Today, the Senate Appropriations Committee passed the General Government budget, SB 177, which contains revenue sharing for local communities. Like the House, the Senate included a specific plan for a new statutory revenue sharing program, based on Governor Snyder’s proposal last month. The committee passed the bill 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. What is similar to the House plan is the following:
The three pots of money will be divided based on these categories and deadlines:
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Each community must produce a citizens guide or “dashboard” by October 1, 2011.
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Each community must develop a plan to increase cooperation, consolidation and collaboration internally and with neighboring jurisdictions by January 1, 2012.
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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.
However, there are some major differences in the Senate version from the House version and Governor's plan. Some of the major differences are:
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The amount each community would receive is based proportionately against their combined Constitutional and statutory funding from FY 2010-11 in the amount of 81.88%. This essentially differs from the House plan in that communities which get large amounts of statutory funding would not be hurt more by the cuts compared to those communities who do not get a large portion of funds from statutory.
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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. This mirrors the House plan, but is different than what the Governor had indicated.
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The employee benefit section does not include references to DB/DC issues as the Governor proposed, and does not reference state employee benchmarks/comparisons as the House plan did - but references specific calculations regarding final average compensation for employees with pensions and a percentage cap toward retirement for non-pension employees. There is also a requirement of an 80/20 split in employees paying for their health care plan.
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As the Governor proposed, communities which get less than $6,000 will not be eligible for any funding.
Please see the specific section of the bill in the attached document, 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 these two different bills to continue moving in the process and that these differences will be worked on in the coming weeks as we approach a final draft which will become the law. Clearly there are still many questions and now that we've seen the drafts we've already been working to ensure the language becomes more clear so our members can easily comply with the new program.
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.
Senate RS.pdf (2.06 mb)
Summer Minnick is the Director of State Affairs. She can be reached at (517) 420-3800 or sminnick@mml.org.
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