According to the Headlee Amendment, what must happen when property assessments increase more than inflation?

The Headlee Amendment, which was adopted in Michigan in 1978, aims to limit the growth of property taxes in relation to inflation. When property assessments increase at a rate greater than the rate of inflation, the requirement is for the maximum millage rate to be reduced. This is to ensure that taxpayers are not unduly burdened and that the growth of tax revenue aligns closely with the rate of inflation.

By reducing the maximum millage rate, the Headlee Amendment effectively keeps property tax revenues in check, maintaining a balance between the need for funding public services and protecting taxpayers from excessive taxation due to rapid property value increases. This mechanism serves to uphold the spirit of the amendment, which is to prevent local governments from profiting disproportionately from rising property values without corresponding increases in inflation.