A two-bill package to support Michigan’s cities, villages, townships and counties that was introduced in the Legislature this week will go a long way to providing much needed financial stability for local governments.
Senate Bills 182 and 183 sponsored by Senator Mike Webber (R-Rochester Hills) and Senator Jeremy Moss (D-Southfield) respectively, and House Bills 4274 and 4275 sponsored by Representative Amos O’Neal (D-Saginaw) and Representative Mark Tisdel (R-Rochester Hills) respectively, would establish a “Revenue Sharing Trust Fund” in the Michigan Department of Treasury. Through this trust fund concept, Michigan would dedicate a portion of general sales tax revenue to a restricted fund for the purposes of distributing those resources to cities, villages, townships and counties. To create the fund, these bills would amend the Michigan Trust Fund Act and the General Sales Tax Act.
“This Revenue Sharing Trust Fund is years in the making. This fund will return more townships to consistent funding that they can rely on to provide the services their taxpayers and residents need,” said Neil Sheridan, MTA executive director. “We look forward to working with the Legislature to get these bills across the finish line.”
Here is what other lawmakers and municipal leaders supporting the bill have to say about it:
- “Our residents depend on fully-funded services from our city and township halls. I’ve long worked as a legislator to boost the shared revenues from the state to our local communities back home,” said Senator Jeremy Moss, D-Southfield. “More than a decade ago, I served as a member of the Southfield City Council and saw first-hand the dire financial consequences of the state underfunding statutory revenue sharing year after year. This Revenue Sharing Trust Fund would be a key step forward in supporting our local governments.”
- “Investing in our communities and the services they provide isn’t a partisan issue,” said Senator Mike Webber, R-Rochester Hills. “Having served on the Rochester Hills City Council for seven years, I’ve seen the economic importance of having strong communities. This trust fund will help protect municipal resources and benefit every corner of this state.”
- “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,” said Representative Amos O’Neal, D-Saginaw. “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.”
- “As a former council member from the City of Rochester Hills, I’m pleased to lend my support to this creative solution to begin addressing a long-standing issue in our state,” said Representative Mark Tisdel, R-Rochester Hills. “This trust fund will give our communities much needed, consistent funding, allowing them to improve the quality of life for their residents and provide high quality services to businesses for years to come.”
- “Should these bills pass, it would be a significant step forward in preserving resources for local units of government that can be used to provide services, invest in infrastructure, improve quality of life, and attract talent and business,” said Dan Gilmartin, CEO and executive director of the Michigan Municipal League.
- “The vital measure here is to create a Revenue Sharing Trust Fund that has dollars that are not vulnerable to the annual budget politics in Lansing,” said Steve Currie, executive director of the Michigan Association of Counties. “Counties across the state are struggling with the means to provide the social safety net services they are charged with. Stable, predictable revenue sources are essential for building a budget and delivering on our responsibilities.”
Ultimately, these bills would require a statutory change by the Legislature to reduce funding below current levels. It is this statutory protection, in the form of the trust fund, that creates the distinction from how we fund revenue sharing today and it being subject only to the annual appropriations process.
A brief history of revenue sharing: State revenue sharing began in the 1930s when Michigan began taxing enterprises that held licenses for alcoholic beverages. In 1946, the state constitution was amended to provide a constitutional revenue sharing payment based upon a percentage of the sales tax collections, to be distributed to municipalities on a per capita basis. There have been numerous changes to the statutory revenue sharing base since the 1930s. However, statutory revenue sharing always was fully funded until the state temporarily reduced statutory revenue sharing during the recession of 1980-1983.
In 1998, state policymakers amended the law to provide that statutory revenue sharing would be based upon a percentage of sales tax collections. It is this formula that has not been fully funded annually since 2001 and in subsequent years the appropriations process eliminated funding to over 1,100 municipalities. To date, statutory revenue sharing to local governments has been underfunded by more than $10 billion since 2002.