Local Government Revenue Sources and Spending

Figure 5 depicts the source of funds for county, city and village owned and operated systems. In 1992 local governments' receipts for spending on county and city/village owned highways totaled $1,022.2 million, but just $336.9 million (33.0%) was raised locally. State transfers accounted for $594.0 million of the total local spending, or 58.1%, while federal transfers accounted for the remaining $76.1 million.6 According to a March 1994 Public Sector Consultants report on Michigan transportation funding, state governments on average provided 29.6% of local transportation spending.7 Michigan's state contribution of 58.1% of local revenue sources makes it the country's third largest state contributor to local needs.

These figures show the state's major role in collecting state user taxes and allocating these taxes to local governments. The figures also point out the relatively low level of locally raised transportation spending in Michigan compared with other states. This is an important consideration given the limitations that the Headlee Amendment places on state taxation. It also raises the question of whether additional transportation spending for local needs should be raised at the local level.