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Michigan Short-Changed Detroit By Millions

Instead of sharing sales tax revenue properly, Michigan kept millions intended for Detroit, effectively bankrupting the city.
Michigan Short-Changed Detroit By Millions
Image from: Karoli

This is one way to kill a city -- short its tax revenue by millions. On purpose.


Michigan communities have missed out on some $6.2 billion in statutory revenue sharing payments over the past decade as lawmakers and governors diverted funds to fill holes in the state budget, according to a new report from the Michigan Municipal League highlighting losses by community.

Detroit, the state's largest city, lost out on $732 million in revenue sharing between 2003 and 2013, according to the report. Twenty two other cities -- from Grand Rapids to Wyandotte -- saw the state divert at least $10 million in sales tax revenue that local leaders believe they should have been entitled to.


However, local leaders say the state has not honored a statutory provision (see: law) that requires it to appropriate additional sales tax dollars to communities based on a standard formula. Over the course of the past decade, those "raids" have added up.

“You can look at pretty much any Michigan community and see where they might be today if the statutory revenue sharing had been fully funded,” Samantha Harkins of the Municipal League said in a statement.

For example, look at Flint, which is now under an emergency manager. Flint will have lost $54.9 million dollars by the end of 2014. The deficit in its 2012 financial statements is $19.2 million. Flint could eliminate the deficit and pay off all $30 million of bonded indebtedness and still have over $5 million in surplus. In Detroit, a city facing the largest municipal bankruptcy in history, the state took over $700 million to balance the state’s books.

Over $700 million. Think of what Detroit could have done with that money. Investments in the city could have been made that would have attracted more business. Instead they cut back on every service there was, closed schools, and effectively closed shop while the state balanced its books on the backs of desperate cities there.

Pathetic management. I don't care who is responsible, Republican or Democrat. There's no excuse for a state failing to abide by its own laws.

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