On Tuesday, December 12th, City Council held a Finance and Budget Committee meeting on the City’s tax collection agreement with Livonia School Districts. Committee meetings are not recorded and the VRS team attended in person to learn more about this topic.

This meeting was scheduled in response to a request by members of LPS administration/board at the September 20th Finance and Budget Committee meeting that the 1994 tax collection agreement be revised. The district’s superintendent and almost all of the School Board Trustees attended Tuesday’s meeting.

Background: In 1994 the City entered into an agreement with LPS, Clarenceville School District and Schoolcraft College for a fee structure for tax collection. It was agreed that the annual rate would increase based on City employee pay increases.

LPS pays the largest portion of this fee. In 1994 the collective amount was $284k, currently LPS pays over $470k annually. Over the last 30 years, the district has paid nearly $11M of its collected tax dollars to the City for this administrative fee.

LPS administration/board contends that this is an exorbitant amount that does not match the arrangements of other districts in the state and creates an undue burden for the district (the annual cost is the equivalent of 52 student or 5 teacher salaries). They brought to Council’s attention the Revised School Code (EXCERPT) Act 451 of 1976 380.1611: Except where a city assessed and collected school taxes pursuant to this section prior to December 31, 1974, reasonable expenses incurred by the city in assessing and collecting the school taxes, to the extent that those expenses are in addition to the expenses of assessing and collecting other taxes at the same time and, except as otherwise agreed to by the city and school district or intermediate school district, exceed the amount of any fee and charge imposed by the city on collection of the school taxes, shall be billed to and paid by the school board of education or intermediate school board.

LPS asks that the City provide a dollar amount for how much it costs the City to collect taxes in addition to taxes already being collected in that time period. They would like to renegotiate the 1994 and are willing to pay for tax collection but want the amount lowered.

A few options noted:

• Renegotiate the tax administration fee with LPS (and presumably Clarenceville and Schoolcraft)
• Transfer the tax administration fee to residents at an amount that cannot exceed 1%. Under state law, this can be an administrative action. The City currently collects around $500k from the schools with this fee but if a 1% resident fee was enacted the city would collect over $2M
• The agreement could be exited by either party and LPS would be responsible for collecting its own taxes (no school district does this)

A motion was made to have a resolution approved by City Council to request a report and recommendation from the administration.

This has been identified by LPS as a top priority for its administration and Board and will continue to be a topic of discussion in the new year.