A new report suggests Detroit could raise between $42 million and $71 million by creating a 1% sales tax that would cost households an additional $167 per year.

The figures come from a Citizens Research Council of Michigan study of potential benefits and risks of local option taxes. It’s the latest in a series of reports commissioned by the Detroit City Council to explore ways to raise new revenue and reduce the property tax burden for residents. It was shared with the council’s Legislative Policy Division.

A local tax could diversify Detroit’s revenue sources, drawing income from visitors while making the city less reliant on property taxes and state revenue sharing.

However, the path to creating a local tax is “a formidable task,” requiring an amendment to the state Constitution, a local ordinance and the approval of Detroit voters.

The report notes that Detroit residents are among the highest taxed in the state. Sales taxes are generally regressive, placing a greater burden on lower-income households, though it wouldn’t apply to groceries, prescription medication and water, plus religious and nonprofit sales.

The maximum expected funding raised by a sales tax is far less than what Detroit collects from other taxes and would represent roughly 5% of the city’s General Fund budget.

“Given the relatively small potential overall revenue raised, and significant challenges to adopting a one-percent local sales tax, local policymakers will have to decide if the potential new revenues are worth the state and local efforts required to secure authorization,” Senior Research Associate Madhu Anderson said in an email.

“Should they decide to move forward, the council could provide some accompanying tax relief when imposing a new local sales tax that would benefit local residents directly and reduce the overall tax burden of residents.”

City documents show the income tax raised $434 million in 2024 while wagering taxes raised $259 million, state revenue sharing contributed $235 million and property taxes generated $142 million.

The City Council‘s interest in adopting a local-option sales tax coincides with recent economic growth and expiration of one-time funding from the federal American Rescue Plan Act.

Pandemic relief funds end in 2026, which “adds to the stakes for the city to find alternative funding streams to support services,” according to the report. 

The report advises Detroit not to pursue changes in state law without widespread support across the state. New data from the University of Michigan suggests other local governments are exploring new revenue sources and face similar concerns about maintaining services in the future. 

A 2025 survey found roughly half of local government leaders from across the state (57%) would support a new local tax if given the opportunity, but only 10% supported a sales tax.

The CRC report argues that local sales tax would better suit other densely populated cities like Grand Rapids and Saginaw instead of rural townships or villages with less retail activity. There may be benefits for tourist destinations across Michigan that experience much larger populations in the summer.

Michigan is among 13 states that don’t allow local governments to create local taxes.

Michigan’s 6% sales tax rate, which does not include any local sales taxes, ranks 38th in the country. Seventeen states levied a combined state and local sales tax rate of seven percent or greater in 2025.

Sheffield shifts resources to poverty prevention

Mayor Mary Sheffield submitted a proposal for new departments and offices under her administration.

Sheffield plans to shift some administrative functions across departments and seeks to establish a new Department of Human, Homeless, and Family Services led by Benita Miller, a Detroit native with experience running family-centered programs in New York City and New Jersey.

Shaefer meanwhile was named chief executive of health, human services and poverty solutions on Monday, tasked with oversight of the new department, plus the Detroit Health Department and Office of Immigrant Affairs and Economic Inclusion.

The Jobs and Economy Team was moved from the Mayor’s Office to the Housing and Revitalization Department. Homeland Security and Emergency Management Services is being shifted from the Mayor’s Office to the Police Department.

The Office of Immigrant Affairs was moved under the Mayor’s Office, which will also host a new Neighborhood Affairs Office.

Sheffield also submitted appointments of several high level positions that require City Council approval, including:

• Human Resources Director Denise Starr
• Planning Director Alexa Bush
• Chief Financial Officer Tanya Stoudemire
• Corporation Counsel Conrad Mallett
• Police Chief Todd Bettison 
• Housing and Revitalization Director Julie Schneider
• Fire Commissioner Charles Simms

The City Council can veto her appointments but can’t make their own suggestions. Confirmations hearings will be scheduled in the Internal Operations Committee on Jan. 23. 

Overheard in CAYMC 

Here’s a look at other topics of interest that affect Detroit.

The Detroit People Mover is hosting meetings for residents to provide input on the future of its downtown railcar system this month. Two meetings will focus on improvement and possible expansion plans.

A drop-in open house event is scheduled from 11:30 a.m. to 3:30 p.m. on Wednesday at the Central Michigan University Detroit Center. An online meeting is planned from 5:30-7 p.m. Jan. 20.

Detroit hotels are posting signs that advertise resources to help victims of human trafficking more than a year after the City Council passed an ordinance requiring it. 

District 2 Council Member Angela Whitfield-Calloway celebrated the installation on Monday at Crystal House Motel. She led passage of an ordinance in May 2024 that required lodging establishments to post a sign providing a toll-free telephone number for the National Human Trafficking Resource Center (1-888-373-7888).

Waters submitted a memo requesting copies of all inspection reports associated with Cass Community Services and Detroit Rescue Mission. This includes violations identified, corrective actions required, and follow-up inspections performed. Council Member Latisha Johnson submitted a similar memo seeking inspection reports for all the housing shelters within the city. 

Santiago-Romero requested a comprehensive report of development projects associated with tax abatements in District 6 from 2022-2025.

Lt. Gov. Garlin Gilchrist dropped out of the race for governor in 2026 to run for Secretary of State instead. Gilchrist’s departure from the gubernatorial race might clear the way for Secretary of State Jocelyn Benson to secure the Democratic nomination. 

Gilchrist is challenging two Detroit residents: Deputy Secretary of State Aghogo Edevbie and Adam Hollier, a former state lawmaker. Ingham County Clerk Barb Byrum is also running for Secretary of State. The position is chosen by Democratic delegates.