Connecting state and local government leaders
One fiscally distressed city says it is “just one step away from becoming a Flint and a Detroit.”
Warning of strained financial conditions in localities around Michigan, an advocacy group for municipalities there, on Monday, cast the system that fuels local government funding in the Wolverine State as troubled, outdated and in need of reform.
During a news conference in Lansing, leaders from the Michigan Municipal League, and other speakers, pointed to U.S. Census Bureau data, which they said shows that between 2002 and 2012 Michigan was the only state nationwide where municipal general revenues declined.
“When we look at how we fund governments in our state, it’s fundamentally flawed,” said Dan Gilmartin, the group’s executive director and CEO. “It’s a mid-20th century approach.”
“We’ve got to figure out a different way of doing some things,” Gilmartin added.
Between 2002 and 2012, the Census Bureau data the municipal league presented also showed that Michigan saw steeper declines than any other state when it comes to the level of municipal revenue coming from state sources.
“We are strategically disinvesting in our communities right now,” said Tony Minghine, the municipal league’s associate executive director and chief operating officer.
Major factors propelling the fiscal woes of local governments in Michigan, according to those who spoke at Monday’s event, include not only reductions in the amount of state revenue flowing to localities, but also sluggish property tax collections since the Great Recession, and state-imposed constraints on how cities and other localities can go about raising revenue.
Susan Rowe, the mayor of Wayne, a city of about 17,000 residents located just west of Detroit, described during the news conference the difficulties her municipality has faced in recent years.
“Our full-time staff has been cut to dangerous levels,” she said.
The city’s budget, she noted, had gone from from $22 million to $16 million in the last eight years. The police force, Rowe said, had been trimmed from 40 officers to 22, including the chief, while firefighters were cut from 21 to 12. City hall is closed on Fridays due to budget constraints, and city retirees now outnumber Wayne’s active public workers 3 to 1.
“How do you operate with a 50 percent loss of revenues, when we’re still six-square-miles, still over 17,000 people, still have 73.5 miles of roads?” she said. “We cannot cut anymore.”
A spokesman for Michigan House Speaker Kevin Cotter and the House Republicans, said by phone on Monday that, under GOP leadership, the chamber had supported budgets that upped the amount of money going to local governments each year.
"Yes, revenue sharing, funding, went way down and, under the past five years, when we've been here, we've been steadily building it back up," the spokesman, Gideon D'Assandro, said.
"They want more and they want it faster,” he added, referring to local governments. “But so does everybody.”
D'Assandro likened the budget to a balloon.
“If you squeeze one area it's going to kind of bulge out in another area,” he said. “If we want more money for the cities, townships and villages, that means we've got to take it out of the money for schools, or the money for higher education, or the money for job training programs."
In the backdrop of Monday’s event was Flint, where the drinking water supply was found to be contaminated with lead, and Detroit, site of the largest municipal bankruptcy in U.S. history. The Motor City exited bankruptcy about 15 months ago.
“While Flint may be in more dire straits than some,” said Gilmartin, “all communities across the state of Michigan are hurting, and hurting badly.”
Minghine noted that in 2014 the taxable value in the state as a whole was less than it was in 2005. “We’re now stuck there,” he said. “We’re not going to grow ourselves out of this.”
Minghine went on to highlight Census Bureau data that shows state revenues in Michigan grew about 29 percent from 2002 to 2012, while the money the state shared with cities went down roughly 56 percent. “You don’t have to be a math wizard to figure out that those numbers just don’t match up,” he quipped.
The money that Michigan shares with local governments consists of inflexible payments set based on mandates in the state constitution, as well as injections of cash outlined in state statutes. Legislators and the governor have the freedom to adjust the statutory payments.
Figures cited by the municipal league show the overall amount of annual state revenue sharing disbursements diverted from cities, villages, townships and counties totaled about $6.2 billion between 2001 and 2014.
Eric Lupher, president of the Citizens Research Council of Michigan, outlined a report on Monday the group put together last year that looks at how to reform statutory revenue sharing in the state. Central to the recommendations in the report was altering the way that money flows so that it reaches the communities that have the least amount of taxable property and the highest demand for services. “We need to get the money to where the needs are the greatest,” Lupher said.
If Rowe’s remarks were any indication, the city of Wayne may be one of those places.
The city is looking to voters to approve a tax levy in August that would pave the way for Wayne to join a regional public safety authority, she said. This would help the city’s finances.
“We are all just one step away from becoming a Flint and a Detroit,” she said.
“We need the state to keep their promise to the cities,” the mayor added. “We need it to become a priority in the state’s budget. Not just a line item.”
Bill Lucia is a Reporter for Government Executive’s Route Fifty.