Michigan High Court Weighs Cities’ Access to Billions in Taxes

A Michigan Supreme Court showdown Thursday could end up shifting billions of dollars in state cash to local governments and changing the future of state and local tax policy.

A taxpayer group claims Michigan governors and the Legislature have unlawfully held back enormous amounts of mandatory local revenue sharing for decades—valued between $1.8 billion and $3.8 billion annually—forcing local governments to raise taxes and fees to provide services.

They say the alleged withholding was an accounting bait and switch: A state tax took the place of a local tax used ...