MML #3: Cities Want their Share, Tool Shows Funding Loss by Community

GallowayCollensTOPsunsetREVISEDMML #3: Cities Want their ctechadShare, Tool Shows Funding Loss by Community

(Crystal A. Proxmire, March 26, 2016)

Lansing, MI – Only four states have reduced the amount of tax dollars going to municipal governments, and of those Michigan has decreased funding the most.  Robert Kleine of Great Lakes Economic Consulting spoke about the subject at the Michigan Municipal League’s Capital Conference on March 23.

Kleine said that from 2002 – 2012 there was a nationwide increase of funding local governments by about 48%. In Michigan it was a 57% decline.  The average decline of the other states (California, Kansas and Minnesota) was only 9.4%.

DDAnew01“The question is why are we doing this to our cities?”

“Michigan experienced the largest decline in property values since the 1930s, and the cities’ ability to respond is constrained, Kleine said.  There are “strict limits on local revenue,” and a “structure that incubates local financial distress.”  Michigan has more cities under state supervision than any other state by far, he said.

Easy examples of economic strife can be found in the biggest cities and in the most rural small towns. But every municipality has been significantly impacted by the losses to their budgets.

Kleine used Farmington Hills as an example.  Taxable value fell 30.2% from 2008-2012.  There is a 0.5% increase per year over three years.  At that rate it will take until 2038 to return to just the funding level that was adequate in 2008.  He said this is not the worst example either.  18 other municipalities had even larger declines than that, with Pontiac being the hardest hit.

MML revealed an interactive tool just prior to the conference where people can look up how Red Door Realty Ad _own_your_dreammuch revenue has been lost since 2002.  The page lets people search by municipality.

Some examples in Oakland County:

Auburn Hills $5,705,188.71

Berkley $5,051,725.52

Birmingham $6,536,156.08

Ferndale $11,131,925.18

Lake Orion $869,879.44

Novi $13,291,711.00

Oak Park $17,209,953.94

mendoza adPleasant Ridge $963,702.11

Pontiac $46,140,361.84

Royal Oak $19,306,964.12

Troy 23,511,976.80

Waterford $19,748,450.14

Look up more detailed information and other cities at http://www.savemicity.org/search.

What happens when communities don’t have enough money? They make cuts, often in personnel and in infrastructure investments.  For example, there are more potholes in roads 711 ad pizzaand crumbling bridges, with few people working to fix them.  The number of municipal employees in Michigan has gone from 450,000 in 2000 to 427,000 in 2007 and 354,000 in 2015.  Police and Fire are down over 5,000 positions Kleine said.

 

The problem, Kleine explained, is that the State of Michigan has not been allocating the proper amount of money to the municipalities.  “Statutory revenue sharing is $585 million below what it should be if they were following the law,” he said.

The MML had been focusing much of their efforts on place making and helping cities come up with creative ways to showcase what makes their communities attractive to potential residents.  But the decreases in tax funding have made dreaming about adding placekicking features seem futile.

royal_servicesMML worked with Public Sector Consultants to identify why economic investment in creating a sense of place matters for community development. Their focus now is in helping the public and the legislature understand that funding local governments is important to the cities, villages and townships, and also to the state as a whole.

“Michigan’s flawed policies and legal limitations are drastically inhibiting our cities’ ability to provide critical public services. The data is clear that in Michigan we are starving our cities to the brink of failure,” said MML Executive Director and CEO Dan Gilmartin in a statement. “Our funding model is broken. The revenue sharing cuts at the state level are in addition to drastic reductions in property values. In many places property values are essentially frozen at levels we saw a decade ago and cannot return to pre-recession levels because of quirks in our tax limitations,” said Anthony Minghine, associate director and COO of the League. “It’s a perfect storm that is going to destroy Michigan’s communities. We need to take a comprehensive look at costs, structure, and revenue and set a path for the future that will sustain our cities and the state by creating places that will attract and retain the talent we need to drive the economy of 2016.”Pledge_side_blue

Creating 21st Century Communities is available online along with other research and the city-by-city search tool at www.savemicity.org.

Learn more about the Michigan Municipal League at http://www.mml.org/home.html.

This story is part of a series on the MML Capital Conference that took place March 22-23 in Lansing.   For other MML-related stories see: http://oaklandcounty115.com/?s=mml

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20160326_municipal funding_01 20160326_municipal funding_02GallowayCollensBOTTOMrevised

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