July 25, 2016
State Shared Revenue
For the past several months, I have been reporting to you the loss of revenue to local governments from the State of Michigan. The Michigan Municipal League (MML) and the University of Michigan have studied this quite thoroughly and in particular, Chris Hackbrath of the MML spoke at the summer conference on the topic of Michigan’s broken municipal finance system:
The MAMC summer conference indicated that Michigan’s economy is driven by its municipalities. More than 80% of our GDP is derived from Michigan’s metropolitan regions, yet the fiscal structure that communities live under is so restrained by state law and policy that they have very little ability to invest in themselves to become more attractive to residents and businesses. Simply maintaining basic services is a challenge for cities, villages, and townships all across the state. The MML is working to change that structure by educating state and local leaders about the importance of local communities to our state’s economy and developing policy proposals that focus on the structure of local government, the cost that local governments struggle with, and revising a revenue system that tracks with a down economy, but doesn’t grow when our economy expands. A new website called www.saveMIcity.org that provides facts, statistics, and a calculator that will compute the amount of revenue sharing lost to a community since 2002. The MML indicates that the state of Michigan is in violation of Michigan Constitution. Here are some other facts that were featured on the saveMIcity.org website:
- According to US census data, municipal revenue from state sources increased in 45 states from 2002 to 2012. The average increase was 48%. Revenues declined in 5 states, including Michigan. The decline in Michigan was 57%. The average for the other 4 states was 9.4%, with a high of 14% in Kansas. Michigan is the only state where total municipal revenue declined from 2002 to 2012.
- Statutory revenue sharing to municipalities in FY 2016 is estimated to be $585 million below the full funding of the statutory dedication. The cumulative amount of cuts to statutory revenue sharing for cities, villages, and townships from FY 1998 to FY 2016 is estimated at $5.538 billion (this total increases to $7.5 billion when including counties).
- Adding to the cities problems was the collapse of the housing and financial sectors in 2008, resulting in the largest decline in Michigan property values since the 1930s.
- Cities ability to respond to the sharp declines in revenues is limited by the constraints and limited revenue flexibility caused by constitutional and statutory limitations – among the most severe in the nation.
- Michigan has lost more public sector jobs than any other state since 2000, mainly at the local level. In 2000, there were 450,000 employees in the local sector, including K -12 education. This number dropped to 427,000 by 2007, and employment was 359,000 in April, 2016. GLEC estimates that municipal employment has declined about 20%. Since 2000, the number of police and fire jobs has declined by over 5,000. Chamber Administrator Report Summer Mania is right around the corner! It will be held on August 5, 2016 and will include inflatables, snow cones, cotton candy, a hot dog lunch, a magic show, music, and a car show. Kate Van Auken and her library staff are once again having a book sale and heading up the town-wide garage sales. It will be a fun day for all.
- The Freedom Festival went off without a hitch. The golf outing went well and they had a beautiful day. A new event was hosted at the golf course on the Friday of the festival. It was a Corn Board Tournament and featured over teams participating. That parade was well-received by everyone who attended. Hills & Dales hosted a marathon race through the Village of Cass City. The park was full through-out the whole day. That park events went well. The Chamber is always looking for new events to be added to the roster. For those who are interested, please contact the Cass City Chamber Administrator Judy Keller at the Village office. The Chamber would also like to give a special thank you to the staff of the Department of Public Works (DPW), the Cass City Police Department, and all of the volunteers that helped with the event. It would have been very difficult to pull-off the event without their help
- Friends of Cass City Parks The Friends of Cass City Parks has created an un-endowed fund agreement with the Tuscola County Community Foundation and the Village of Cass City for the purpose of donations being made to improve the great Cass City park. The infrastructure is in-need of many improvements and it is hoped that donations can be made to make the improvements become a reality.