The House Committee on Michigan Competitiveness advanced a bill this week proposed by state Rep. Ben Frederick opening a new avenue to help rebuild lost revenue sharing state communities have experienced over the last 15 years.
Frederick’s bill reforms how personal property tax funds are distributed. The proposal will implement a consistent, annual plan for distributing so-called “over-collection” payments to make up for previous lost revenue. The distribution of surplus funds will follow current formulas, with 65 percent going to cities, villages and townships and 35 percent going to counties. The total amount in over-collected money in 2017 was roughly $134 million.
The bill is part of a plan using money generated through Michigan’s sales tax to create additional sources of revenue sharing funds, while employing the same distribution formula to cities, villages, townships and counties as current fiscal year planning.
Until recently, revenue sharing had been adversely affected by multiple factors for many years â€“ including a struggling economy and falling property values. Frederick, who served in local office from 2007 until his election to the House in 2016, said he was pleased to see the state moving toward prioritizing funding for local communities.
“I know all too well the difficult choices facing local communities struggling to provide essential services,” said Frederick, of Owosso. “As it stands right now in some localities, payments into retirement benefit plans for employees such as police officers and firefighters are not being met. Payments that do get made in some cash-strapped communities are being diverted away from areas such as current police and fire needs. It’s time we give our local communities additional support so they aren’t wringing out dollars from one budgetary concern to help another.”
Frederick’s bill is part of a reform package bolstering local funding. House Bill 5316 moved to the full House for further consideration.
PHOTO INFORMATION: State Rep. Ben Frederick (right) of Owosso offers testimony for House Bills 5314-16 on Tuesday before the House Michigan Competitiveness Committee. Frederick was joined by (from left) state Reps. Roger Hauck of Mount Pleasant and Rob VerHeulen of Walker. The trio, all of whom previously served in local office, have proposed a revenue sharing package designed to help stabilize finances for local governments across the state.