Cuts to statutory revenue sharing first began again in FY 1991 and—with the exception of FY 1998 when the base was revised, and FY 2001 when statutory revenue sharing was fully funded—actual statutory revenue sharing payments have been below full funding each year since.

The League has continuously highlighted these cuts and the devastating impact this reduction of revenue has had on services local government provides. This week, two bills will be introduced in the House that would create a “Revenue Sharing Trust Fund” and dedicate a portion of non-constitutionally dedicated sales tax revenue to the fund annually. These bills will be sponsored by two former municipal officials, Representative Jim Ellison (D-Royal Oak) and Representative Mark Tisdel (R-Rochester Hills).

HB 6133 (Rep Ellison) and HB 6134 (Rep Tisdel) were turned in with nearly 30 sponsors and roughly a 50/50 mix of republicans and democrats. We thank each of them for their support.

Sponsors on the bill include: Mark Tisdel, Jim Ellison, Ben Frederick, Padma Kuppa, Kevin Hertel, John Damoose, John Cherry, Tim Sneller, Ken Borton, Amos O’Neal, Samantha  Steckloff, John Roth, Steve Marino, Gary Howell, Jack O’Malley, Gregory Markkanen, Jeff Yaroch, Rachel Hood, Kelly Breen, Kara Hope, Julie Brixie, Tommy Brann, Regina Weiss, Alex Garza, Terry Sabo, Julie Alexander, David LaGrand, Sue Allor, Ronnie Peterson

We have long desired to fully fund and protect revenue sharing under the law. These two bills would go a long way to preserving resources that are currently being used to fund revenue sharing.

Highlights of the Legislation

Amend the Michigan Trust Fund Act: (Rep. Ellison)

• Establish a “Revenue Sharing Trust Fund” in the Department of Treasury beginning in October of 2022
• Money would be deposited into the trust fund as required by the general sales tax act.
• Any funds in the trust fund at the end of the fiscal year would not lapse.
• The trust fund would be funded annually with $542.7 million in sales tax revenue.
  • $311.2 million would be dedicated to cities, villages, and townships.
    • This would be an increase of $45 million over the current fiscal year and would return CVTs to their 2011 funding level.
    • Funds would be distributed to each city, village, and township in the same proportion that each was eligible to receive in FY21/22.
  • $231.5 million would be dedicated to counties.
    • This is equal to their current fiscal year funding level.
    • Funds would be distributed to each county in the same proportion that each was eligible to receive in FY21/22.
• Any funds deposited into the trust fund in future fiscal years in excess of $542.7 million will be distributed according to the formula within the Glenn Steil state revenue sharing act.
• Requires the governor and state budget director to include this funding in their annual budget that is submitted to the legislature as required by the Constitution.

Amend the General Sales Tax Act: (Rep. Tisdel)

• Beginning in October of 2022, the Department of Treasury would be required every other month to deposit at least $90.4 million of the money received and collected from the rate of 4% sales tax into the revenue sharing trust fund.
• This number would adjust to account for counties that are brought back into the revenue sharing formula under the Glenn Steil state revenue sharing act.

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.

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.

John LaMacchia is the League’s director of state & federal affairs. He can be reached at [email protected] or 517-908-0303.