In recognition of the importance local governments, Governor Whitmer and legislative leaders have reached a budget agreement to address the state’s current year budget situation. The plan calls for eliminating the August statutory revenue sharing payments, but then fully replacing it plus an additional 50 percent. The replacement funding will come from federal CARES Act dollars.

This agreement, as the state manages the fallout from the COVID-19 pandemic, represents a significant boost for municipalities and is the result of substantial behind-the-scenes work by the Michigan Municipal League.

The agreement was released Monday night and it sets forth the framework for budget reductions needed to balance the state’s current year deficit.

Here’s how the portion of the budget agreement related to municipalities will work:

• The state will eliminate this year’s August statutory revenue sharing payment for all cities, villages, townships and counties, saving the state around $97 million.
• THEN, the state will provide a new allocation of federal CARES Act funding worth $150 million to go to the local units impacted by the revenue sharing budget cut. This allocation of CARES Act funding is in addition to the previous CARES Act allocations for local governments that were recently adopted in the state Legislature and await the Governor’s signature.

Additional details are not yet available, but we should have them soon. The actual budget reductions will likely be done through a negative supplemental appropriation bill and that will not be acted upon until the latter half of July. Stay tuned for additional information as it becomes available.