Finance committee members spent part of the Aug. 19 meeting reviewing a proposed municipal motor vehicle license excise surtax (referred to in committee materials as a ‘will’ or ‘wheel’ tax) and the potential budget impacts of recent state action. The controller said the council will consider a resolution on the tax at the city council meeting later that night and that consultants have flagged material revenue effects from recent state legislation.

Committee members asked the controller about the effects of Senate Bill 1 and changes to the local income tax (referred to in the meeting as the LIT tax). The controller said Baker Tilly prepared a concise summary of impacts and that she will forward that information to all council members. She told the committee that receipts related to prior county-level LIT distributions are likely to fall and that cities may need to enact their own LIT to replace county-collected amounts; she cautioned that municipalities probably will not be able to fully recoup prior distributions.

The controller said the state-level change will reduce revenues over time and that the larger revenue effect will come in 2028, when certain LIT-related revenues are slated to end under the enacted legislation. She said municipal advisers and other cities are actively reviewing the fiscal impact and that the city is monitoring receipts closely to determine how the 2026 budget should be set.

Committee members requested a simplified presentation and a separate memo explaining the LIT changes, how county decisions will interact with municipal options, and what municipal actions Michigan City might need to take to cover services previously funded by county LIT. The controller agreed to circulate the Baker Tilly summary and any other relevant materials to council members. No formal vote on the excise surtax took place in the finance committee during this meeting.