Property tax: exemptions; fund from which municipalities are reimbursed for certain revenue lost due to the small business property tax exemption; modify to require that unused funds lapse to the general fund, the official text

Act
No. 27

Public
Acts of 2025

Approved
by the Governor

October
7, 2025

Filed
with the Secretary of State

October
7, 2025

EFFECTIVE
DATE:  October 7, 2025

state of michigan

103rd Legislature

Regular session of 2025

Introduced by Senator Anthony

ENROLLED SENATE BILL No. 565

AN ACT to amend 2000 PA 489,
entitled “An act to create certain funds; to provide for the allocation of
certain revenues among certain funds and for the operation, investment, and
expenditure of certain funds; and to impose certain duties and requirements on
certain state officials,” by amending section 3a (MCL 12.253a), as added by
2023 PA 174.

The People of the State of
Michigan enact:

Sec.
3a. (1) The local government reimbursement fund is created in the state
treasury.

(2) The state treasurer shall deposit money and assets
received under section 21(7) of the use tax act, 1937 PA 94, MCL
205.111, or from any other source in the fund. The state treasurer shall direct
the investment of money in the fund and credit interest and earnings from the
investments to the fund.

(3) Money in the fund at the close of the fiscal year does
not remain in the fund and lapses to the general fund.

(4) The department of treasury is the administrator of the
fund for audits of the fund.

(5) The department of treasury shall expend money from the
fund, upon appropriation, only for the purpose of compensating municipalities
as described in this subsection. Subject to subsection (6), on or before May
31, 2024, and on or before May 31 of each year thereafter, the department of
treasury shall compensate municipalities for the revenue lost during the
immediately preceding property tax year as a result of exemptions claimed under
section 9o(2)(b) of the general property tax act, 1893 PA 206, MCL 211.9o, as
determined by the department of treasury.

(6) If the money in the fund is insufficient to fully
compensate all municipalities that lost revenue as described in subsection (5),
payments from the fund must be prorated amongst those municipalities.

(7) As used in this section:

(a) “Fund” means the local government reimbursement fund
created in subsection (1).

(b) “Municipality” means that term as defined in section 5 of
the local community stabilization authority act, 2014 PA 86, MCL 123.1345.

This
act is ordered to take immediate effect.

Secretary of the Senate

Clerk of the House of
Representatives

Approved___________________________________________

____________________________________________________

Governor