This has been a problem since Prop A's inception, something your's truly has been warning against since that very day - but nobody was listening back then. Now that we are in a housing crisis its politically expedient to act; from Michigan Association of REALTORS:

Today, the Michigan Senate took action in passing legislation that aims to stimulate the housing industry in Michigan. The Senate Economic Stimulus Plan gives a boost to the housing industry by providing property tax relief, while putting more money back into the homeowner’s pocket. It does so by offering a window for homebuyers to receive a refundable income tax in the amount of the pop-up tax now and for the duration of their homeownership.

The Senate package (SB 1065, 790, 791, HB 4215, ) alleviates the issue of homeowners who continue to lose equity in their homes, while allowing potential homebuyers to move forward with the dream of homeownership without financial penalties. Senator Jud Gilbert (R-Algonac) and Senator Roger Kahn (R-Saginaw Twp) spoke on the Senate floor today and stressed the importance of “pop up” tax relief in order to boost Michigan’s housing market while spurring the economy.

Details of the legislation include:

• 791 (Kahn substitute) offers immediate substantial relief for Michigan taxpayers who purchase a home within the next 33 months.
• SB 1065 (Cassis) –Increases the Homestead Property Tax Credit from $1200 to $1300 to those who qualify
• 790 (Pappageorge) – Increases the income thresholds of the Homestead Property Tax Credit by $10,000
• 4215 (Gaffney) Extends principal residence exemption to unsold homes

You may recall that a similar package was introduced in the House last year, which implemented an 18-month moratorium on the “pop up”. The Senate plan creates a 33-month window, starting April 1st, 2008 and continuing to January 1st of 2011, for prospective homebuyers to lock in the plan. The plan includes principal residences only. It works by providing an income tax credit to reimburse homebuyers for any “pop up”. Those homeowners with no income tax liability would still receive a check from the State for that “pop up” amount. Jeff Young, 2008 President of the Michigan Association of REALTORS® said, “While the House and Senate plans differ in their mechanics, we are confident that both sides will come together and work to provide aid to homeowners and homebuyers. This will give Michigan’s economy a much needed shot in the arm. I’m extremely pleased that both House Speaker Dillon and Senate Majority Leader Bishop are working on much needed relief. It is obvious that both the House and Senate understand the important economic role the housing market plays. This is a historic time for homebuyers, and it’s a great time to buy.”
 
What is the "Pop Up" Tax?
The "pop-up" tax is the common name for the uncapping of property taxes that occurs upon the transfer of property. The uncapping is a result of the 1994 Michigan Constitution amendment known as Proposal A. In short it is the difference between the current owner's taxable value and the new taxable amount a buyer will pay on the true cash value of the home.

Under Proposal A, a property's taxable value is capped at an increase of the rate of inflation or 5%, whichever is less, thus keeping a home's value artificially low for tax purposes. When the property is transferred, the cap comes off and the new owner begins paying property taxes on the true cash value of the home, not the previous owner's taxable value. This uncapping has become known as the "pop-up tax."

EXAMPLE-- A taxpayer buys a home in 2008 for $200,000. The property's TAXABLE value WAS $140,000 with property taxes of $2,380.
Upon purchase, the home's TAXABLE value will "pop-up" to the MARKET value with the new buyer paying $3,400 in property taxes -- a $1,020 increase.

Because Michigan property values outpaced the rate of inflation since 1994, the true cash value of many homes is significantly higher than their taxable value (about 30-35% higher statewide). Over the years this significant increase in tax liability has become a detriment to a person's buying power. The "pop-up" has the effect of prohibiting seniors from downsizing, pricing younger families out of older markets, forcing development into rural areas, and has taken away an incentive to purchase new homes.