Want to improve city finances? Give counties more to do.

Grand Rapids downtown

Taking a more regional approach to local government would improve the efficiency and economics of service delivery. Counties are in a better position to drive technology, elections, tax assessments and other back office functions.

As Bridge identified in a recent article on Michigan’s lost property values, the financial condition of many of Michigan’s local governments remains precarious as a result of the Great Recession. Compounding the problem are the structural problems inherent in Michigan’s local government finance system.  

In a previous guest commentary, I  suggested that the options available to local officials are limited: increase tax rates, cut services, or find new methods of delivering services at a reduced cost.

While some local governments are now levying taxes at higher rates and many governments have reduced or eliminated services, efforts to change the service delivery model have been limited. It is now the time to rethink Michigan’s local government service delivery model.

Two commonly heard criticisms of Michigan local government (other than their inability to prevent or fix potholes) are 1) that Michigan has too many independent local governments and 2) local government should operate more like a business.

I hold out little hope for reducing the number of governments. Individual attempts to merge local governments have gained little traction as evidenced by recent efforts in Grand Blanc, Onekama, and Saugatuck and Douglas. All resulted in the residents of those communities voting to maintain their independent local governments despite the potential for operational efficiencies and savings. People want there to be less government, but they do not want to give up their own.  

A different approach is needed.

Lupher

Eric Lupher is president of the nonpartisan, nonprofit Citizens Research Council of Michigan, the state’s oldest public policy research organization.

With a new report out this week, the Citizens Research Council of Michigan has conceptualized a path that will focus on obtaining efficiencies in service delivery and emulate the franchise model common in business. The concept expands the role of counties to perform back office functions for the cities, villages, and townships within them just as a corporate headquarters would do for its franchise stores.  

It also seeks opportunities for counties to assume responsibility for the delivery of services currently provided by cities and townships, thus freeing scarce city and township resources to be concentrated on developing the identity and place making that will attract people and businesses. And it seeks opportunities for counties to partner with cities and townships in service provision to achieve efficiencies without threatening the identity or uniqueness of the local governments.

This approach would not reduce the number of independent local governments in Michigan, but it would reduce the number of service providers. Think of this as a service consolidation/regionalization as opposed to government consolidation. 

Taking a more regional approach to local government would improve the efficiency and economics of local government service delivery and provide both service and revenue side benefits to counties and their local governments. 

Opportunities for Change

For most of Michigan’s history, counties were tied in their governance to the cities and townships within them. County governance started out as a regional exercise in intergovernmental cooperation, but has now evolved into more of a stand-alone government. It is recommended that new ties between the counties and their local governments be created. These would be based more on the economics of service delivery than on inserting local government officials into the county governance structure as was done previously. 

Counties, as a regional form of governance, are well suited to provide services to residents of smaller municipalities and to partner with larger municipalities to maximize the economies of scale so services can best be provided to benefit residents. It is recommended that counties be positioned as the support system capable of providing services, performing functions, and facilitating cooperation.

The Research Council, through years of research into local government service delivery, has identified a number of services that counties could play a bigger role in providing. 

The first step is to build up the foundation for this new model.  

Improvements in information technology infrastructure are needed to better connect county governments with the cities, villages, and townships within them. Greater connectedness would position the counties to offer file sharing and the development of resources to capitalize on advances in communication. This would allow counties to perform many back office functions on behalf of cities, villages, and townships (e.g., human resources, fiscal services, and document functions, among others). 

Beyond those back office functions not usually visible to the residents of a community, the counties could play stronger roles in such things as tax collection, conducting elections, assessing property, maintaining roads currently under city and village jurisdiction, and aspects of planning and land use.  

County sheriffs can assume responsibilities for policing communities or provide services to support municipal police departments. They also could provide support services to local fire departments. Public works and sanitation services and public transportation services are some of the service areas for which local governments most often collaborate. The expensive nature of infrastructure for these services makes regional bodies and county-to-county collaboration well suited to their provision.

Prerequisites for Change

Conceptualizing change in the local service delivery model cannot occur in a vacuum.  For such changes in service delivery provision to become widespread among Michigan counties, some issues need to be addressed.

First, counties would benefit from modernizing their governance structures by adopting the charter or optional unified models of county governance. Although these models of county governance have long been available, Michigan still has 79 of the 83 counties organized with an archaic structure designed for the 1800s. This organizational model disperses executive branch authority and decision-making, which in turn handicaps service system reform.  

Without governance changes in these counties, officials do not have full latitude to undertake activities and services without state legislative authorization. Like a business, county government needs strong, centralized direction to be an effective regional leader and unifier.

Second, county government officials need to change the culture of county government. Much could be gained by changing the thinking of counties from stand-alone entities to multi-purpose function providers for their local units. Strong county leadership will be needed to gear county services to benefit the local governments and to let their local units know that the county is amenable to working with them to achieve savings.

