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Before 1909, Michigan’s cities and villages had very little control over their own decisions. That changed with the Home Rule City Act, which gave cities the power to govern themselves for the first time. As cities grew, so did their need for money to provide services like roads, police, and schools. In 1946, Michigan changed its constitution to require revenue sharing—a system where the state gives part of its sales tax to local governments to help fund these services.
Today, the Michigan Constitution of 1963 guarantees that 15% of the first 4% of the state’s sales tax goes to cities, villages, and townships, based on population. In 2024 this amounted to $333.5 million. This portion of the funding is protected by the state constitution and can’t be changed without a public vote.
Additional funding is also given to counties, villages, and townships through state laws. However, unlike the constitutional funding, this money can be changed or cut by the state legislature each year. To help local governments manage their finances, Treasury offers expert support. Staff work with communities to reduce financial risks, find savings, and connect them with helpful resources—all while promoting transparency and long-term stability.