House panel seeks $4.1M cut in Detroit revenue sharing

Chad Livengood
Detroit News Lansing Bureau

Lansing — A state House committee is recommending Detroit get a $4.1 million cut in state revenue sharing three months after the city emerged from the largest municipal bankruptcy in U.S. history.

The House Appropriations General Government Subcommittee approved a $4.6 billion spending plan Wednesday that changes a formula for municipal revenue sharing and only reduces state funding for Detroit.

The panel’s change redirects $5.8 million that Gov. Rick Snyder budgeted for Detroit and spreads it out across 101 cities, villages and townships across the state.

The redistribution of revenue sharing reduces Detroit’s current state funding by $4.1 million from $195.7 million this fiscal year to $191.6 million, according to the nonpartisan House Fiscal Agency.

State Rep. Laura Cox, chairwoman of the subcommittee, said Detroit can “take a little bit of a haircut” after shedding $5.5 billion in pension and retiree health care liabilities in bankruptcy court.

“They’re taking a 2 percent cut on their revenue sharing,” Cox said. “It’s a very, very small number.”

The Republican-controlled committee rejected an amendment sponsored by Rep. Fred Durhal III, D-Detroit, to restore the $5.8 million for Detroit.

“This would interfere with the city of Detroit’s recovery,” Durhal said.

Cox noted the $191.6 million Detroit would receive next year is still higher than the $189.7 million the city received from the state in the 2014 fiscal year, when Detroit declared bankruptcy.

The proposed paring of state support for the Motor City comes after the Legislature pumped $195 million in state tax dollars into Detroit’s bankruptcy settlement “grand bargain” with retirees to help the city shore up its pension funds and end the Chapter 9 case amicably.

As expected, the House Appropriations general government subcommittee also eliminated all funding for film production incentives for the 2016 fiscal year.

Snyder wanted lawmakers to restore film incentives to $50 million, which had been the current year appropriation until the Republican governor reduced it by $12 million to help eliminate a mid-year deficit.

Cox said she expects the Senate will move to keep some film incentives funding in place.

The House committee also reduced the Michigan Economic Development Corp.’s business attraction budget of $127.8 million by 13 percent or $16.7 million. The money is used to lure companies to expand or relocate in Michigan.

House Republicans decided to cut MEDC’s incentives because of the ballooning cost of business tax credits that are causing strains elsewhere in the state’s general fund budget, Cox said.

Legislative subcommittees are rushing to pass preliminary budgets before lawmakers leave Lansing Thursday for a two-week spring break.

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