Bill approved by Michigan Senate would cut revenue-sharing payments to local governments

Senate bill would cut revenue-sharing payments

LANSING, Mich. — Local governments are warning that they will be forced to make deeper cuts to law enforcement agencies, fire departments and other services if Michigan lawmakers reduce their tax-sharing payments in the fiscal year starting Oct. 1.

A bill approved 21-17 mostly along party lines Tuesday in the Republican-led Senate would cut revenue-sharing payments to local governments by about 4 percent next fiscal year. That would continue a trend of reduced help from the state at the same time local governments are losing money because of declining property tax revenues during the economic downturn.

Michigan already has lost more than 4,000 law enforcement and fire department personnel statewide over the past decade.

“The biggest service we provide is public safety,” said Summer Minnick of the Michigan Municipal League, which represents many local governments such as cities, villages and townships statewide. “It’s usually the absolute last thing communities want to cut because it’s such a valued service. But it’s been happening and it’s going to continue to happen.”

The budget bill now goes back to the Democratic-run House. The measure likely will end up in a conference committee where lawmakers from both chambers will try to resolve their differences as part of Michigan’s overall budget solution for the next fiscal year.

Democrats including Gov. Jennifer Granholm want to avoid cuts to local government revenue-sharing in the upcoming budget after years of reductions. But Republicans are trying to eliminate a projected $1.7 billion overall budget shortfall for the next fiscal year without tax increases — which means spending cuts in several departments would be necessary to balance Michigan’s budget.

Revenue sharing is included in what’s called the general government budget. Republicans said House Democrats approved a general government budget that doesn’t include enough revenue to pay for all the programs Democrats want funded.

“This Senate bill has no pretend money in it,” said Sen. John Pappageorge, a Republican from Troy.

The Senate also approved its version of a transportation budget for next fiscal year on Tuesday. The bill would take $84 million from other transportation funds to put toward road and bridge work, allowing Michigan to collect $475 million in federal matching money that otherwise could be lost.

Lawmakers don’t appear willing to raise fuel taxes to raise more money for Michigan roads. Opponents of the Senate plan are upset that budgets for welcome centers along highways and other transportation programs would be reduced as a result.

Lawmakers also learned Tuesday they may not be done with budget issues for the current fiscal year ending Sept. 30. A report from the nonpartisan Senate Fiscal Agency projects revenue to the state’s general fund — which helps pay for most state services except schools — is down more than $500 million from estimates made in January.

On the positive side, Senate analysts project the state’s main fund supporting schools is up by about $255 million for this budget year compared to estimates made in January.

Fiscal analysts from the Senate, House and Granholm administration are scheduled to come up with a consensus budget forecast on Friday.

The general government budget bill is House Bill 5880. The Senate transportation bill is SB 1164.