What is the purpose of the millage rollback fraction formula (MRF)?

The millage rollback fraction formula (MRF) serves the purpose of determining the rate of taxable property value adjustments. This formula is essential in the context of property taxation, particularly in Michigan, where it is used to ensure that local governments do not collect more property tax revenue than allowed by the Headlee Amendment.

When property values increase, the MRF is applied to adjust the millage rate downward to prevent governments from benefiting from increased assessments without voter approval. By calculating the MRF, assessors can maintain equity in taxation, ensuring that property owners are not unfairly burdened with higher taxes simply because the overall property values in their area have risen. This process helps keep tax revenue stable and predictable, aligning it more closely with the actual growth in the economy and property values, rather than inflating tax rates merely due to market fluctuations.

Ultimately, understanding the purpose and application of the MRF is vital for assessors and property tax administrators in administering fair and lawful property tax systems.