In a news conference held Monday, the Michigan Municipal League and its member localities asked for a community stabilization plan that would provide localities relief from the effects of the pandemic, including allowing localities to offset decreased tax revenue with withholdings from telecommuting workers.
"The community stabilization plan we are presenting to lawmakers will ensure that local governments can continue providing the vital services our residents and businesses need and expect and keep us functioning efficiently as we work to defeat the pandemic," Bill Wild, the mayor of Westland and president of the league's board of trustees, said in a statement.
The league is a nonprofit, nonpartisan organization representing the interests of cities, villages and urban townships in Michigan, according to league spokesperson Matt Bach. The organization has more than 520 community members including cities such as Detroit, Flint and Grand Rapids, Bach told Law360.
The league said the 24 Michigan cities that levy income taxes will lose approximately $160 million in 2020 due to the loss of nonresident income taxes, losses the league said will "devastate" city revenue when paired with the inability for localities to tax unemployment benefits as the state does.
The proposed plan put forward by the league asks the Legislature to authorize localities to continue collecting income taxes from remote workers as if they were working from their normal places of business, saying that the change would be temporary rather than permanent to income tax treatment.
"Even while being forced to close due to the pandemic, these employers still maintain a presence in the city, and the city is responsible for keeping that building safe and secure, along with maintaining all services and infrastructure their residents need," the league said.
Lowered property values and the resulting loss in property tax revenue will also hurt city coffers, the league added. To lessen the blow, the group asked lawmakers to make various changes to property valuation calculations to prevent unintended interactions between different provisions of state law that could worsen revenue losses.
The league also requested that lawmakers extend the existing authorization for public bodies to meet virtually into the new year to allow adherence to public transparency laws while abiding by public health measures.
Anthony Minghine, chief operating officer for the league, told Law360 that while taxing remote workers might be a controversial idea, the league was only asking for a temporary extension of the tax treatment these workers would be subject to in nonpandemic circumstances.
"If ever there was a circumstance that no one on any side of this issue could have anticipated ... this is it," Minghine said. "We don't really think that this is creating an undue or unexpected burden."
Minghine said that even if additional stimulus were to arrive before the end of the year, the league is urging lame-duck lawmakers to deliver cities additional flexibility and relief before tax day on Dec. 31, providing policymakers time to devise solutions addressing more systemic issues holding back local recovery. The current session of the Legislature runs until Dec. 17.
"At the end of the day, if our communities fail, the state fails," Minghine said. "We need a temporary fix to get us through and give us time to deal with this in a more thoughtful way on a longer-term basis."
Leadership for the majority and minority in the state House and Senate did not immediately respond to requests for comment on Tuesday.
--Editing by Neil Cohen.
Correction: A previous version of this story misspelled Bach's name. The error has been corrected.
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