Fewer cops, abandoned parks, and why more cities will crumble unless Michigan changes

In one decade, Michigan cities lost 2,300 police officers.

That’s like laying off every Michigan State Police trooper. Twice.

Ann Arbor lost 23 percent of its police force; Saginaw, 41 percent; Troy, 48 percent.

And it only happened here. No other Midwestern state witnessed anything close to the massive police layoffs that occurred in Michigan between 2005 and 2014.

The distinction isn’t about crime rates but the arcane issue of municipal finance. Simply put, Michigan funds its cities differently than most states. As a result, the old industrial city of Flint is in notably worse financial shape than the old industrial city of Toledo, just across the state line.

The disappearance of one in five city police officers may be the most noticeable impact of Michigan’s growing municipal finance crisis, but it’s far from the only one. In some cities, dwindling revenues have meant abandoned parks or cuts to youth programs. Other communities have deferred maintenance on streets and buildings, or are holding fundraisers to buy basic fire equipment.

And then there’s Flint, where high levels of lead in the drinking water potentially caused life-long neurological damage to thousands of children. The series of bad decisions that led to the drinking water crisis in that cash-starved city emerged from the same milieu of state-level choices cracking the budgets of cities across Michigan.

Flint, with its tragic decision to save money by switching its water source without properly safeguarding the new water supply, is only the most grievous example. But it is hardly alone among Michigan cities and towns that are facing seismic decisions about how to provide basic services to residents in the face of grim revenue numbers.

Call it the Flint Syndrome, where systemic, long-term disinvestment has imperiled the safety and frayed the quality of life for residents of many Michigan cities.

And the grim choices cities must make are likely going to get worse, unless the state makes fundamental changes to the way cities are funded, say municipal finance experts.

“Cities are bound and gagged financially by the state,” said Mitch Bean, former long-time director of the nonpartisan House Fiscal Agency. “And there’s no way out.”

State’s role in starving cities

Josh Sapotichne, assistant professor of political science at Michigan State University, looked at a map showing the locations of financially distressed cities in the U.S., and noticed something odd. Most distressed cities were clustered in only a handful of states.

Michigan is one of only three states with a double-digit number of cities designated as financially distressed since 2000, according to data he shared with Bridge. Michigan has had 11 designations (Flint and Hamtramck, twice); Ohio, 13, and Pennsylvania, 14. California cities have had their own financial struggles, with several declaring bankruptcy, but the state has no state program to take over the books of cash-strapped municipalities.

“It’s not like Michigan is the only state in the nation with cities that are dealing with the consequences of post-industrialism,” Sapotichne said. “So why is it happening here and why hasn’t it happened elsewhere?”

The surprising answer, according to a report by Sapotchine and a group of MSU researchers: most cash-starved cities weren’t broke because of something they’d done; they were broke because of things their state had done.

Related: City blues: MSU study finds state tax polices cripple cities

“Michigan incubates municipal financial distress,” Sapotichne told Bridge. “There’s a reason why cities in North Carolina or Tennessee are not experiencing the same kinds of financial pressures. Even an all-star team of city officials and managers could not design a strategy to manage their way through the constraints Michigan's policies place on a Flint, an Ecorse, or a Benton Harbor.”

Those restraints, the report suggests, are an accumulation of decisions by legislators and the public that date back 40 years. Those decisions include:

Headlee Amendment

In 1978, the Headlee Amendment limited increases in property tax revenue collected by cities to the rate of inflation. So during years when property assessments increased more than inflation, millage rates were reduced so total property tax revenue matched the inflation rate. But cities could bump their millage rates back up in years when property tax increases were going to be below the inflation rate. The result: cities lost a lot of revenue in years when property values were skyrocketing, but could make up only some of that loss in other years.

Proposal A

In 1994, voters approved Prop A, which put a cap on property assessment increases of 5 percent or the rate of inflation, whichever was less. In simplest terms, property tax revenues, the bread-and-butter of city budgets, could go down quickly and steeply when property values spiraled, as they did during the Great Recession, but could never go up quickly.

Farmington Hills, for example, lost so much property value during the Great Recession that, given Prop A’s limits on increases, it will take until 2038 just to get back to pre-recession assessment levels – without taking inflation into account, according to calculations by Robert Kleine, former Michigan treasurer.

