News Story

Municipal Governments Blame State For Their Property Tax Hikes

A presumption that state assistance should only go up

A lobbyist for municipal governments in Michigan said the reason so many local property tax increases were approved by voters on Aug. 7 was that the state has disinvested in cities, townships and villages.

The Michigan Municipal League focused on “state shared revenue,” which is money collected from the state sales tax and distributed to local governments.

“The trend of local millage requests is increasing because the state has repeatedly dis-invested in its own communities and refuses to help raise revenue and change policy and laws to give local communities more revenue-generating options,” the Michigan Municipal League stated on its blog.

However, the state government has sent municipalities more money in recent years, increasing its revenue sharing from $1.0 billion in 2012 to $1.3 billion budgeted for 2018-19, a 10 percent increase when adjusted for inflation.

So local governments have been getting more money in revenue sharing. Nevertheless, they placed 299 tax hike requests on the August ballot, of which 89 percent were approved, according to MIRS News.

The claim of declining state support was also used in the city of East Lansing’s successful campaign to get a local income tax proposal passed in the recent election. The tax will take effect Jan. 1, 2019. The city is projected to get $5.5 million in state-shared revenue in 2018-19. That’s up from $4.8 million it received in 2012-13. When adjusted for inflation, the $4.8 million increases to $5.1 million, which means East Lansing is projected to get an extra $400,000 above inflation over that six-year period.

Michigan Municipal League Director of Communications Matt Bach said municipalities are getting less money if the time frame goes back 17 years.

“While our members appreciate the modest increases they’ve seen in revenue sharing, lawmakers still have yet to fully fund statutory revenue sharing payments to cities and villages since 2001-2002 fiscal year,” Bach said in an email. “We’ve taken a long-term look at the state’s disinvestment in communities. We found that since 2002 the state has diverted from its communities and counties more than $8.5 billion in revenue sharing. And it’s just not us saying this – the House Fiscal Agency has also found that the state has fallen short of fully funding revenue sharing for years.

“The fiscal agency’s June 2018 report on this topic shows Michigan municipalities are getting $400 million less in total revenue sharing in 2017 than they did in 2001-02. The amount includes a constitutionally mandated portion and an additional amount subject to legislative discretion. Looking at just the latter, Michigan’s cities and villages are $650 million below full funding, according to statute. This represents a net cut for local governments.”