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Published in Economic Development

Municipal leaders call on state lawmakers for ‘community stabilization plan’

BY Monday, November 30, 2020 12:11pm

Municipal officials from across Michigan are calling on state lawmakers to pass bills they say would provide certainty and continuity in the face of revenue declines stemming from the COVID-19 pandemic.

The “community stabilization plan” outlined Monday morning by multiple Michigan mayors, budget experts and the Michigan Municipal League calls for continued virtual public meetings after the end of this year, local income tax collection and the removal of limitations on local millage rates.

Rosalynn Bliss COURTESY PHOTO

“It’s important to note the community stabilization plan does not raise taxes,” Grand Rapids Mayor Rosalynn Bliss said during the virtual press conference. “What it does is ensures the primary revenue streams all of our local governments rely on to provide local services continues as intended.”

Bliss was joined on the call with Port Huron Mayor Pauline Repp and Westland Mayor William Wild, each of whom warned of anticipated cuts to public safety services in the coming years without state action to help restore lost income tax revenue in cities that collect it. 

Officials representing Michigan’s 24 cities that collect a local income tax — the revenues from which have declined with the shift to remote work — have warned for months of impending revenue cuts, which could total up to $160 million in just this year, according to the Michigan Municipal League. 

Although state and federal governments can do so, Michigan law prohibits the collection of local income tax on unemployment benefits. According to the Michigan Municipal League, these 24 cities could lose about $250 million in income tax revenue next year.

One of the stabilization’s three prongs asks lawmakers to allow cities to temporarily collect income taxes “as if employees were working from their places of businesses,” Bliss said.

Local officials are also asking lawmakers to remove restrictions in state law that could slow the collection of property tax revenue. The proposal would allow millage rates to “adjust both up and down depending on the relationship of property value growth or decline to general inflation,” according to the MML.

Eric Scorsone, director of Michigan State University’s Center for Local Government Finance and Policy, said taking the property tax measures would prevent the years-long drag on municipal finances that was seen during the Great Recession a decade ago.

“Cities went into this (COVID-19) crisis in not great shape,” Scorsone said. “2021 and 2022 will be some of the toughest times facing municipal governments, at least since the Great Recession.”

The third component of the community stabilization plan asks the state Legislature to amend the Open Meetings Act to allow public bodies to meet virtually beyond the current sunset of Dec. 31, 2020.

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