Finally, counties will require more funding to carry out these service delivery changes.  Those funds could come from new local-option taxes, which are best levied on a regional basis, or by directing new state revenue sharing to counties. Additional revenue sharing dollars sent to counties and distributed in a fashion that recognizes variances in fiscal capacity among the counties would help to enhance the roles counties play.

Any approach at regional governance has to understand and appreciate the population and community variance among counties. Counties in Michigan are not uniform and have many differences in size and population, urban versus rural makeup, revenue levels and sources, and expenditure levels and needs.

The population characteristics and the demand for local government services in Keweenaw or Alpena Counties are very different from that of Kent or Oakland Counties.  

County government will not be better utilized by crafting a uniform plan to be carried out by every county; it will require allowing counties to tailor the assumption of service responsibilities and collaboration to meet their residents’ and local municipalities’ needs, as well as the counties’ abilities.
 

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

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Comments

Thomas Blackstone
Thu, 04/06/2017 - 9:16am

States like Maryland and Florida have mastered strong county service functions. In Maryland all public safety and education functions are are conducted at the county level. In Florida all education services are conducted at the county level. Also, election of sheriff's, prosecutors, drain commissioners, etc. Is totally archaic.

Eric Lupher
Thu, 04/06/2017 - 1:14pm

Mr. Blackstone, you are correct, but the devil is in the details. States south of the Mason-Dixon line and western states do not have townships. You reside either in a city or the county. By default, counties are more active in providing services. When counties prove too big for effective service provision, areas outside of counties often create special authorities to provide the services. There usually is no coordination between these authorities and each feels their service is the most vital for the residents. There are some down sides to Michigan’s townships, but they do force residents to budget and prioritize services and that helps to control costs. Since Michigan is not likely to change its local government governance structure any time soon, our study seeks to make what works in those other states fit into the Michigan model.

Kevin Grand
Thu, 04/06/2017 - 10:08am

I love how this was just "buried" right at the end...

"Finally, counties will require more funding to carry out these service delivery changes.  Those funds could come from new local-option taxes, which are best levied on a regional basis, or by directing new state revenue sharing to counties."

Has the CRC EVER met a tax that they didn't like?

 

Eric Lupher
Thu, 04/06/2017 - 1:24pm

Mr. Grand, Our study begins with the assumption that no new revenues are coming and we need to rethink our local government service delivery model. But even if counties fully embrace our recommendations, the plain fact is that Michigan local governments (including counties) - especially those serving the largest and densest populations - have significantly less resources than they did 15-20 years ago. Some of this is because the tax limitations are serving their intended purposes. But those who designed the tax limitations never could have imagined Michigan's single state recession or the loss of property values that resulted from the bursting of the housing bubble. Access to fewer resources is affecting the ability to provide services - police, fire, parks, roads, etc. - and that will affect the quality of life that make our cities and townships attractive places to live and work.

Kevin Grand
Thu, 04/06/2017 - 3:14pm

Mr. Lupher, how can you look at Gov. Snyder's FY budgets and NOT notice the fact that state spending had gone UP from roughly $47-billion during his first year in office to $54.9-billion just last year?

Is it necessary to remind you about things like PA 174 of 2015, as well?

The revenue IS there.

The problem is that the "leadership" in Lansing, with its penchant for crafting omnibus budget bills, always finds innovative ways to redirect money away from where it should be going.

And as someone who has been following current events for as long as I have here I Michigan, I'll ask the same question again that I posed earlier: When has the CRC ever taken a hard look at a tax or fee hike and said that it was not beneficial to Michiganians?

The same people whose family budgets have taken a harder beating from the last recession as well.

David Waymire
Sun, 04/09/2017 - 10:21am

If you look closely you will see virtually all of that increase came from
Federal funds earmarked for specific purposes, like helping provide medical insurance to the poor. The states general fund, the potential source of additional funding for this idea, is at the same level as in 2000, about $10 billion.

Kevin Grand
Sun, 04/09/2017 - 6:34pm

And if you had looked a little more closer at the SFA numbers, Mr. Waymire, you would know THAT statement was incorrect.

In the FY 09-10 budget, Michigan's match from taxes & fees was just over $25.2-billion. Next year it is projected to be $31.9-billion.

According to my math, that is a $6.7-billion increase!

When you downplay the value of what Michiganians have gone out and earned by utilizing accounting gimmicks, don't be too surprised when we take notice and get a little angry as a result.

THIS is why tax hikes fail.

Barry Visel
Thu, 04/06/2017 - 10:57am

"Finally, counties will require more funding...." I thought the premise of this article was better service at lower cost...until I got to this paragraph. An example currently playing out in Kalamazoo County is the consolidation of 911 services. To accomplish that, citizens are being asked for a substantial increase to the 911 surcharge on our phone bills. At the same time, county officials are trying to figure out how to spend their "savings" from this consolidation scheme. Giving those savings back to the citizens, or using them to offset the increased surcharge, are not options under consideration.

