Pontiac council approves MOU with Michigan Treasury to administer city income tax, 6-1
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Summary
The council voted 6-1 to authorize a memorandum of understanding with the Michigan Department of Treasury to have the state administer Pontiac’s city income tax beginning in the 2027 tax year; proponents cited capacity and collection advantages, critics warned about local jobs and resident impacts.
The Pontiac City Council voted Oct. 7 to authorize a memorandum of understanding (MOU) with the Michigan Department of Treasury for state administration of the city’s income tax. The measure passed after debate and a roll call vote of 6-1.
Proponents said the state can offer technical capacity, predictable annual costing and a wider collection apparatus that could improve delinquency recovery without the city hiring and training a larger in-house team. Deputy Mayor Stevens and representatives from the Treasury’s city tax team told the council that the state can onboard Pontiac under a one-time implementation cost covered by earmarked IT funds and provide ongoing administration at a projected annual cost the state estimated in its proposal.
Council members asked specific operational questions: how the state will estimate annual costs, whether the city’s two current income-tax FTEs would be retained, and how the process would handle payment arrangements for residents with limited means. State representatives said the MOU includes annual budgeting steps, that posted state positions will be offered to current municipal staff first where feasible, and that the Treasury will maintain customer-service capacity and collection tools the city lacks.
Opponents voiced concern about potential job loss and the effect of more aggressive collection practices on residents who use tax refunds to pay household bills. Council members asked for written clarity on termination terms; the draft MOU includes termination and oversight provisions. The transcript records one councilmember voting no; the final roll call and public statements indicated the MOU was adopted and the city will work with Treasury on transition plans. The council set a follow-up at the Finance & Personnel subcommittee to review operational detail.
Treasury officials said the state will not assume administration until the 2027 tax year, giving the city time for transition and for current staff to remain engaged in operations during the changeover.
