League’s Summer Minnick: COVID-19 and Broken System Paint Bleak Financial Picture for Michigan Communities
The current COVID-19 pandemic and it’s impact on Michigan’s communities was the topic of an excellent panel discussion Thursday that included the Michigan Municipal League’s Summer Minnick. The SaveMICity initiative has long talked about how the state’s system for funding local governments is broken and must be fixed and the current pandemic is another example of this.
The panel discussion featuring Summer dove into this topic. The conversation was part of the Lansing Regional Chamber Economic Club forum and it was covered in this Gongwer News Service article. The article, with the headline “COVID-19, Local Budget Impacts Dominate Lansing Chamber Forum” is for paid Gongwer subscribers, but here is an excerpt:
The effects of the new coronavirus on local city, township and county budgets was the topic at hand for panelists Thursday during a Lansing Regional Chamber Economic Club forum.
The forum also touched on revenue stream issues, increased taxes, new millages and innovations that could possibly arise as local units of government wade through the wake of the pandemic. Panelists included Summer Minnick, deputy executive director and CMO for the Michigan Municipal League, Stephen Currie, executive director for the Michigan Association of Counties, Neil Sheridan, executive director for the Michigan Townships Association, and Eric Scorsone, associate professor and director for the Center for Local Government Finance and Policy at Michigan State University.
With his experience in Flint as an advisor to Mayor Sheldon Neeley since November, Mr. Scorsone said everything has been turned upside down for local governments and that it is high time for local units to discuss a possible deal with the state to increase revenue sharing and changes to property and income taxes.
Mr. Scorsone also said that could mean an increase in taxes to cover local shortfalls in addition to state and federal stimulus money, as local governments tend to lag the state or even the national economy.
“I do expect some more challenging times ahead, and now the question is, ‘how do we prepare for those? How do we act in resilient manner,” Mr. Scorsone said. “I think we’re just at the beginning of this crisis, maybe, unfortunately, so we know need to think about how local governments can respond and then also how the state can either not do damage or help local governments in the efforts they’re going to need to make over the next few months.”
Overall, Ms. Minnick said cities and villages have been facing a continuum of crises not dissimilar to what other entities and economic sectors have dealt with over the last several months, including employee safety, keeping essential services up and running and later work on legal interpretations of Governor Gretchen Whitmer‘s various COVID-19-related executive orders.
Mr. Sheridan said the same of townships and their wrangling with Ms. Whitmer’s orders, particularly those allowing leeway in the Freedom of Information Act, which gave local units additional time to fulfill requests, and Open Meetings Act changes so those same units could hold meetings virtually.
As the pandemic enters a new phase heading into fall – with businesses and schools reopened, coupled by fears of a second wave and a possible associated flu epidemic – Ms. Minnick said the devastating long-term financial impact of the disease and what it mean for services will be priority number one for cities and villages. That includes how communities navigate safely reopening still closed businesses to the public and how they are able to best assist social service providers.
The current year isn’t as shocking as I think the next several years are going to be, and so what we’re talking about with our members is preparing them for this long-term outlook,” Ms. Minnick said. “We have a broken municipal finance structure in Michigan where when our property values drop, the property taxes drop and are capped at the rate of inflation. We were just getting to the point before COVID-19 where many of our cities were finally back to where they were in terms of their property value that they can tax on going back 15 years or more.”
The pandemic has cities bracing for another significant decrease in property values in certain areas and because of that drop, they will not be able increase taxes beyond the rate of inflation for another 10 or 20 years, Ms. Minnick said.
Further, Ms. Minnick echoed Mr. Scorsone by saying that local governments don’t bounce back the way that other governments do because of an inherent lack of taxing resources with tighter restrictions.
Mr. Currie and Mr. Sheridan said they agreed with Ms. Minnick’s assessment of trying to find a medium of supporting services and local businesses with few resources. Mr. Currie noted, too, that at least five counties have received direct federal funding for small business loan programs.
The forum was also covered by WKAR Radio here and Michigan Public Radio here. For more information on the state’s broken municipal financial system go to savemicity.org.