Taxpayers Sue Snyder for Theft of Revenue Sharing Dollars
TMCG Files Lawsuit Against the State of Michigan for Withholding Billions from Local Communities
DETROIT — Taxpayers for Michigan Constitutional Government (TMCG) filed a lawsuit against
the State of Michigan on September 7, 2016, with the Michigan Court of Appeals in Detroit. TMCG is suing the State for withholding billions of dollars of Constitutional payments to cities, townships and villages throughout the state.
The lawsuit was filed to correct Snyder’s violation of the Headlee Amendment, which stipulates the State must pay 48.97 percent of revenues to communities. The Snyder administration has carried out a practice of purposefully miscalculating these payments. The intentional miscalculation has jeopardized communities throughout Michigan.
According to Eastpointe City Manager Steve Duchane, these miscalculations “has put strain on all municipalities everywhere and wreaked havoc on many of the communities that were hardest hit by the economic recession. The symptoms of underfunding municipalities are clear. Unsafe water, fewer police officers, fewer firefighters, the list goes on…. we are taking action, we are sick and tired of struggling while money that rightfully belongs to us gets spent on select legislative pet projects.”
“The shortfall in payments has been extreme in some years,” said John Mogk, president of TMCG and professor at the Wayne State School of Law. “As a result, local governments, like Flint, have been required to reduce services, work force, pay levels, pensions and, in some cases, turn over local control to the State.”
Snyder placed the Detroit Public Schools under Emergency Management and created an even bigger deficit for the district. As a result of the deficit, the schools were in bad shape, lost students and required a loan from the State at as much as 18% interest.
Detroit Public Schools Board President, Herman Davis says, “I hope that TMCG is successful in getting to the bottom of this. We’ve suffered greatly under the Emergency Managers. The DOJ has found lots of fraud took place under State Control. TMCG has found maybe Emergency Management was not inevitable, afterall! Perhaps, the whole Snyder administration should be audited.”
Retired SurfRay A/S CEO, Bill Cobbs who runs community group, Putting the People First, is also concerned. “ Governor Snyder is ignoring the intent of the Headlee amendment to protect a community’s ability to provide necessary services, like water, railroad tracks, police and fire service for the people who live there.
The Headlee Amendment establishes a balanced fiscal policy framework and protects local governments from State actions that would undermine their fiscal integrity. The Michigan Department of Technology Management and Budget (MDTMB) is tasked with calculating these constitutional payments made by the State.
Their miscalculation occurs because the State includes expenditures which are prohibited from inclusion in the calculation, and in so doing , has hurt municipalities and allowed Constitutional Payments to be kept by the State. Snyder’s DTMB has included in the calculation `four types of prohibited payments:
• Money given to the community to maintain major trunklines on behalf of the State;
• Payments made under Article 9, Section 25, which prohibits a tax shift placing a tax burden on local governments;
• Payments made to public school academies;
• Payments made to fund obligations imposed upon them by the state.
The lawsuit seeks a declaration that funds raised for the purposes prohibited for inclusion in the calculation of tax revenue by Headlee cannot be included in the calculation of the minimum mandatory payment; an injunction barring the State from including funds from these areas in the minimum percentage payment calculation and monetary relief to local governments to recover shortfalls in State spending.
Taxpayers for Michigan Constitutional Government is a non-partisan, Michigan non-profit
organization. TMCG can be found online at michcongov.org.