Broken Municipal Finance System, SaveMICity Work, Highlighted in Traverse City Column

There is a really nice column by Rob Bacigalupi in the Traverse City Record-Eagle about Michigan’s broken system for funding municipalities. Bacigalupi wrote about our state’s disinvestment in our communities after hearing the Michigan Municipal League’s Anthony Minghine speak to business officials in Traverse City in January. Minghine’s trip to Traverse City involved multiple stops and presentations and resulted in some tremendous media coverage. This column posted March 7, 2018, is a continuation of that coverage.

Bacigalupi is the former executive director of the Traverse City Downtown Development Authority and now serves downtown organizations and developers through Mission North Consulting.

It’s a great column and here is one part we liked in particular:

Another reason local governments have lost ground on funding is related to sales tax. Sales tax is a great way to reward building a strong economy, since tax collections grow as consumers prosper and spend. Unlike in many states where local government can collect sales tax, Michigan allows only the state to collect taxes on sold goods. In return, the state returns a portion of that revenue to local governments, based on population, in what is called “revenue sharing.”

Unfortunately, Michigan has reduced the portion they give locals as Lansing has struggled over the years to balance its budget.

Traverse City has done a great job of creating a thriving economy with strong sales. A 2016 DDA Market Analysis estimated that Traverse City had $1,891,995,486 in retail sales in 2015.

In comparison, the State of Michigan paid out $1,263,713 in revenue sharing to the city in 2016. That represents only 11 percent of the more than $113,300,000 the State took in for sales tax on Traverse City sales in the previous year.

The State of Michigan long ago realized the value to their bottom line of thriving cities like Traverse City. As a result, they encourage urban development through a number of programs including brownfields and DDAs.

Brownfield and DDA TIF (tax increment financing), along with an assortment of state grants geared for downtown development, are some of the few ways municipalities like Traverse City can recoup some of the costs for making a thriving city.

In the long term, Lansing needs to fix what the Michigan Municipal League calls a broken system. Until that time, cities will need to vigorously use these tools — and be creative with local revenue sources — in order to survive and thrive.

Read the full column here: http://www.record-eagle.com/news/business/rob-bacigalupi-michigan-s-municipal-funding-system-broken/article_0490d411-6e3b-52fe-8200-b92457eaa293.html.