Group: Data points to ‘disinvestment’ in Mich. cities

Jonathan Oosting
Detroit News Lansing Bureau

Lansing – Michigan is one of four states that reduced investments in its cities between 2002 and 2012 and was the only state where local revenues declined during that span, according to a new analysis of U.S. Census data by the Michigan Municipal League.

The local government group said reduced revenue sharing from the state, depressed property tax values and a lack of local revenue-generating options has led to service reductions in communities around the state, including cuts to police and fire departments.

Data from the 2002 and 2012 U.S. Census of Governments shows Michigan “disinvested” in cities like no other state, according to the league. Only Kansas, Minnesota and California also reduced funding to municipal governments during that period.

“We’ve got to find a different way to do things,” Dan Gilmartin, the group’s executive director and CEO, said Monday afternoon during a news conference in Lansing.

A portion of state revenue sharing is guaranteed by the state constitution. But the rest is outlined in state law and must be appropriated each year by legislators, who critics say have not lived up to the promise of a 1998 state statute.

Michigan sent cities, townships and villages about $1.3 billion in revenue sharing payments in 2002, but $917 million in 2012, according to House Fiscal Agency data cited by the league. Funding will increase to $1.03 billion this year, but that’s far below the $1.6 billion prescribed under the 1998 law.

“The bottom line is, the state solved their budget issues on our back,” said Tony Minghine, associate executive director and COO of the Michigan Municipal League.

“At the end of the day it’s that simple. That’s something they’ve been doing strategically going all the way back to governor Engler, throughout the entirety of Gov. Granholm’s administration and continuing to this day (in the Snyder administration).

During the same period, Michigan experienced the worst recession among states in the country. Several times, including 2005 and 2006, Michigan was the only state in the nation that experienced a loss in economic output or gross domestic product.

Minghine and Gilmartin pointed to Flint as an example of a city that has suffered from state cutbacks, noting that it faced issues long before its water contamination crisis garnered national headlines.

Flint received about $6.7 million in statutory revenue sharing payments from the state in fiscal year 2015, down from $13.9 million in 2003, according to an online data tool the group unveiled Monday.

All told, Flint missed out on $63 million in revenue sharing it could have received since 2003, according to the league. Lansing lost $62 million over that span and Detroit lost $872.6 million. Even affluent areas have lost out on funding, including $23 million in Farmington Hills.

“A lot of our knowledge and data tells us that while Flint may be in more dire straits than some, all communities across the state of Michigan are hurting and hurting badly,” Gilmartin said.

He was joined at Monday’s news conference by Eric Lupher of the nonpartisan Citizens Research Group and former House Fiscal Agency head Mitch Bean, who now works with Great Lakes Economic Consulting.

Lupher’s group, in a 2015 report to the state Legislature, said Michigan’s revenue sharing program “bears little resemblance to its prior self” and could be revisited to meet the needs of more communities.

“If the Legislature is serious about the health of local governments, it needs to be funded,” Lupher said Monday of the statutory revenue sharing program.