Section 32
That word “costs” carries more weight than it first appears. The Michigan Supreme Court has held that it includes reasonable attorney fees, not just filing and service costs. The Court reasoned that Headlee litigation tends to be complex and expensive, and that without the ability to recover attorney fees, the average taxpayer could never afford to bring these cases. The drafters’ own notes confirmed they intended “costs” to cover all expenses of maintaining a lawsuit, including attorney fees.11Michigan Legislature. Headlee Amendment For a taxpayer who spots a violation, that fee-shifting rule is what makes hiring a lawyer possible.