What is revenue sharing and why is it important? 

Revenue sharing is the distribution of money from sales tax collections to local units of government — cities, villages, townships, and counties — to fund services that residents count on from their communities. 

These resources help local governments pay for key services that Michigan’s communities and their residents need to thrive. This funding can help local governments fund police protection, fire service, roads, water and sewer service, garbage collection, parks and recreation, and more. 

Where we started

In 1998, the State of Michigan adopted a new method for discretionary revenue sharing that would distribute these resources in a fairer way to communities across the state. This new method was based on a three-factor formula that was to be implemented with a 10-year phase-in plan. 

Before that phase-in plan was complete, the three-factor distribution formula was ripped away just four years later and replaced by a “uniform reductions” method, which booted nearly 1,200 communities out from being able to receive these essential resources. Unfortunately, these  underfunded communities have had to make drastic cuts to the very services their residents depend on — from sidewalk repairs to water infrastructure projects, park improvements to library programs.

What we’re building towards

With our 2025 state budget, Senate Democrats are bringing it back to the 90’s — specifically 1998 — returning to the three-factor revenue formula for discretionary revenue sharing for the ~1,200 communities that had been previously kicked out from the changes that took place in 2002. This distributes these dollars in a more balanced way. This not only ensures all CVTs receive revenue sharing payments, but enables state funding to better adapt to the ever-changing demographics and characteristics of the places we call home — something the previous uniform approach never did. 

The Senate Democrats’ budget also ensures all local units of government receive the same statutory payment they received last year. Overall, the budget includes a 11.5% increase to revenue sharing for both CVTs and counties, ensuring all communities see more funding to support residents’ everyday needs.  

From our rural areas to our urban ones, we are ensuring Michiganders in all corners of the state have the services they need, when they need them— from responsive police and fire departments, quality local water, sewer and trash services, and robust parks and recreation opportunities.