Cities vs. Townships

There are 2 basis types of townships: general-law and charter. General-law townships are limited to a maximum of 1 mill of general operating revenue. Charter townships can levy up to 5 mills. General-law townships become charter townships for 2 reasons: residents desire to have increased services and to gain additional protections from annexation. General-law townships by virtue of their limited millage provide basic services, usually part paid fire service and a contract for police protection from a county. As townships grow, they experience the need for more service. Fire departments become full-time and they provide emergency medical assistance and transport. There is also a need for a full-time police department. Waste is collected from residents and recreation programs and facilities are constructed.

When 5 mills are insufficient to meet the needs of a growing community, it often leads to the creation of a city. Cities, unlike townships, operate on the basis of a city charter. A charter written and approved by the residents. The charter spells out maximum millage rates, the structure of government, and the rules to modify the charter. A charter township receives it charter from the State of Michigan. All townships receive the same charter.

Sources of Revenue
  • Property Tax - Property tax is a significant source of revenue for local governments. In most cases it represents the largest source of revenue. Prior to proposal A school districts derived most of their revenue from local property taxes. Post proposal A schools now receive the bulk of their revenue from the state of Michigan as a foundation grant. Other local governments continue to look to the property tax as a major revenue source.
  • State Revenue Sharing - Revenue sharing is made up of two parts, constitutional and statutory. The constitutional portion is based exclusively on a community’s population. Statutory revenue sharing is based upon a formula developed by the legislature. Prior to 1996 local governments received a portion of revenue from four taxes levied by the state; sales tax, income tax, intangible tax, and the single business tax. These funds were distributed to communities based upon their population (decade census) and by relative tax effort. Relative tax effort rewarded those communities with high millage rates with more state shared revenues.
    • In 1996 there were a number of changes made to revenue sharing. Income, intangible and the single-business taxes revenues were removed from state revenue sharing (these were off set by the new sales tax revenue. Relative tax effort was phased out as one of the components of the distribution formula. Post-1996, the formula has been modified to include a hold harmless revenue level for cities, as well as, the per capita value of the unit’s total taxable property, support for low wealth communities, and a weighted population component.
    • Statutory and constitutional revenue sharing’s population component is based upon each decade’s census. Following the certification of the census, communities gaining residents should see an increase in revenue sharing equal to its growth rate. Those losing population would like wise see a reduction in funds. Canton’s population increased from 57,000 in 1990 to 76,000 in 2000. Rather than adjusting Canton’s revenue sharing commensurate with its population increase, the state capped Canton’s increase to 8%. As a result, Canton has been denied $2 million per year of revenue sharing for the years 2001-2010.
    • As Canton’s population continues to increase, its per capita revenue sharing declines ($ / person). It will do so throughout the decade. Meanwhile as other communities lose population their per person revenue sharing increases.
  • Other Major Sources of Revenue:
    • As a growing community Canton realizes revenue from site plan and engineering review fees, building permits and a variety of other building related activities.
    • The 35th District court distributes excess revenue to each of the five communities it serves. There has been a steady decline in excess revenue over the last ten years.
    • Revenue is also derived from cable companies who utilize the community’s rights of way. Canton also receives royalties from the operator of the landfill located south of Michigan Avenue and west of Haggerty. It is expected that the landfill will continue to operate for 8-10 years.
    • Additional revenues are generated by programs and service fees. Most of these revenues are generated by the Leisure Services Department.