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Whitmer Signs Bill to Let Sinking Fund Millages Cover School Transportation Costs

May 10, 2023

Crain’s Detroit Business
May 8, 2023
David Eggert

School districts will be able to seek sinking fund taxes to cover transportation costs such as buying and maintaining buses under legislation signed Monday by Gov. Gretchen Whitmer.

Sinking funds, which require voter approval, are savings accounts into which districts deposit millage revenue to pay for certain purposes as they arise. Spending has been limited to new land for school buildings, construction and repairs; school security improvements; and technology purchases and upgrades.

The funds are an alternative to bond proposals by which districts borrow money. The measure, Senate Bill 63, will take effect in early August. It will enable transportation-related spending with sinking fund taxes that are authorized on or after the law’s effective date, not current sinking funds. The maximum millage for a new sinking fund will remain 3 mills for 10 years.

“This legislation gives schools and taxpayers more flexibility to purchase and maintain school buses,” the sponsor, Democratic Sen. Dayna Polehanki of Livonia, said in a statement. “To best serve students, it is important that schools have a safe and reliable bus fleet.”

Also Monday, the Democratic governor signed bills to clarify that equipment used to produce aggregates is eligible for an industrial-processing tax exemption if the product is subject to the use tax. Those measures, which are part of a deal in which some Republicans agreed to help majority Democrats enact a spending bill that included $630 million to prepare a Marshall megasite for Ford Motor Co.’s new electric vehicle battery factory, will cut taxes by approximately $1 million a year.