Anonymous
Sun, 04/09/2017 - 8:05am

The City of Portage is planning on returning dispatch funds to it's citizens

John Saari
Thu, 04/06/2017 - 11:33am

Think Community A team or partnership of the County, city/Village, townships could provide the necessary public services, without the wastes and corruption in the Federal and State governments.

Ron Quackenbush
Thu, 04/06/2017 - 11:59am

I have had similiar thoughts for many years. Presently I am a County Commissioner in Ogemaw County. Prior to that I served for 12 years as Township Supervisor and Assessor. I know from a personal viewpoint that many township tasks that were handled by the township are now handled at the county level. My father was a township supervisor in the 1950's and 60's. Mom spread the tax roll on the dining room table with the help of an adding machine and the treasure hand addressed the tax bills. Today many of those tasks are done at the county level via computer. Rural townships were ideal when you had to walk or go by horse to your township officeholders. Today I see many low tax base townships struggle to find qualified people for clerk and treasure and repeatedly turning to the county people for assistance. Furthermore, their one mill general operating millage, which has been Headleed down to about .7 does not garner enough to pay the boards wages and they depend on State Shared Revenue to operate on.

John saari
Sun, 04/09/2017 - 7:49am

Public Services can cross political boundaries. 911 stuff is charged on our phone bills. Our propert tax must pay for minimal public services: Public Safety, Healthcare, Water/Sewer/Solid Waste, Education, Roads/Streets, Public Recreation. Pay-as-go extras. I.e.: gated communities, extra health insurance, bottled water, higher education/trade, toll roads, entrance fees

Cory Johnston
Thu, 04/06/2017 - 3:54pm

While touched on in the comments, Michigan's city, village and township requirements are well over 100 years old (Home Rule City Act of 1909, General Law Village Act of 1895, General Township laws of 1846) and arguably have little relationship to the roles and responsibilities of modern governments with many townships being indistinguishable from cities and many cities having far less services and amenities than townships.
I live in a very small city (1/2 square mile, population of around 900) surrounded by a township with a growing population currently around 35,000. Water, sewer, parks and recreation are all provided by the surrounding township. Police services are provided by the Township who contract it from with the County Sheriff. Assessing is by the County. Library services are a separate joint entity of city and township. Schools are a completely separate entity and all are located in the township, none in the city itself. Half of our streets are State or County roads so snow removal and maintenance are done by County and City, often at the same time. We have no vote on police, water, sewer, parks and recreation as unlike the Village we once were, we have no vote in the township that provides them by contract.
As a city, we are essentially built out so there is very little ability to provide new property tax revenue and as a historic city, no one wants to tear down old to build new. We are and have been at the highest tax rate possible by Charter although not at the highest possible by State law. That increase was defeated a few years ago causing us to eliminate our local police force.
All of that said, there needs to be a better system than what we have today. All municipalities do not need all the services possible every day so it makes sense to have some handled regionally where there can be some economy of scale instead of every community having every possible, or at least affordable, service whether needed every day or not.

Matt
Thu, 04/06/2017 - 4:32pm

I'm not certain what township's do that couldn't be better handled at the county level. Luckily some townships have subbed out some of their functions but would resist like crazy any move to make them go away completely. It's my observation that cities incur huge costs for their police services that the townships largely skate on. My extensive experience is that many township government boards end up being nothing more than a bunch of NIMBY's and rather than being close representatives are often a secretive, petty, cronyistic (?) , very expensive level of government. We'd all be better off if they gradually (or faster!) are made to become self- supporting cities or be absorbed into the counties?

duane
Thu, 04/06/2017 - 11:37pm

Mr. Lupher has a significant flaw in his suggestion, the lack of accountability of the counties providing services.

Mr. Lupher seems to fall into or use the standard politician practice of; avoid talking in specifics, avoid describing the results to be achieved, avoid providing metrics and their regular reporting for voters to use to verify performance, avoid establishing procedures for regular evaluation of program performance to ensure that programs can be modified or replaced when they aren't achieving expectations.

At best Mr. Lupher's approach may lower cost for a brief window after cost of transition and before it becomes apparent that results haven't changed. I would encourage Mr. Lupher to do a bit of research on how services are delivered, how results are achieved, and what processes have proven effective. It may not be political, but it maybe practical if he met with some of the long serving companies in our state that survive solely on the value of services their customers receive, on the results from their services, and the means they use to ensure effective services.

John Saari
Sun, 04/09/2017 - 7:28am

Excellent I have been preaching. -Think Community- for years. Especially now with our Top heavy, wasteful government. We should pass down all we can. Fed---:State--:County--:City/Village. We can do it more efficiently, honestly and at less cost, with greater transparency. Take approximately half of the larger dept budget and pass it down. Lay-off everyone except the best two employees in each dept, with a goal of elimination of the dept.