Judgment levy placed on summer tax bill

By: April Lehmbeck | C&G Newspapers | Published July 22, 2015

 Tim Killeen

Tim Killeen


WAYNE COUNTY — Some residents who have taken a look at their summer tax bill have raised questions or concerns about something different on their bill this year — a judgment levy.

The levy was placed on the bill to help the county comply with an approximately $49 million judgment entered against Wayne County in May after the county’s retirement system took the county to court over a funding issue.

County Commissioner Tim Killeen, D-Detroit, has fielded some of the calls from residents with questions or concerns.

“This one-time levy is a Wayne County judgment levy,” Killeen said in an email. “A judgment levy is allowed under Michigan law whereby a judge can order a tax levy onto the tax bills without any vote of a legislative body.

“In this case, the judgment levy was the result of a Michigan Supreme Court decision last December that found that the county had violated the law when it moved some money around within the retirement system and ordered the repayment of $49 million,” he said.

Killeen is not the only one who has been fielding questions from residents.

Grosse Pointe Woods Treasurer/Comptroller Dee Ann Irby said the city has received calls from residents, or residents have come in to ask questions about the levy.

“Their major concern is, is this a one-time levy,” she said.

Because the levy settles the problem that was raised in the lawsuit, this is a one-time judgment. The cost of the levy, which is .9761 mills, is about $35 for the average Wayne County homeowner.

The county, like any government entity, must make an annual required contribution to its pension system each year if the fund is not 100 percent funded. The contribution comes from the general fund.

Many cities and counties in Michigan are short of that 100 percent level, including Wayne County. At one point several years ago, the county had a pension system that was funded in the high 70 percent area. Today, it’s slightly less than 50 percent.

Killeen said that this situation is complex.

He said that four years ago, the county needed to make an annual contribution of $32 million. The previous county executive raised the possibility of moving funding from a separate part of the retirement system that was used to give retirees a 13th check each year due to inflation.

At that time, Killeen and six other county commissioners voted against it after discussions about whether the funding move was legal. However, the plan passed by an 8-7 vote, Killeen said.

Litigation ensued and resulted in about $1 million in legal fees over time, and the matter ended in the hands of the Michigan Supreme Court, which ruled that it wasn’t legal and the money needed to be returned.

Because that money potentially would have grown by about $17 million due to the investment of pension fund dollars over the years, that was added to the amount that needed to be paid back.

That added up to the $49 million for the judgment. When a city or county cannot pay a judgment levy, it can go onto tax bills to satisfy the judgment. The county is not alone in being sued over pension funding issues.

Harper Woods was sued in recent years by its pension system for underfunding the pension fund.

The Wayne County Commission picked up this issue again after the judgment with the thought of using money that had been earmarked to pay down long-term debt to satisfy this judgment.

While Killeen said he sympathizes with the commissioners who wanted to save the taxpayers from a forced additional tax at this time, he didn’t believe it was the best decision for the residents.

He, along with four other commissioners, voted against using the money. It passed by a 9-5 vote with one commissioner absent.

Killeen felt that residents would foot the bill no matter which way the commission moved on the matter. The difference was the total cost the taxpayer would foot if they chose to add to long-term debt, he explained.

“It’s cheaper to pay now than later,” he said.

“I know of no instance that by delaying paying a bill, it becomes cheaper,” Killeen said in an email. “It seemed to me that this was a classic case of ‘kicking the can down the road.’ My feeling was, and is, that it would be less expensive to the taxpayers by getting this judgment paid right now by means of this levy.”

While the commissioners passed the issue with the majority vote, County Executive Warren Evans vetoed the commission’s decision. If the commission wanted to override that veto, it would have needed 10 votes. There weren’t 10 votes, so the levy went on the summer tax bill.

Killeen voted against overriding the veto.

Because the commission was split on the matter, there were commissioners who disagreed with Killeen and some of the other commissioners’ positions about the tax levy.

For instance, County Commissioner Joe Barone, R-Plymouth Township, wrote his views, which the commission released in a news release.

He called the levy a “summer surprise.”

“I understand that imposing this tax without voter input might be legal, but it still doesn’t make it right,” he stated.

Because the issue is complicated, Killeen encourages residents with questions to contact him or stop by his regular chats with residents in the Grosse Pointes, Harper Woods and Detroit.

To see his hours, visit waynecounty.com/commission/district1.htm.