Cities ask legislators to ensure non-residents pay taxes

Lansing – Michigan mayors on Monday asked the Legislature to act quickly to ensure two-dozen cities collecting income taxes do not lose revenue because non-residents are working at home during the coronavirus pandemic.

Officials warned that without the approval of bills in December’s lame-duck session, the communities could lose up to $160 million in 2020. The proposed “community stabilization plan” would prevent workers, who typically have city income taxes withheld from their paychecks, from seeking refunds.

The Michigan Municipal League also requested that the Republican-led Senate and House let public bodies meet virtually beyond Dec. 31 and tackle “unintended interactions” between a tax-limiting state constitutional amendment – known as Headlee – and Proposal 1, a 1994 overhaul of the tax and school-finance systems. Mayors warned that COVID-19 is permanently closing businesses and reducing occupancy for retail and office space, which could reduce property values and result in cuts to tax revenue.

Ahead of the session, which resumes Tuesday, Democratic Gov. Gretchen Whitmer asked legislators to approve up to $100 million in financial relief for people and businesses hurt by the pandemic and to make permanent the state’s 26 weeks of unemployment benefits. She did not specify how such aid would be distributed.