Change state revenue-sharing formula

The Detroit News is highlighting ideas from various groups to promote discussion on reform, restructuring government and the economy.

Change state revenue-sharing formula

Idea 18: Change revenue-sharing payments so they fund the services provided in local communities, not the unit of local government.

Why: Local governments sometimes don't look for the most efficient way to provide services and rely on state revenue-sharing payments to subsidize existing practices. Currently, each city, county, village and township receives revenue-sharing dollars -- roughly $1 billion this year -- based on population. Having state dollars follow services and not governmental units allows state government to reward best practices and penalize inefficiencies.

Benefit: A legislative efficiency commission estimates that a new revenue-sharing formula could save $250 million or more a year. It also would also let the governor and Legislature require cost-saving measures on local governments, including creating a four-day, 32-hour work week; rebidding all purchases; contracting out noncritical services to private firms; collaborating with neighboring communities on services; consolidating departments; restructuring debt; and selling revenue-producing assets.

How: Amend the state constitution.

Obstacle: Local and county governments oppose the loss of local control over government programs and the year-to-year budget uncertainty of such an approach, especially when revenue-sharing dollars are already declining. Questions will be raised about how fair such an approach would be to particular communities.

Source: Center for Michigan and Southeast

Michigan Council of Governments