Michigan House approves local government revenue sharing plan

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(The Center Square) – The Michigan House of Representatives approved a bipartisan plan to stabilize state funding for county, city, village and township governments.

Reps Mark Tisdel, R-Rochester Hills, and Amos O’Neal, D-Saginaw, sponsored House Bills 4274 and 4275, which aim to create a dedicated revenue-sharing trust fund to distribute a portion of state sales tax dollars to local governments.

Tisdel, a former Rochester Hills city councilor, said the dedicated fund would ensure local officials can count on consistent state support for their communities.

“People look to their local officials to ensure public safety, keep their communities clean, and maintain beautiful, recreational parks,” Tisdel said in a statement. “Local governments need dependable funding to pay for these needs, but for far too long, state revenue sharing has been inconsistent and often insufficient. Creating a dedicated funding stream will give local officials stability and peace of mind as they provide community services and activities for residents to enjoy.”

Over decades, state law changes have decreased statutory revenue sharing to local governments, partly because revenue sharing fluctuates because it comes from the General Fund, which state officials use to spend on other programs.

Instead, the proposed revenue-sharing trust fund would reserve tax dollars permanently dedicated to revenue sharing with local governments.

The bill aims to deposit at least 8% of the money received and collected from the tax imposed at a rate of 4% into the Revenue Sharing Trust Fund. The nonpartisan House Fiscal Agency projects this plan would set aside $601 million in the next fiscal year.

“Having served on the Saginaw City Council for 13 years and four years on the Saginaw County Board of Commissioners, I’ve seen the detrimental impact that underfunding of revenue sharing has had on our communities,” O’Neal said in a previous statement. “Ensuring we have great places to live, work and play is a key factor in our overall economic success, and I am pleased to lend my enthusiastic support to this legislation.”

Under the bills, starting on Oct. 1, 2024, the state treasurer would have to transfer and disburse money received by the Revenue Sharing Trust Fund from sales tax revenue as follows:

Cities, villages, and townships eligible to receive funding through the city, village, and township revenue sharing program would receive 52.87% of the disbursement, or about $317 million distributed proportionately to eligibility for the 2022-2023 fiscal year.Cities, villages, and townships that were not eligible to receive CVTRS payments would receive 1% of the disbursement, or $6 million distributed on a per capita basis to each municipality based on the most recent federal census.Counties would receive 46.13% of the disbursement, or $277 million distributed in the same proportion that each was eligible to receive payments through county revenue sharing and the County Incentive Program for the 2022-2023 fiscal year. Distributions would be made on the last business day of October, December, February, April, June, or August, as applicable.

HBs 4274-4275 now proceed to the Senate.

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