Prop A also nixed the provision in Headlee that allowed cities to “roll up” their millage rates when the rise in taxable value was less than inflation; that revision made it easy for cities to lose money, but impossible to gain it back. Combined with Headlee, Michigan devised the second-tightest local taxation limits in the nation, ahead of only Colorado.

Revenue sharing

All of which left Michigan cities more reliant on revenue sharing, which is a share of sales tax collected by the state and distributed to cities, villages and townships. The state is required by the state constitution to distribute 15 percent of sales tax revenue to these local governments; a 1998 law passed by the Legislature sets the distribution of another 21.3 percent of the first 4 percent of sales tax revenue to cities. But while setting that distribution level, the law doesn’t require the appropriation. So every year, the legislature decides whether that money actually goes to cities, or is used for other things in the state budget. The Legislature and a series of Republican and Democratic governors have routinely kept some of that 21.3 percent for other uses. By 2015, about $5.5 billion in revenue sharing had been diverted from the cities and towns that were supposed to benefit from that money (another estimated $2 billion has been kept from counties).

With full revenue sharing since 2002, Grand Rapids would have $82 million more in its coffers; Lansing, $63 million; Flint, $62 million.

“Cities are on the bottom of the food chain,” Sapotichne said. “If the state needs to balance a budget, they can not make good on these commitments on revenue sharing made in the ‘90s.”

You can look up how much your community has lost in revenue sharing here.

“For most cities, about 75 percent of revenue comes from property taxes and revenue sharing,” said Anthony Minghine of the Michigan Municipal League, which advocates for Michigan cities. “One is horribly restrained and the other is cut drastically. So cities are never getting ahead of the game.”

Gideon D’Assandro, spokesperson for House Speaker Kevin Cotter, R-Mt. Pleasant, suggested to Bridge in November that Michigan cities have no one to blame but themselves for their financial mess.

Legacy costs - expensive retiree health care and pensions - is hurting cities, D’Assandro said. Sapotichne’s report also cites legacy costs as a contributing factor in city budget problems. “There do appear to be some bad deals out there,” D’Assandro said.

Shedding police

The impact of fiscal limitations can be seen in police departments in cities across the state.

Michigan’s 22 largest communities and 48 of the top 50 had fewer police officers per capita in 2014 than a decade earlier. (St. Clair Shores and Muskegon had slightly more police per capita.)

Michigan cities fell even farther behind the nation and the Midwest. On average, Michigan cities had 17 percent fewer cops than their Midwestern neighbors in 2005; by 2014, Michigan cities had 24 percent fewer police officers (1.6 police per 1,000 Michigan city residents, compared to 2.1 across the Midwest).

While Michigan has the fewest city police officers, its cities have the highest rate of violent crime and motor vehicle theft in the Midwest. Minnesota added officers in the decade, despite having the lowest violent crime rate in the Midwest.

Flint, with one of the highest rates of violent crime in the nation,was forced to cut its police force from 244 in 2005 to 102 a decade later. By comparison, fellow rust belt city Toledo has more than twice the number of cops per capita, despite a lower violent crime rate than of Flint.

In Hazel Park, the police force has been trimmed from 40 to 33 in recent years. “There’s a minimum number of human bodies you need to perform services,” said City Manager Edward Klobucher. “Nobody wants to relocate to a community that can’t protect itself.”

The impact on public safety is not immediately clear. There’s no crime data to suggest the decline in police officers in Michigan cities has made cities less safe. Crime rates in Michigan have dropped over the past 20 years, as they have nationally.

But police do more than investigate murder, rape, assault, car thefts and burglaries. They are there when there's a car accident, or when a woman is menaced by her spouse or partner (domestic violence is a crime but not in federal crime statistics). They do crowd control and catch speeders. They line the street when there's a parade and stroll the stands at Friday night football games.

And in places like Wayne, near Detroit, where the force has shrunk from 42 to 23 officers over the past decade, they routinely work 12-hour shifts to keep residents safe. “Every night I go to bed and I pray that they come home okay,” Wayne Mayor Susan Rowe told Bridge of her city’s overworked patrol officers. “I fear for their safety.”

The impact of fewer officers may show up in other ways.

In Bay City, for example, drunk driving arrests have declined with the number of police officers.

“With less people … less gets done,” Bay City Public Safety Director Michael Cecchini told MLive in 2013.

In Ann Arbor, where the police force shrank 23 percent, the decline has meant the elimination of the drug education DARE program in schools and dedicated foot patrols on the city’s main thoroughfares.

