DETROIT – The city of Detroit will be able to continue collecting income and utility taxes under legislation signed into law today by Gov. Rick Snyder.
Currently, only cities with more than 750,000 residents are allowed to levy an additional city income tax and utility user tax. Because Detroit’s population dropped below that threshold in the 2010 census, the city risked losing the revenue source unless lawmakers lowered the population threshold. Losing the ability to collect these taxes would have been a major blow to a city already struggling with deficits.
To prevent the city from falling further into financial distress, Republican and Democrat lawmakers OK’d legislation setting the population threshold at 600,000.
“Not approving this legislation would have pushed Detroit to the brink of bankruptcy,” Snyder said. “In the old days, some would have used this situation as an opportunity to play politics. The fact that lawmakers put the old divisions aside and worked together shows that our culture is changing. It shows that lawmakers in Lansing are working together for a successful Michigan, and we can’t have a successful Michigan without a successful Detroit.”
The governor also acknowledged Detroit Mayor Dave Bing, who attended the bill signing ceremony, and said the legislation affirms the state’s commitment to Detroit.
“Mayor Dave Bing has one of the most challenging jobs in the state. I support his efforts to reinvent Detroit and get the city’s finances under control,” Snyder said.
House Bill 4623, sponsored by state Rep. David Nathan, allows cities with at least 600,000 residents to levy a maximum income tax rate of 2.5 percent on residents and 1.25 percent on non-residents.
H.B. 4624, sponsored by state Rep. Harvey Santana, allows Detroit to continue levying a tax of up to 5 percent on the amount paid for intrastate telephone communication services, electrical energy, steam and natural and artificial gas provide by a public utility. Revenue from the tax must be used to hire or retain city police officers.
The bills are now Public Acts 56 and 57 of 2011, respectively.