The bill amends the Income Tax Act of 1967, specifically section 695, to revise the distribution of revenue collected from the tax levied under this part. It stipulates that, starting from the 2022-2023 state fiscal year through the 2024-2025 state fiscal year, the revenue must be allocated in a specific order: first, up to $1.2 billion to the general fund; second, up to $50 million to the Michigan housing and community development fund; third, up to $50 million to the revitalization and placemaking fund; and fourth, up to $500 million to the strategic outreach and attraction reserve fund. Any remaining revenue after these allocations will go to the general fund.

Beginning with the 2025-2026 state fiscal year, the bill changes the allocation structure significantly. It mandates that $500 million be directed to the Department of Transportation for county road commissions, followed by another $500 million for cities and villages. The remaining funds will be deposited into the Michigan transportation fund. Furthermore, starting in the 2026-2027 state fiscal year, all revenue collected under this part will be deposited into the Michigan transportation fund, ensuring a consistent funding source for transportation-related projects.

Statutes affected:
House Introduced Bill: 206.695