MCCC may lose $1.56 million in funding over the span of eight years if a tax appeal by DTE Energy is finalized.
DTE Energy petitioned the Michigan Tax Tribunal to lower the taxable value of their Monroe Power Plant in May of 2018.
Had the taxable value stayed the same progressive rate, the plant’s value would have eventually reached $516.6 million by 2025. Instead, the negotiated taxable value is estimated to drop to $360 million by 2025.
This would cause a loss of over 30% of the plant’s value in the eight-year span of 2018 to 2025.
DTE also made an appeal for the Fermi 2 nuclear plant’s taxable value, estimated to drop from $404.3 million to $161.7 million.
The Fermi plant is six months behind the legal process of the Monroe plant and is not included in the current agreement.
An assessed value is how much a city assessor determines a property is worth, which factors into the property owner’s tax bill.
This appeal is to combat the assessment DTE was originally given.
Monroe City Assessor Samuel Guich said he considered his options after DTE appealed.
“When DTE made it known that they would likely be appealing, I started looking more closely at all approaches to value,” Guich said.
Guich said he started monitoring sales of the power plant more closely in the early 2010s.
When news spread of DTE wanting to appeal the value in 2017, he began looking at all aspects of value.
“Although taxpayers occasionally appeal their values to the Michigan Tax Tribunal, nothing of this magnitude has happened in the city of Monroe,” Guich said over email.
The Monroe Power Plant currently makes up 8.11% of the city’s general fund.
The city has reached a tentative agreement with DTE, with hopes of being finalized soon.
If a challenge is filed with the tax tribunal, the property owner continues to pay taxes at the rate they’ve been assessed.
That means, based on the appeal, DTE can go back to what they had been paying since 2018 and request the difference plus interest from the tax adjustment, Guich said.
Property taxes are used in part to help fund local entities, including MCCC.
Vice President of Administration Sue Wetzel said tax dollars make up nearly 50% of the college’s revenue stream.
When the college first heard of the petition for the appeal in 2018, she said plans were made to prepare for the loss.
In the general fund, Wetzel said MCCC set aside $500,000 annually in the last two years in case they would have to pay back the difference of DTE’s original tax value.
She said the money has been moved from the general fund to the college maintenance and replacement fund.
Details of revenues and expenditure totals can be found on the college’s website under the “Finance and Operations” section.
The money they’ve set aside would be enough that they could still make up the difference from reserves, Wetzel said.
The amount the college would owe back may vary.
The expected loss in an eight-year period would be $1.56 million in funding, Wetzel said.
The five-year maintenance and repair millage ending December 2020 would also be affected.
This would be a loss of $75,000 only affecting two of the five years.
Typical growth from funding and taxes would also remain more stagnant as a result of the decrease in tax funding.
“It’s a concern over time when you’re not experiencing growth,” Wetzel said.
The loss could limit potential courses, programs and services the college may be able to offer to meet the needs of students and the community, Wetzel said.
“That’s the real challenge I think for the college, is how do you address those needs,” she said.
It is too early in the budget process to determine the effect it may have on future projects.
“A fear would be if we weren’t able to expand programming or services that we provide students that maybe they really need,” Wetzel said.
The chance of something like this happening is not absolute but possible.
Wetzel said the Board of Trustees would not approve a large tuition increase.
“That would be directly in opposition of philosophically what we believe in,” Wetzel said.
She said the affordability of education for everyone in the community is the mission of the college.
Wetzel said the college will estimate their revenues and present to the board a balanced budget.
They work to put together a preliminary recommendation on tuition for the board to discuss during a meeting in February, followed by a vote on tuition at a March meeting.
Wetzel said with it being an eight-year plan, the losses can be planned out accordingly, rather than if it changed annually.
The college can then predict what the values are going to be so that they can budget accordingly.
“While we’re disappointed that the value is decreasing, we at least have predictability of what that value is going to be over the next years,” Wetzel said.