LANSING – The Michigan Municipal League unveiled Thursday proposals to expand the sales tax to services and increase the sales tax by 1 cent, and dedicating the new revenue to local governments.

“This plan presents bold policies to help Michigan cities recover from more than $5 billion in cuts that the state Legislature and governor have made to local communities in the past decade,” said Jacqueline Noonan, Utica mayor and president of the MML. “This plan also protects funding for local services such as police and fire protection from future raids by Lansing, and it proposes to end the decade-long disinvestment in Michigan cities where most of our state’s jobs and people continue to be.”

Other proposed policy actions within the league’s Partnership for Place: An Agenda for a Competitive 21st Century Michigan, include:

Supporting a gasoline tax increase to 37 cents. The increase would ensure the state is able to meet a federal match on road funding in the future, the plan said;

Putting a greater emphasis on transit development through increasing revenues;

Forgiving student loans on an incremental basis. The league’s idea would give each public university and community college student in the state an $8,000 loan, 20 percent of which would be forgiven each year the student remains in the state; and

Advocating for the creation of an optional other post-employment benefits pool, which would be bonded. Local communities could have their other benefits liability assumed by the pool, and make payments.

“We’ve been asked repeatedly by legislators and by the governor’s office, how do we fix the many issues facing our communities? And this agenda, it is our answer,” said Samantha Harkins, director of state affairs for the MML.

Noonan said the state’s system of funding local communities is “archaic,” and allows the Legislature to “simply take funds that were meant for local communities, by law.”

Rep. Sam Singh (D-East Lansing) said now is the time to have this conversation on fixing municipal finance. “If we don’t, we will not have the economic development and growth that we need as a state in Michigan,” he said.

Harkins said the Legislature and various interest groups recognize there are problems with transportation and municipal funding.

“Half of our college graduates are leaving Michigan for other states, so we’re not attracting and retaining talent. And we’re not even discussing in any way land use policy and how to properly utilize our infrastructure,” she said. “That leaves us with two options. We can wither continue to pretend these problems don’t exist, or we can do something about them.”

Sen. John Pappageorge (R-Troy) said the plan does a great job in finding the problem, but the real question is funding it. Pappageorge said various interest groups need to come up with a proposal that is fair.

Harkins said in recent years there have been more legislators coming from local governments, and it is time to bring forward the League’s plan and begin to change the conversation.

Harkins said the 2007 attempt to expand the sales tax to services was a “train wreck.” She thinks if it is done well it can generate a lot of new revenue, but is just an idea to put out there to start a conversation on reinvesting in communities.

However, Harkins said the willingness of the Legislature to raise funds for local communities through new or additional taxes is “not as good as we might like.” But there is a willingness to invest into communities.

Ari Adler, spokesperson for House Republicans, said that talks of increasing the sales tax have only revolved around raising more funds for transportation, and not increasing funds for municipalities.

“The way our tax code is set up and operated has been reviewed over the years, and changed as necessary to put taxpayers first,” Adler said about the MML’s view that the Legislature and the governor have really added to the loss in municipal funding. “So the amount of money coming in and where it is going may have changed. But you are also facing the situation here you have a smaller population in Michigan, because for so many years we were an outbound state … and we’re trying to turn that around.”

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