Has there ever been a time you heard someone clarify that they were referencing a fiscal year and thought, “How much difference could that make?” Here’s a great example of how it can make a huge difference.
The State of Michigan Consensus Revenue Estimating Conference held last Friday (will be summarized in another blog we’ll post tomorrow), a Michigan Department of Treasury webinar earlier this week, and postings on that same department’s revenue sharing website, are all providing important information regarding constitutional revenue-sharing payments to local governments. Unfortunately, each of these sources offers information based on different time frames, which means none of the numbers match!
Sales-tax revenues are projected to decrease approximately 11 percent during the current state fiscal year (ending in September), but revenue-sharing payments – which are based on those collections – are expected to decline 2.2 percent. That alone will leave a lot of people scratching their heads. The current economic volatility is causing confusion. Since every community has different fiscal years, any description of how much revenue sharing will change from year-to-year is completely dependent on which bi-monthly distributions are part of your fiscal year.
Below is a chart derived from the very latest treasury numbers for past and future constitutional revenue-sharing distributions (in dollars). Actual estimates of distributions for your community can be found here. Numbers through April 2020 are actual per-capita distributions. For dates after April 2020, the numbers reflect estimates agreed upon by the Department of Treasury, the House Fiscal Agency, and the Senate Fiscal Agency at the May 15 Consensus Revenue Estimating Conference.
SEMCOG has calculated the total payments that will be received per person for a two-year period for four different fiscal years. For example, a city with a July fiscal year is expected to receive $88.93 for every resident for the current year. That amount is expected to shrink to $77.49 for the fiscal year that begins July 1, 2020 – a 12.9 percent reduction in constitutional payments.
In a second example, a community with an October fiscal year is expected to receive $84.72 for every resident for the current year, but receive only $80.50 for the fiscal year that begins next October – a 5.0 percent reduction. Everyone is receiving the same amount per person for each bimonthly payment; the differences occur based on which group of months fall into your fiscal year.
Cities, villages, and townships depend heavily on constitutional revenue-sharing payments from the state. Resources are now available for local officials to truly understand how COVID-19 and Stay Home Stay Safe have impacted revenue sharing. Significant revenues have been lost, but the fiscal year your community uses will determine which budget needs to be modified and to what extent.
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