Michigan Cuts $33 Million From Local Aid — and 41 Jobs From the Department That Sends It

Michigan's Legislature passed a $75.2 billion FY2027 budget in an overnight session that ended July 3, 2026 — missing its own July 1 statutory deadline for the second year running, though this time without the government shutdown that followed last year's impasse.▸ General Fund spending fell $859 million to $14.1 billion and School Aid fell to $19.8 billion, both smaller than the year before. Inside that larger contraction sits a narrower, more mechanical cut: the Michigan Department of Treasury's own May 2026 revenue sharing projections show the state cutting $33.3 million from the constitutional payments it sends every city, village, and township in Michigan — and the Legislature's own enacted conference report shows the department that runs that formula losing 41 of its own positions in the same budget.

Michigan's constitution requires the state to share 15% of its 4% sales tax with cities, villages, and townships (CVTs) on a per-capita basis — "constitutional" revenue sharing, distinct from the smaller "statutory" formulas the Legislature funds by choice each year.▸ The Treasury department's own consensus projection, updated in May 2026 to reflect weaker sales tax collections, shows the constitutional payment falling from $1,033.87 million in FY2026 to $1,000.55 million in FY2027 — a $33.32 million decline. The two statutory formulas (Standard, and the "3 Formulas" taxable-value/population/yield calculation) are unchanged at $299.13 million and $34.42 million, so the entire net cut, $33.3 million, comes out of the constitutional side. The Legislature's own conference report independently confirms the same number: the Executive's $1,010.08 million recommendation, reduced $9.5 million to reflect the same May 2026 revenue update, lands at $1,000.55 million — matching the Treasury's figure to within $500.

Townships absorb the largest single cut in dollar terms, $16.44 million, followed by non-Detroit cities at $13.88 million.▸ Detroit, which receives its own line because of its size, loses $2.12 million; Michigan's 262 villages, the smallest recipient class, lose $890,000. None of these are large percentage swings for any one city or township — the underlying per-unit rate fell about 3.2% statewide — but they are the same formula local government associations asked the Legislature to protect in a joint statement issued weeks before the deadline, calling revenue sharing "a critical resource that helps local governments deliver the services residents expect."

The same conference agreement that set the revenue sharing numbers also sets Treasury's own headcount.▸ The House Fiscal Agency's summary of the Department of Treasury budget shows authorized full-time-equivalent positions falling from 1,965.5 in FY2025-26 to 1,924.5 in the enacted FY2026-27 budget — a reduction of 41.0 positions, 2.1%. Part of that reduction is explicit: the conference report eliminates 14.0 FTEs by transferring the Prosecuting Attorneys Coordinating Council out of Treasury, and cuts a further 20.0 FTEs from the Bureau of Accounting and Financial Services and Tax Compliance lines "to align appropriations with prior years' spending and the number of filled FTE positions." Treasury's Revenue Sharing and Grants Division — the unit that produces the payment projections behind the chart above — sits inside this same departmental budget.

Figures cover constitutional and statutory revenue sharing to Michigan's cities, villages, and townships only; counties are funded through a separate mechanism not included in the Treasury's CVT revenue sharing table. Dollar figures by recipient type are as printed in the source, rounded to the nearest $10,000, and may not sum to the published grand totals by more than that rounding.