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Advocacy Blue Arrows

Issue Advisory

April 13, 2011

House Committee Passes Specific Language
to Replace and Reduce Statutory Revenue Sharing Today

Today at noon, the House General Government Subcommittee on Appropriations unveiled for the first time their specific plan for a new statutory revenue sharing program, based on Governor Snyder’s proposal last month. The committee voted to pass the bill, HB 4274, moments later on a party-line vote.

As the Governor proposed, the bill provides for a new program entitled the “Economic Vitality Incentive Program,” and appropriates $195 million to communities who meet three main criteria. The amount each community would receive is based proportionately against their statutory funding from FY 2009-10 in the amount of 62.96%. That amount is divided into thirds, based on three criteria.

  1. Each community must produce a citizens guide or “dashboard” by October 1, 2011.

  2. Each community must develop a plan to increase cooperation, consolidation and collaboration internally and with neighboring jurisdictions by January 1, 2012.

  3.  Each community shall develop an employee compensation plan which must include various factors (outlined in the attached link) by May 1, 2012.

There is also an appropriation of $5 million to Treasury for a new program for communities who undertake cooperative efforts, which is set to be a grant process developed by Treasury.

At first glance, there appears to be many differences from the recommendations Governor Snyder indicated in March. Some of the major differences are:

  1. Each city, village or township that is got statutory revenue sharing in the State FY of 2009-2010 will be eligible for the new program. There is no provision that excludes communities who received under $6,000 (or any other amount).

  2. The requirement that local communities must produce plans to cooperate and consolidate services does NOT include any past efforts at consolidation and cooperation and ONLY references future efforts in that regard. 

  3. There is NO specific reference to defined benefit/defined contribution plans OR an 80/20 split in health care contributions. Rather, in both instances the reference on retirement and health care is that communities develop a plan that is cost effective in relation to all new state classified employees.

Please see the specific section of the bill in this link, which outlines these proposals in detail. Section 951 references the new program and subsections (a), (b) and (c) outline the three main criteria. We expect this bill to be voted on by the full House appropriations committee and then the full House within the two weeks. Obviously, there are still many questions that we have regarding the proposal that we intend to work on as the bill moves through the process.

The League has testified that we oppose any revenue sharing program that reduces funding to communities, as we have absorbed over $4 billion in cuts to core services in the past 10 years. By passing a bill that cuts funding this significantly, the legislature is signaling their intent to encourage locals to reduce public safety officials and eliminate infrastructure projects, or increase local property taxes to try and maintain some level of services. This disinvestment strategy will not propel Michigan toward prosperity.

Click here to get the contact information for your local legislators.






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