Because the cuts occurred over more than a decade, there has been little public notice that a police force that once stood at 198 is down to 122, with officers working 12-hour shifts, said Ann Arbor Police Chief Jim Baird.

“I think the public has been shielded (from the cuts),” Baird said. “Police are always going to provide the core services. It’s the other stuff that falls by the wayside.”

Other public-safety funding cuts are harder to hide. In Battle Creek, the police station smells of sewage, and office supplies are stored on shelves in the women’s bathroom.

Back in the city of Wayne, community members held a fundraiser at a bowling alley to raise funds for new fire hoses.

“Wayne has a stable population, middle-class housing stock and a large, operating industrial complex, and it’s still almost bankrupt,” said Minghine of the Michigan Municipal League. “That’s the world we live in.”

Because the financial squeeze on local governments happened gradually, deferred maintenance on sewer systems, old playground equipment and outdated public safety vehicles aren’t noticed by the public until there’s a problem. MSU’s Sapotichne compared it to a man eating bacon cheeseburgers every day. Outwardly, his health may seem fine, right up to the day he has a heart attack. “We’re feeling the cumulative effect of 40 years of choices,” Sapotichne said. “This structural financial gap is toxic to cities.

“Cities are going to make mistakes, because they’re being squeezed,” Sapotichne said. “And the consequences of those mistakes are exacerbated because of this financial structure.”

Those mistakes could mean bankruptcy.

In Flint’s case, it meant poisoned water.

“If all these cities are struggling, it tells you there’s something wrong with the model,” Minghine said. “We lose sight of how everyone is dancing on the edge of the cliff.”

