After months of advocacy by the League, the legislature, with the support of the Governor, took another critical step forward in their efforts to invest in local government and secure those resources long term. We have been very public about our support for the creation of a revenue-sharing trust fund, which will provide predictability and investment for local budgets. This year’s budget not only invests over $100 million in new revenue for cities, villages, townships, and counties, but it also sets up the framework for the implementation of a trust fund.

The final budget agreement represents a compromise between three very different proposals from the Governor, Senate, and House. In total, nearly $670 million will be invested in revenue sharing and divided into three buckets. The breakdown is as follows:

• Statutory Revenue Sharing: $549.7 million
  • Cities, Villages, Townships: $293.5 million
    • Distributed in the same proportion as the current fiscal year
  • Counties: $256.2 million
    • Distributed in the same proportion as the current fiscal year
  • New Revenue Sharing Trust Fund: $75 million
    • Cities, Villages, Township: $40 million
      • Distributed on a three-factor formula that was created in 1998 and based on population, yield equalization, and inverse taxable value per capita
    • Counties: $35 million
      • Distributed based on taxable value per capita
    • New Public Safety and Violence Prevention Fund: $75 million
      • Distributed to cities, villages, townships, and counties based on violent crime statistics

Total investment in revenue sharing for Fiscal Year 25/26 is $699.7 million, up from $560 million in Fiscal Year 24/25. This results in approximately a $140 million increase in direct resources to local government, meaning a 25 percent increase in overall funding.

Couple these new resources with the underpinning of a trust fund for the new money, and we have taken a significant step forward in our efforts to protect every statutory revenue sharing dollar provided by the state in a secure fashion. Our effort now shifts to securing this policy change within the budget implementation bills that will need to pass before October 1.

This is a big win for local government, and the League issued the following statement expressing our gratitude.

“As Michigan’s leading advocate for placemaking, we know that any successful economic development strategy must include efforts to foster thriving communities. We appreciate the Governor and legislature passing a budget that makes a significant investment in revenue sharing. This investment in place aligns with Michigan’s goals for growth and supports prosperity for every community in our state,” said Dan Gilmartin, Executive Director and CEO of the Michigan Municipal League. “These resources will continue to ensure that we can invest in the public safety and placemaking that enhances and promotes community engagement, well-being, and quality of life. With the budget complete, it is now essential to support and enact policy to ensure these resources are secure and can grow in the long term.”   

If you have an opportunity, please take the time to thank your State Senator and Representative for their support of this investment in our communities.

Other Budget Highlights Impacting Local Government:

Economic Development and Housing

• $45.5 million for Talent and Growth to support Michigan’s current and future workforce needs and population growth, including specialized economic assistance to businesses locating or expanding in Michigan to meet their talent and workforce needs, developing customized talent solutions to fill identified talent gaps, and grow Michigan’s population.
• $2.5 million for the Economic and Worker Transition Office to aid Michiganders with the transition to electric vehicles and clean energy, and prepare for the jobs of the future.
• $50 million in continued funding for the Revitalization and Placemaking program, including support for a new program to implement transformational public space development projects that will increase the population by creating high-density, high-amenity, walkable, vibrant neighborhoods and business ownership opportunities for locals.

• $100 million to construct more affordable housing on top of the $50 million set aside for housing for the Housing and Community Development Fund.
• $3.3 million for the Housing Readiness Incentive Grant Program to provide grants to local communities to cover the costs associated with master plan updates, zoning amendments, and other actions to encourage increasing housing supply and affordability.
• $2.5 million for the Office of Rural Prosperity to expand outreach and grant funding in rural communities throughout the state.

Infrastructure

• $509.4 million for water infrastructure to fund lead service line replacement and water infrastructure, and climate change mitigation.

• $48.3 million to provide loans and grants to local communities to support projects associated with lead service line replacement.

• $74.5 million of new one-time funding for local roads and bridges and other critical infrastructure projects.
• $247.6 million of new funding to improve state and local roads, highways, and bridges across the state. The FY25 budget includes a total of $4.2 billion for road and bridge construction projects, including $1.7 billion in federal highway aid from the Infrastructure Investment and Jobs Act.
• $75 million of additional funding to support local transit operating expenses, federal transit capital grants, marine passenger services, rail operations and transit capital matching funds.
• $20 million of federal American Recovery Plan funding to support local transit operating expenses.

• $24 million to support new technology and mobility projects, including drone infrastructure projects, e-bike incentives, and an inductive charging pilot project.

Local Government

• $75 million to establish a Public Safety Trust Fund to provide cities, villages, and townships with additional resources for police services and to support community violence intervention efforts.
• $75 million in a new Revenue Sharing Trust Fund to continue support for all cities, villages, townships, and counties across the state.
• $17 million to fund grants for local prosecutors to reduce caseload per attorney in the counties with the highest levels of violent crime.
• $7.8 million for firearm injury and violence prevention grants, and community violence intervention services to reduce gun violence and save lives.
• $3.2 million for disaster recovery in communities affected by natural disasters.
• $500k for Ground Emergency Medical Transportation (GEMT) implementation resources.

Beyond the Budget

The biggest story of the night beyond what happened in the budget is probably what didn’t happen. Several major pieces of legislation were shelved until the fall including the economic development package that revamped Strategic Outreach and Attraction Reserve (SOAR) Fund, the Michigan Voting Rights Act package of bills, short-tern rental legislation, and a new sales tax exemption for data centers.

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