West Shore Community College v. Manistee County Board of Commissioners, 389 Mich. 287

Summary

The Supreme Court of Michigan considered whether a community college could levy ad valorem property taxes exceeding the voter-approved millage limitation to pay debt service on outstanding bonds. The Court held that statutory and constitutional exceptions permitted debt-service taxes without limitation as to rate or amount, but that the actual purpose of a challenged levy remained subject to judicial determination. The Court remanded for a new trial, placing the burden on the levy’s opponents to prove that the additional levy was not in fact imposed for debt service.

Holdings

1. The statutory limitation on a community college district's tax levy is subject to the exception permitting taxes imposed for payment of principal and interest on bonds or other evidences of indebtedness to be levied without limitation as to rate or amount.
2. A trustees' declaration that a levy is for debt service is not conclusive; the actual purpose of the levy determines whether it falls within the debt-service exception.
3. The courts, rather than the Municipal Finance Commission, county commissioners, or county equalization director, must decide a properly presented factual dispute concerning whether a challenged over-levy is actually for debt service.
4. Community college trustees are presumed to act lawfully, and opponents of a non-voted over-levy bear the burden of proving that the levy is not in fact imposed for debt service but principally serves another purpose.
5. The record did not establish that the challenged 0.3-mill levy was invalid, but it was insufficient to resolve the factual issue, requiring a new trial.

Questions Presented

1. Whether Michigan law permitted a community college district to levy ad valorem taxes above the voter-authorized millage limitation for payment of principal and interest on outstanding bonds.
2. Whether the trustees' designation of the additional levy as a debt-service levy conclusively established its validity.
3. Which governmental body had authority to determine whether an over-levy was actually imposed for debt service.
4. Whether the existing record established that the 0.3-mill levy was in fact imposed for payment of bond debt service.

Disposition

reversed_and_remanded