Jackson Hosts Michigan Municipal League Municipal Finance Road Show

Michigan Municipal League’s Anthony Minghine is in the midst of a statewide tour of Michigan cities to educate the public, media and legislators about the complete failure of the way the state funds our communities. Our latest stop was in Jackson today (Monday, Aug. 15).

It is a pleasure to be in Jackson and see all the work being done, including an impressive downtown street-scape improvement project and the expansion and revitalization of Horace Blackman Park where the Consumers Energy headquarters was. We want to thank Jackson City Council Member Dan Greer (MML board member), Jackson Mayor Bill Jors and city staff  for helping coordinate today’s visit, that concludes tonight with a town hall meeting on the issue. But like cities all across Michigan, Jackson is feeling the severe financial pressures created by Michigan’s broken municipal finance model. Since 2002, Jackson has lost more than $19 million in revenue sharing from the state. Jackson is a decent town now and still making strides, but just imagine what the city could’ve done with that $19 million?

Below is a look at some of the information we shared in Jackson today. You can find more details at SaveMiCity.org.

A new report – “Michigan’s Great Disinvestment: How State Policies Have Forced Our Communities into Fiscal Crisis” – was prepared for the Michigan Municipal League (MML) using information from state and local records as well as census data.

It shows:

• Since 2002, Michigan has cut state support for cities more than any state in the nation. According to U.S Census data, from 2002 to 2012, the average state increased municipal revenues by 48 percent. Revenues declined in five states, including Michigan, where the decline was 57 percent. The next largest cut was in Kansas, which cut support by 14 percent.

• Michigan has lost more public sector jobs than any other state since 2000, mainly at the local level. In 2000, there were 450,000 employees in the local sector, including K-12 education. This number dropped to 354,000 in November 2015. Since 2000, the number of police and fire jobs has declined by over 5,000.

• Michigan is the only state where total municipal revenue declined from 2002 to 2012, an 8 percent reduction before considering inflation. Revenues remain below the 2002 level for most communities.

• The ability of cities to respond to the sharp declines in revenues is limited by the constraints and limited revenue flexibility caused by constitutional and statutory limitations.

How is this possible? State policies that hamstring cities by harnessing property taxes, cuts in state revenue sharing and a requirement that cities get state permission before increasing most taxes all bear a large part of the blame.

The situation is not getting better. In 2015, Jackson lost more than $2.3 million in statutory revenue sharing. That’s 10 percent of its $23 million general operating budget. Since 2002, the city has lost over $19 million and Jackson County area communities have lost a combined $41 million-plus. This fiscal year, the city is expected to get $4,238,895 in revenue sharing, which is a 0.4 percent reduction over last year. In other words, even as the state’s economy is growing, the state legislature is cutting the money it gives to Jackson.

In the fiscal year 2016-17 budget that starts Oct. 1, Jackson is expected to receive a meager 1 percent increase. Meanwhile, townships in the county will get a 1.6 percent increase.

For cities, revenue sharing is typically the second highest source of income (second only to property taxes) and it has consistently been cut by the state since 2002.

Revenue sharing is particularly vital for core cities like Jackson that have a significant role in providing services for its region.

Michigan is one of only a handful of states that so aggressively limits the ability of local governments to raise their own revenues to address their issues, while simultaneously reducing state support.

“Our conclusion is that the State of Michigan has failed our cities,” says report co-author Robert Kleine, a former state treasurer. “We have a dysfunctional system of local government organization and financing. The entire system needs to be overhauled. We cannot have a strong state without strong communities.”

The data clearly demonstrates what has been happening to cities over the past fifteen years. It’s a perspective not often grasped by a public focused more on year-to-year budget changes or local and state officials who may not be in office long enough to see the downward pattern.

This is important to all residents of Jackson County. Young college grads today are migrating to cities that can provide the services they demand. The county will be successful only if the city can attract and retain the best talent. Otherwise, the county will continue to miss out as our nation moves toward a knowledge-based economy.

The bottom line: We must reevaluate how we fund the services that matter most and back them with the resources needed to create places that people want.

Continued fiscal restraints on cities will lead to our state becoming a long-term laggard in prosperity. Learn more about the League’s effort to reform the way our communities are funded at SaveMiCity.org. See how much in revenue sharing your community has lost here: http://www.savemicity.org/search/. Join the conversation here: http://www.savemicity.org/join/.