Revenue sharing: cities and villages; withholding of payments for enactment and enforcement of certain sanctuary policies; provide for. Amends sec. 21 of 1971 PA 140 (MCL 141.921). TIE BAR WITH: HB 4338'25, HB 4339'25

2025-2026 Regular Session Introduced by Greg Alexander and 16 co-sponsors

HB 4342 withholds state revenue sharing from Michigan cities, villages, townships, and counties that enact sanctuary policies, starting FY 2025–26, unless HB 4338 and HB 4339 pass.

REFERRED TO COMMITTEE ON GOVERNMENT OPERATIONS

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Purpose

HB 4342 amends the Glenn Steil State Revenue Sharing Act (1971 PA 140) to make state revenue‑sharing payments conditional on local compliance with two companion bills (HB 4338 and HB 4339). It is intended to withhold statutory revenue sharing from municipalities or counties that adopt or enforce certain “sanctuary” policies that limit cooperation with federal immigration authorities.

Key provisions

Amends section 21 (MCL 141.921) of the Glenn Steil Act.

Adds subsection requiring the state treasurer to withhold any payment a city, village, township, or county is eligible to receive under the Act if that local unit “enacts or enforces a law, ordinance, policy, or rule” that violates the Local Government Sanctuary Policy Prohibition Act (HB 4338) or the County Law Enforcement Protection Act (HB 4339).

The withholding applies for each fiscal year beginning on or after October 1, 2025 (i.e., starting with FY 2025–26) and continues for as long as the locality continues to enforce the violating measure.

The amendment is tied to enactment of HB 4338 and HB 4339; HB 4342 would not take effect unless both companion bills become law.

Existing withholding authorities in section 21 (for missing audits/reports or fiscal deficits) remain unchanged.

Who is affected

Directly: cities, villages, townships, and counties in Michigan that receive statutory revenue sharing under the Glenn Steil Act.

Indirectly: Michigan Department of Treasury (administers withholding), Attorney General and circuit courts (companion bills create enforcement mechanisms), and local governments’ budgets and services that rely on shared revenue.

Fiscal and administrative impact

HB 4342 itself is not projected to create a direct cost to local units except the economic effect of withheld revenue sharing when noncompliant.

The House Fiscal Agency notes potential increased costs to the Attorney General (required to bring enforcement actions under the companion bills) and indeterminate impacts on local courts depending on caseload changes. An additional AG attorney FTE is estimated at roughly $200,000 annually if needed.

Withheld statutory revenue sharing would be redistributed once the locality is found in compliance. Constitutional revenue sharing payments (mandated by the constitution) are not subject to withholding under the Act.

Related/Procedural notes

Companion bills HB 4338 (local units) and HB 4339 (counties) prohibit local “sanctuary” policies that limit communication or cooperation with federal immigration authorities and provide private‑ and AG‑initiated enforcement (injunctions, damages, fees).

Legislative history: filed March/April 2025; public hearing and committee activity in April 2025; passed the House May 1, 2025 (Roll Call 57–49), then transmitted/referred to committee for further consideration.

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