644 Michigan Communities Levy Local Road Taxes

Hundreds of local municipalities across Michigan are getting an infusion of tax revenue to repair roads, generated by property tax levies approved by their voters.

For example, Hamburg Township in Livingston County collected $993,000 in 2018-19 from a voter-approved local road millage that took effect in 2017. The road tax revenue exceeded the $833,000 in general property tax revenue the township collected that same year.

There are 644 local government units in Michigan that levy a dedicated road millage. The Mackinac Center for Public Policy was able to track down the amounts collected by 570 of those millages by looking at local government financial reports. Those 570 property levies generate about $151.5 million a year. This local money is above and beyond the $3.6 billion in state tax revenues being spent on transportation this year.

The largest annual road millage levied by a local unit of government last year was $6.5 million in the city of Warren. A road millage in the city of Southfield brought in $6.2 million, and Washtenaw County’s road tax generated $6.1 million a year.

A report released by the Citizens Research Council of Michigan suggests the state should let municipalities try alternative road funding options, and expand their authority to enact new taxes for the purpose. These taxes could include local income, sales, vehicle registration and gas taxes.The report predicted that more communities are likely to seek voter approval for road millages, and that this could strain governments’ reliance “on the overburdened property tax.”

"We don’t have a position about what to do about the 700-plus local millages currently levied for roads," said Craig Thiel, research director for the Citizens Research Council. "In the immediate term, many of these millages probably could not be replaced by another tax option (e.g., pledged for debt service), but we could see a future scenario where a county or municipal government, given the option, would opt to generate funds to address local road needs from something other than a dedicated property tax millage."

Thiel added: "... providing additional options does not mean that local decision makers will automatically be able to levy a new tax. The Headlee Amendment requires a local vote for any new tax. We would expect local officials would have to make the case to taxpayers, and residents weigh in with a public vote, before levying a new tax. It is our hope that any new tax for highways would be in lieu of local officials pursuing a property tax for roads. Thus, easing some of the pressure placed on taxpayers from an already-high property tax burden."

In some other states, cities already have other ways to levy taxes for roads. For example, Oregon cities are allowed to impose their own fuel taxes. A town can levy a business license tax on fuel dealers, with the amount based on the number of gallons they sell.