Opinion: Time is now to invest in Michigan communities
As state lawmakers wind down 2019 and begin to prepare for 2020 and the budget year that lies ahead, many of them are starting to think about Michigan’s future. While Michigan’s budget will always reign supreme in Lansing, making changes to the way local government operates in concert with state budget decisions is the key to long-term prosperity in the Great Lakes State.
For decades, the state of Michigan has disinvested its cities and villages to the point that local governments struggle to survive and thrive in our current climate. This fact comes across loud and clear in the recent Public Sector Consultants (PSC) report — City Revenue Snapshot: Revenue Trends of Michigan Cities 2002 to 2017.
The report shows that the Great Recession of 2008 took a significant toll on municipal revenues in Michigan. The report found that communities have still not returned to pre-recessionary fiscal levels, due to sharp declines in taxable value and reductions in state revenue sharing.
Even though the recession ended nearly a decade ago, municipal revenues have still not fully recovered, and they can’t rebound under the current system. Communities continue to struggle with maintaining important services, funding capital improvements and infrastructure, and addressing underfunded pensions and retiree healthcare plans.
When Michigan is impacted by recessionary pressures, local communities — Michigan’s economic backbone — are hit hardest. Comparing 2002 to 2017, Michigan cities and villages saw their revenues decline by $337.3 million, according to the PSC report. This sum represents money used to support police and fire services, local roads improvement and other crucial activities that make Michigan communities desirable places to live, work and raise a family.
As a state, we have seen people, jobs and entire industries going elsewhere. They are going to cities and states that provide for employees and their families world class schools, solid infrastructure and community amenities that mean something to residents, like public safety, parks and recreation, clean water and more. If state government will not join with local municipalities and invest in these places, our cities will not have the ability to thrive and attract businesses, jobs and people.
To make matters worse, many state economists and large city finance officers say they believe an economic downturn will occur in Michigan as soon as 2020. Cities across Michigan are anticipating their declining revenues in the face of rising concerns over national trade slowdowns, weakening economic indicators, and increasing spending pressures — all of which negatively impact city budgets.
The PSC report reaffirms that Michigan’s cities are in trouble, and the broken economic system in place needs to change. Despite record highs in our country’s stock market, low unemployment and increasing home values, cities are still not able to keep pace with inflation and address the needs of residents under our current fiscal structure.
Since 2002, our state has diverted $8.6 billion away from cities, villages, townships and counties with cuts to revenue sharing — a main source of income for local government. Through education efforts — such as the League’s SaveMICity initiative — we are working to fully fund the state’s statutory revenue sharing formula and increase support for local communities by $600 million each year.
The key to Michigan’s bright future lies not in Lansing, but in local communities. From Marquette to Monroe and every municipality in between we need our elected state leaders to provide solutions that ensure our cities and villages grow to their fullest potential.
Dan Gilmartin is the CEO and executive director of the Michigan Municipal League, a nonprofit organization representing Michigan’s cities, villages and urban townships.