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Thu, 05/12/2016 - 9:03am
Through the Michigan Public Policy Survey at UM we interviewed 76% of Michigan's local government leaders last fall on issues of public safety. We found very mixed views when it comes to police services. In Michigan's biggest jurisdictions (cities and townships), despite the steep cuts in the number of officers, and despite widespread concern that crime is a problem (especially drug and property crimes), 95% of local leaders are still satisfied with the services provided by their local police departments. 86% think most people feel safe in their communities. And 76% think most people are confident the police will arrive in time to deal with an emergency. Of course, we'd like to see those percentages at 100%, and it is possible local leaders were giving relative assessments of satisfaction based on the funding constraints they have to work within, but those are still pretty positive assessments. On the other hand, 47% of these leaders in the biggest jurisdictions say they do not have sufficient funding to meet their law enforcement needs, even though 37% report they have recently succeeded at raising local funding for police services through millages or special assessments. Since 2009 we have been tracking how local governments have responded to their growing fiscal challenges, and there is no question that overall they've been very active at making cuts to live within their reduced revenue streams. They've found efficiencies and tried to do more with less. They've cut staffing, made employees pay more for fringe benefits, renegotiated labor contracts, collaborated with neighboring jurisdictions, delayed infrastructure maintenance, and more. Meanwhile, public demands for services and infrastructure maintenance or improvements are growing in many places, but the funding to meet those demands hasn't kept pace. In 2012 we asked about their views on the system of funding local government in the state and found that 58% thought it needed significant reform, including 77% in the largest jurisdictions. Fewer than half (43%) thought the system would allow them to maintain the package of services they were delivering at that time. In the largest jurisdictions, only 22% thought the system would be sufficient to maintain services. We are repeating those survey questions now in the spring of 2016, with four more years of "recovery" from the Great Recession under the belt, and we'll report those findings this fall. All findings and data are available via http://closup.umich.edu/mpps.php or by email to closup@umich.edu
Thu, 05/12/2016 - 11:34am
"95% of local leaders are still satisfied with the services provided by their local police departments" Those "local leaders" set a budget for local police department! Of course "THEY" are satisfied! Get real, look at actual crime statistics in Michigan, not the perceptions of those who are responsible for allocating funds for local police departments. "We are repeating those survey questions" Stop repeating failed questions! Look at facts, not just the perceptions of those who make budgets for City Hall.
John S.
Thu, 05/12/2016 - 3:10pm
There's a positive correlation in Michigan between municipal crime rates and police department staffing levels but it's not as large a correlation as one might think. One of the most important jobs for mayors (and local managers) is to get public safety staffing levels "right." What is "right," of course, will vary from community to community, and include factors other than the crime rate. There's need, however, for mayors (and local managers) to be more transparent and give reasons or justifications for staffing levels that, controlling for the crime rate, are below or above average.
Jarrett Skorup
Thu, 05/12/2016 - 9:38am
This piece does a lot on the revenue side but almost nothing on the costs to cities, which is a much bigger issue. Bridge hould do a deeper dive into pension and retiree costs. As my colleague James Hohman noted recently: "Consider that the state police retirement system now costs between 57 percent and 63 percent of the Michigan State Police’s total payroll. It is not because the benefits are lavish. It is because the state is trying to pay for promises that it made in the past but didn’t set money aside for — the state saved only 63 percent of what pensions are expected to cost." Municipal governments are the same. Almost no cities in Michigan have fully-funded their pension systems.
Mike Wilkinson
Thu, 05/12/2016 - 11:48am
Jarrett, we'll talk a bit about how differently it's done in Ohio in a story next week. Pensions there are funded and manageable, with almost all public employees in five statewide plans. Cities can budget and not worry about looming OPEB and pension costs derailing their budgets.
Jarrett Skorup
Thu, 05/12/2016 - 12:01pm
Thanks guys, looking forward to the piece. Sorry I missed Pat's old series.
David Waymire
Thu, 05/12/2016 - 1:47pm
Michigan has cut its effective state tax rate from 9.49 percent of income in 2000 to about 6.75 percent today...and the Mackinac Center led the way, saying doing so would create a more vibrant economy, and actually lead to more government revenues. We know by now that the Laffer Curve was a laugher, and that tax cuts lead to fewer public goods like education and good cities, which lead to...Michissisppi. If we had not cut taxes and had instead continued to invest in our people -- and our pensions -- we wouldn't look like this today. We would have had $70 billion more to spend on pensions, cities, universities, etc. See Figure 19 here. http://www.senate.michigan.gov/sfa/Publications/BudUpdates/EconomicOutlo... This year alone, we are $7 billion under the 2000 level of tax effort.
Thu, 05/12/2016 - 4:05pm
We do not in fact "know by now that the Laffer Curve was a laugher," Perhaps Mr. Waymire has forgotten that the Big Three suffered a large loss of market share beginning in 2000. It may very well be that the tax cuts did stimulate our economy, but the effects were overwhelmed by the loss in market share. And Figure 19 of the Senate Fiscal Agency report does not show the difference in revenue due to tax cuts. Rather, it shows how far Michigan's revenue is below the constitutional limit.
david waymire
Sun, 05/15/2016 - 11:31am
Actually, by dividing state spending by personal income, it provides a very useful measure of tax effort. And the reduction in business taxes from 2000 to now along with cuts in the personal income tax rate from that time are matters of historical fact. In other words, the limitation numbers implicitly take into account the auto industry's problems. It shows that if we were still providing state government with 9.49 cents of every dollar -- even if those dollars might be smaller due to auto industry cuts to worker wages (certainly not executive pay) -- we would have billions of dollars to invest in services, infrastructure and pensions.
Lynn Markland
Fri, 05/13/2016 - 4:12pm
While it's true that most cities pension funds are not fully funded, it's not because most cities have not made their full payment into their pension systems. Most cities made their full payments as calculated by the actuaries for their pension fund. The Great Recession, and the resulting pension fund losses in the stock market, created a larger gap in pension funding (or a lower percentage of funding as you have pointed out). In addition, the use of new assumptions (future return on investments and years of amortization) used by actuaries have increased the underfunding gap. In an effort to reduce pension costs, a number of cities have reduced pension benefits for new and future employees. As benefit groups have been closed to new and future employees, the amortization time for those closed groups (or the time allowed for full funding) has been decreased resulting in a spike or increased cost for pension benefits. Eventually the cost for employee pensions will be reduced, but it will take some time for this to happen. Long-term problems do not have short-term solutions.
D Dagostino
Thu, 12/29/2016 - 1:37pm

The pension issue is massive and growing. Cities use actuarial data to determine the amount that needs to be set aside each year. The money is invested but there are some constraints on how it is invested. Since the 'great recession' interest rates have plummeted and are now at levels that are killing the pension plans that are required to invest a significant percentage of their investments in quality bonds. So the projected growth of the invested assets is not meeting actuarial projections and this is compounding the problem. This crisis will potentially bankrupt many cities over the next 10-20 years and simultaneously cause a crisis for the retirees depending on these pension payments which will have to be reduced because the money will not be there to pay the promised benefits.

