The Michigan Court of Appeals has upheld a lower court’s decision against the Detroit school district in its battle over collecting operating tax revenue. The ruling means the Detroit Public Schools Community District will have to rely on voter approval on a ballot measure that would allow the district to collect its own operating millage for the first time.

Background

Until now, Detroit Public Schools collected the operating millage and DPSCD received other state funds to pay for daily operations. The August proposal would not create a new tax, but would allow DPSCD to collect the existing tax instead of DPS. Judges Michael J. Riordan, Daniel S. Korobkin, and Philip P. Mariani sided with the Michigan Department of Treasury, agreeing that DPS cannot continue to levy the operating tax once it pays off operating debt.

Lawmakers created DPSCD in 2016 to take over day-to-day school operations while DPS remained responsible for collecting taxes to pay off its $3.2 billion debt. Revenue from DPS’ operating millage is close to paying off a $150 million emergency loan the district received in 2016. DPSCD officials wanted DPS to continue collecting the operating tax revenue to accelerate the payment of the district’s $1.3 billion capital debt and $355 million in state School Loan Revolving Fund debt.

Next Steps

If the district’s ballot measure does not receive voter approval by July 1, 2027, Superintendent Nikolai Vitti has said DPSCD would face a $120 million deficit the following school year. The tax applies only to non-homestead properties, such as rentals and businesses, and is not placed on homeowners.

Original reporting: BridgeDetroit — read the source article.