THE IMPACT OF THE 1970 CENSUS ON THE DISTRIBUTION OF
STATE COLLECTED-LOCALLY SHARED TAXES TO LOCAL UNITS
Council Comments No. 827, February 25, 1970
State collected-locally shared taxes are a major source of revenues for cities, villages, townships and counties in Michigan. Last year (fiscal 1968-69) the state distributed almost $350 million to these local units from the state sales, income, intangibles and motor vehicle highway fund (gas and weight) taxes. (This is exclusive of funds distributed to school districts.) The distribution of the sales, income and intangibles taxes is on a per capita basis and the distribution of gas and weight taxes is based on a formula which includes a population factor. Over $200 million of state collected-locally shared taxes was distributed solely on the basis of population. The federal decennial census provides the official population count used in distributing these state collected-locally shared taxes among the various local units. The new census to be taken April 1, 1970, will reflect ten years of population changes in the state as a whole and in individual local units of government. It will have a significant impact on the amount of these taxes received by each local unit.
The April 1, 1970, census count is expected to total 8,850,000, an increase of 1,025,000 or 13.1 percent over the 1960 census of 7,824,000. This increase in population will result in a decrease in the per capita amount of state collected locally shared taxes distributed. The fixed distribution of $9.5 million of the intangibles tax to cities, villages and townships on a per capita basis, for example, will decrease from the present $1.21 per capita to an estimated $1.07 per capita based on the new census as a result of growth in the state population.
Impact on Cities and Villages
In fiscal 1970-71 it is estimated that the distribution of sales, income and intangibles taxes to cities, villages and townships on the basis of the 1970 census will total $16.28 per capita, which is $2.11 per capita less than the per capita distribution would be if it were based on the 1960 census. Motor vehicle highway fund monies distributed to cities and villages on a population basis will be an estimated $7.38 per capita in 1970-71 based on a total estimated incorporated population of 6,350,000, which is $.94 less than the per capita distribution would be if it were based on the 5,638,274 population of cities and villages currently used. Thus, the use of the 1970 census figures in fiscal 1970-71 will result in a decrease of over $3.00 in the per capita distributions of sales, intangibles, income and gas and weight taxes to cities and villages as compared to a distribution based on 1960 census figures.
Impact on Townships and Counties
The per capita distribution to townships of sales, income and intangibles taxes will decrease $2.11 per capita based on the 1970 census as compared to a distribution based on the 1960 census. The per capita distribution of the income tax to counties based on the 1970 census will be an estimated $4.07 per capita, which is $.55 per capita less than a distribution based on the 1960 census. The distribution of gas and weight taxes to counties based on “rural” population will increase by about $.15 per capita (rural population only) as a result of an estimated decrease in the population living in unincorporated areas between 1960 and 1970.
Impact on Individual Local Units
These figures illustrate the potential impact of the 1970 census only on the per capita distribution of state collected-locally shared taxes. The impact of the new census on an individual city, village, township or county will be determined by its population growth between 1960 and 1970 in relation to the growth in total state population of 13.1 percent. Thus, a local unit with a population increase during the decade of less than 13.1 percent can expect a decrease in its revenues from state collected-locally shared taxes (as compared to what it would receive based on the 1960 census), while a local unit with a population increase of more than 13.l percent can expect increased revenues. As a result of the timing of the publication of census data, the new census will have an impact on local revenues during both calendar 1970 and calendar 1971.