Lansing — State Democratic Chairman Lon Johnson and three municipal officials Wednesday accused Gov. Rick Snyder of conducting "hostile takeovers" by using their state revenue-sharing money to cover the cost of the $1.8 billion tax cut he and lawmakers gave businesses in 2011.
The result, they said, is a growing number of Michigan cities face another "takeover" in the form of emergency managers. Detroit last week became the latest and biggest city with a state manager because of huge accumulated budget deficits and almost $15 billion in unfunded liabilities.
Clinton Township Trustee Dean Reynolds accused Snyder of "balancing the books of the state on the backs of cities and townships." Reynolds said the 100,000-population, Michigan's largest, has seen its fund balance shrink to $10 million, down from $22 million in 2002.
That's partly due to revenue sharing reductions and partly the result of recessionary drops in home values and property tax revenues, he said. Since 2009, he added, the township has lost a total of $25 million in annual revenue. "If it keeps going this way, we're going to be down to nothing," Reynolds said. "We just can't cut enough because the money is not coming in."
Snyder and legislative Republicans have noted revenue-sharing money fell because the state lost revenue during the recession. Ithaca council member L.D. Hollenbeck said his city, the Gratiot County seat, is dumping its police department and relying on the county sheriff. Hollenbeck said Ithaca's state revenue-sharing has dropped to $280,000 from a one-time high of $424,000.
"We're going to lose services that people need," said Hollenbeck. "He's taking away from elected officials and putting us in a real bind."
Ann Arbor council member Chuck Warpehoski said while Ann Arbor is OK for now, more trouble is ahead with the prospective removal of personal property taxes on business equipment and factory machinery, a big revenue source for many local governments.
Michigan Republican Party spokesman Matt Frendewey said pinning the blame on Snyder for municipalities' financial woes is "distasteful."
"When you have a city with more than $14 billion in long-term liabilities, you can't say that's because of a business tax. Those jobs end up creating revenue, so you don't get to that point because of something Snyder did 24 months ago."