Michigan Senate Bill SB0358

Michigan 2025-2026 Regular Session

• Introduced: 6/5/25
• Refer: 6/5/25

Caption

Use tax: distribution; disposition of money received and collected; revise. Amends sec. 21 of 1937 PA 94 (MCL 205.111). TIE BAR WITH: SB 0357'25

Impact

One of the key impacts of SB 358 is the restructuring of how funds from the use tax on aviation fuel are allocated. Beginning in the 2024 fiscal year, the bill requires that $75 million annually be distributed into the local government reimbursement fund. This aims to alleviate some of the financial pressures on local governments, providing them with essential funds to support local programs and infrastructures. The adjustments to the distribution of revenue are intended to enhance stability in funding for both state educational necessities and local governmental operations.

Summary

Senate Bill 358 seeks to amend the 1937 Use Tax Act by modifying the distribution of revenue generated from a specific use tax imposed on aviation fuel. The bill mandates that all funds collected from this use tax should be allocated primarily to the state treasury and specifically directs portions of these collections into the state school aid fund and the local government reimbursement fund. This adjustment is aimed at better aligning state funding mechanisms with the demands of local governance and educational financing in Michigan.

Contention

Debate may arise around the implications of the changes proposed in this bill, particularly concerning the balance of funding between local governments and state education needs. Critics of the bill could argue that reallocation of funds might detract from direct educational investments if local governments utilize these reimbursements for unrelated costs or if the distributions do not adequately match the funding requirements of educational institutions. Additionally, there are concerns regarding ensuring that these changes do not adversely affect the existing funding sources for schools, especially if revenue from the use tax fluctuates significantly.