Taxpayers for Michigan Constitutional Govt v. State of Michigan ( 2019 )

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
revision until final publication in the Michigan Appeals Reports.
STATE OF MICHIGAN
COURT OF APPEALS
TAXPAYERS FOR MICHIGAN FOR PUBLICATION
CONSTITUTIONAL GOVERNMENT, STEVE October 29, 2019
DUCHANE, RANDALL BLUM, and SARA
KANDEL,
Plaintiffs,
v No. 334663
Original Action
STATE OF MICHIGAN, DEPARTMENT OF
TECHNOLOGY, MANAGEMENT AND
BUDGET, and OFFICE OF AUDITOR
GENERAL,
Defendants.
ON RECONSIDERATION
Before: BORRELLO, P.J., and METER and SHAPIRO, JJ.
BORRELLO, P.J. (concurring in part and dissenting in part).
I respectfully disagree with my colleagues’ analysis of Count IV of plaintiffs’ complaint.
In my opinion, my colleagues’ conclusions regarding the operation of Const 1963, art 9, § 29
vis-à-vis Const 1963, art 9, § 30 are predicated on faulty logic regarding the interplay between
these two provisions. I would find that state funding provided to units of local government for
new or increased state mandates under § 29 may be counted for purposes of § 30, and, thus, that
defendants, and not plaintiffs, are entitled to summary disposition on Count IV of the complaint.
In all other regards, I concur with my colleagues in the majority.
Section 30 provides that the “proportion of total state spending paid to all units of Local
Government, taken as a group, shall not be reduced below that proportion in effect in fiscal year
1978-79.” As recognized by the majority, § 30 “only requires that state funding of all units of
local governments, taken as a group, be maintained at 1978-79 levels.” Durant v State Bd of Ed,
424 Mich 364, 393; 381 NW2d 662 (1985). Moreover, the drafters’ notes explaining the
Headlee Amendment indicated that the primary intent of § 30
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was to prevent a shift in tax burden, either directly or indirectly from state to local
responsibility. The phrase “taken as a group” permits the legislature to reallocate
funds to local units of government, i.e., geographically or from one unit to
another. It was the drafter’s intent to rely on the political process to effect such
allocations and not to limit the legislature’s ability to create more effective and
efficient governmental entities or to eliminate those local units which no longer
serve any utilitarian purpose. [Drafters’ Notes – Tax Limitation Amendment
(Proposal E, approved by the electors on November 7, 1978, as an Amendment to
the Michigan Constitution of 1963), § 30, p 11.]
Section 29 provides:
The state is hereby prohibited from reducing the state financed proportion
of the necessary costs of any existing activity or service required of units of Local
Government by state law. A new activity or service or an increase in the level of
any activity or service beyond that required by existing law shall not be required
by the legislature or any state agency of units of Local Government, unless a state
appropriation is made and disbursed to pay the unit of Local Government for any
necessary increased costs. [Const 1963, art 9, § 29.]
Each sentence in § 29 serves a separate but related function. The first sentence is “aimed
at existing services or activities already required of local government,” Durant, 424 Mich at 379,
and “prohibits reduction of the state proportion of necessary costs with respect to the
continuation of state-mandated activities of services,” Judicial Attorneys Ass’n v State of
Michigan, 460 Mich 590, 595; 597 NW2d 113 (1999) (emphasis added), quoting favorably
Mayor of the City of Detroit v State of Michigan, 228 Mich App 386, 396; 579 NW2d 378
(1998). The second sentence “addresses future services or activities,” Durant, 424 Mich at 379,
and “requires the state to pay the increased necessary costs in full when it mandates new
activities or mandates activities at an increased level,” Judicial Attorneys Ass’n, 460 Mich at 598(emphasis in original).
When analyzing the interplay between constitutional provisions, such as these two
provisions of the Headlee Amendment, this Court must remain mindful of two basic principles of
constitutional construction.
