Report 399 | February 2018
In a Nutshell
- In Michigan, the current local government revenue structure is largely disconnected from the local economy, leaving them vulnerable to macroeconomic trends and unable to provide the services needed. Communities need more mechanisms to capture the economic activity taking place within their boundaries.
- Many other states afford their local units of government a number of tax options – general and selective sales, income, transportation, various tourism, and others – to capture economic activity and to create diverse revenue streams.
- Expanding access to local-option taxes in Michigan requires the state to authorize local units to levy different taxes, but would not be levied unless acted upon by the local government and submitted to the voters for approval. Expansion of local-option taxes could be offered to cities and townships, but may be best suited to the regional level of government (e.g., counties or larger regions).