Revenue Sharing

These resources help pay for key governmental services such as police protection, fire service, roads, water and sewer service, garbage collection, and parks and recreation – keeping Michigan’s communities equipped with the resources they need to thrive.  

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 pay for key governmental services such as police protection, fire service, roads, water and sewer service, garbage collection, and parks and recreation – keeping Michigan’s communities equipped with the resources they need to thrive.

Where we started

In 1998, the state of Michigan adopted a new method for 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 their 2025 state budget blueprint, Senate Democrats are bringing it back to the 90’s – specifically 1998 – by proposing to return to the three-factor revenue formula as the way to distribute these dollars in a more balanced way. Under this restored approach, as outlined in Senate Bill 760, all Cities, Villages, and Townships (CVTs) would start to receive revenue sharing payments, including the ~1,200 communities that had been previously kicked out from the changes that took place in 2002. This bill also recommends a 20.5% increase to revenue sharing for both CVTs and counties, ensuring no communities lose out on funds under the new equation. 

By taking this innovative and long-awaited approach to state funding for local communities, everyone wins. 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.