First, every statement contained within a state constitution must be interpreted in
light of the whole document. Second, no fundamental constitutional principle
shall be construed so as to nullify or substantially impair another, all fundamental
constitutional principles being of equal dignity. [Durant v Dep’t of Education
(On Second Remand), 186 Mich App 83, 115; 463 NW2d 461 (1990), remanded
on other grounds 441 Mich 930 (1993).]
As properly pointed out by my colleagues, the parties have agreed that the proportion of
total state spending that is required to be paid under § 30 to units of local government, as a
whole, is 48.97 percent. Defendants indicate that this 1978-79 baseline percentage included the
state’s provision of both discretionary funding paid to local units of government and funding
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specifically allocated to reimburse the units of local government for the costs of pre-Headlee
state mandates.
As previously noted, § 30 guarantees that the percentage of the total state budget
earmarked for local government spending will not decline from the fiscal year 1978-1979 level.
Thus, § 30 guarantees nothing more than the provision by the state of a certain base level of
funding, i.e., an amount equivalent to the proportion of total state spending paid to all units of
local government, taken as a group, in effect in fiscal year 1978-79. I would find that the first
sentence of § 29, when read in conjunction with § 30, operates to protect that portion of the
overall 48.97 percent composed of funding to reimburse local units of government for the
necessary costs of implementing state mandates that existed in 1978 and that pre-date the
ratification of the Headlee Amendment. The first sentence of § 29 accomplishes this purpose by
prohibiting the reduction of state spending with respect to state-mandated activities and services
in effect at the time the Headlee Amendment was ratified. Judicial Attorneys Ass’n, 460 Mich at
595, 603; Livingston Co v Dep’t of Management & Budget, 430 Mich 635, 644; 425 NW2d 65
(1988).
The second sentence of § 29 “requires the state to fund any additional necessary costs of
newly mandated activities or services and increases in the level of such activities or services
from the 1978 base year.” Judicial Attorneys Ass’n, 460 Mich at 595, quoting favorably Mayor
of the City of Detroit, 228 Mich App at 396. Section 30 contains no language guaranteeing the
exact composition of the funding, i.e., that the base level of funding guaranteed by § 30 must
contain the same ratio of discretionary funding to restricted funding as existed in the 1978-79
fiscal year. Simply stated, there is nothing in the language of either § 29 or § 30 that prohibits
the state from eliminating a state mandate and then shifting funds formally allocated to the
eliminated mandate to satisfy the state’s obligation under the Headlee Amendment to fund a new
mandate or an increase in the level of a mandated activity or service from the 1978 base year so
long as the total proportion of state spending paid under § 30 is not reduced by the shifting of
funds. Furthermore, as acknowledged by our Supreme Court, the provisions of the Headlee
Amendment do not prohibit the reduction by the state of its financed portion of any existing
activity or service provided by a local unit of government not required by state law, i.e., a service
or activity provided at the discretion or option of the unit of local government. Livingston Co,
430 Mich at 644, 648. In the absence of such a prohibition, and to the extent that general and
unrestricted revenue sharing composed a portion of the total state spending in fiscal year 1978-
1979, the state is free to shift or reallocation that general and unrestricted revenue sharing paid
under § 30 to fund the necessary costs incurred by local units of government in providing newly
enacted state-mandated activity or service or an increase in an existing mandated activity or
service without violating the scheme of the Headlee Amendment.
I believe that such a view of the interplay between § § 29 and 30, as detailed above, best
honors the voters’ intent neither to freeze legislative discretion to enact necessary and desirable
legislation in response to changing times and conditions nor to permit state government
unrestricted discretion in its allocation of support for mandated activities and services. Judicial
Attorneys Ass’n, 460 Mich at 601, 605.
For these reasons I would conclude that state funding provided to units of local
government for new or increased state mandates under § 29 may be counted for purposes of § 30.
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Accordingly, I would grant summary disposition on Count IV of plaintiffs’ complaint in favor of
defendants and grant defendants summary disposition on all other counts.
/s/ Stephen L. Borrello
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