State of Michigan FY 2019 budget: Revenue sharing increase

For the second year in a row, Michigan local government units will experience a revenue sharing increase. That’s because the constitutional payment budget for 2019 has increased by $37.2 million over the amount appropriated by the 2018 budget.

Each community’s overall increase will vary, since each local unit has a different mix of CVTRS and constitutional revenue sharing.

The FY 2019 budget also includes the City, Village, and Township Revenue Sharing (CVTRS) appropriation, which was established in FY 2015. That appropriation remains flat at $243 million. Each community’s overall increase will vary, since each local unit has a different mix of CVTRS and constitutional revenue sharing.

The FY 2019 budget recommendation includes $1.3 billion for revenue sharing, broken down as follows:

In order to receive the CVTRS payments in FY 2019, qualified local units will once again need to comply with the same best practices as last year:

• Issue a citizen’s guide to local finances with disclosure of unfunded liabilities.
• Maintain a performance dashboard.
• Create a debt service report.
• Develop a two-year budget projection.

The amount budgeted for distressed CVTRS has been reduced from $5 million in 2018 to $2.5 million in 2019. The state has once again budgeted $6.2 million for “supplemental CVTRS” payments in FY 2019 but added a requirement that funds must be used to pay down debt, pension, or OPEB. Any city, village, or township receiving CVTRS payments will receive an additional payment equal to its population multiplied by $0.807929, rounded to the nearest dollar.

The additional, one-time CVTRS payments that were in the 2018 budget are also part of the 2019 budget and remain flat at a total of $5.8 million. Additionally, $1 million was added as a one-time payment for counties to be used for debt, pension, and OPEB. This one-time payment will be distributed to all counties at a rate of 0.4627 percent of full funding under the Glenn Steil State Revenue Sharing Act.

Overall, the $1.3 billion-dollar appropriation is a 2.8 percent, or $36.1 million, increase over the 2018 budget. Of this amount, $37.2 million is attributable to constitutionally related payments, which means the remaining statutory and supplemental distribution actually decreased by just over $1 million. Sales tax projections are revised throughout the year, and Plante Moran will continue to share this information as it becomes available.