Thu, 05/12/2016 - 9:54am
This is only part of the story. Take, for example, Garden City. As the city faced declining revenue, the officials put forth a millage vote to sustain the police and fire departments. They used scare tactics such as claiming that heart attacks or other medical emergencies would not be responded to. The tactic worked and the voters approved a high millage for 3 years. However, the revenue from that specific millage was not totally provided to the police and fire departments. Those departments received less than half of the revenue with the bulk going into the general fund. Using the same tired scare tactics, (i.e. lay-offs of police looming), the millage was re-approved recently and extended to five years. Basically, city officials lied to and scared citizens into giving up more of their income and that money isn't going to where it is supposed to.
Diana Menhennick
Thu, 05/12/2016 - 10:03am
This article demonstrates and supports the argument of the state of municipal finance, that it is an outdated model which needs overhauling. As a former elected city council official in the Upper Peninsula I can provide numerous examples of how the State of Michigan engaged in policies that strangled my community instead of facilitating a partnership that allows investment of an aging infrastructure and outdated revenue generation models. Communities are doing much more with less however they will reach a point in the near future where they will no longer be able to continue doing more with less. Michigan communities large or small can not look to the state for partnership or collaboration in dealing with this ongoing fiscal and infrastructure issues and I don't see this changing anytime soon.
Thu, 05/12/2016 - 10:04am
I have never understood the concept of revenue sharing, something that has come about in perhaps the last 50 years. Each governmental entity, federal, state, and county/city/township, has a defined role of things that it is supposed to provide. Each entity should establish a tax plan for the items it will provide. If revenues do not match expenses, then either revenues have to be increased or expenses decreased. The citizens spoke when they established Prop A and the Headlee Amendment to prevent what was common prior to those acts of taxes increasing uncontrollably and people being forced to sell their house when they could no longer afford it. Enter revenue sharing which is just a transfer of money from the government entity above to the entity below. Eventually it gets to the federal level transferring to the state, but the federal government is not bound by a dictate to balance a budget. Furthermore, it can, as one of its defined powers, just print money. This is just as bad as the pre Prop A taxes, as the inflation caused by just printing money will force people into a lower lifestyle if their income increase does not match the inflation. If entities make bad choices in promising more than they fund, then why are those that have always lived within their means forced to correct the bad choices. Perhaps it is because those making the bad choices have enough lag time before the bad choice becomes a problem. In any event, we would be much better off without revenue sharing at any level.
David Waymire
Thu, 05/12/2016 - 1:51pm
If you live in a low-tax township and work in city, you are using its services...and not paying for them. If you live in a township and eat in the nearby suburb, you are using that suburbs services, and not paying for them. If you live in Wixom and go to a baseball game in Detroit, you are using the city's services and not paying for them. That's why we have revenue sharing. Not many people live, work, eat, play and die in the same small geographic area. Revenue sharing was a tacit realization that externalities need to be addressed in municipal finance as they do in basic capitalistic economic systems.
Thu, 05/12/2016 - 3:35pm
Mr. Waymire is absolutely right about the need to address externalities, but I don't think his examples are that substantial. Somebody working in a city they don't reside in, is using services they don't pay for, but how many? And what if they spend money in the city? Isn't that a contribution to its economy? And someone eating in a community consumes very few services. And the services consumed while attending a ball game are not that significant. Consider where the revenue sharing money comes from. The state's taxpayers. To a large extent, a large portion of the revenue sharing a city receives will have come from that city's residents. After all, the revenue sharing received and the taxes paid are both proportional to a city's size. There may not be much cross border transfer. Revenue sharing can be justified as payment for services mandated by the state.
Thu, 05/12/2016 - 4:04pm
David, in addition to Observer's problems with your accusing the non-resident of free loading off the cities, you also ignore the fact that that anyone who does any business in a city is in fact paying towards the tax bill of that vender, and also many people (my wife) work in cities that levy income taxes and at the end of the day they leave asking little to nothing in return other than the use of their roads. This is a very common, false and myopic view of how the economy works which I believe you're smarter than falling for.
Scott Groups
Thu, 05/12/2016 - 11:11pm
I don't agree with this statement, "If you live in a low-tax township and work in city, you are using its services…and not paying for them." I consider this blatantly false and will list my reasons: 1. If you work in a city that taxes income of non-residents, then you are absolutely paying for services. 2. In addition, you actually are paying for the services indirectly Property taxes are paid by your employer which support the services you use. Corporate property taxes are much higher because they do not have the homestead/principle home owner exemption in addition to business property being valued at much higher values than typical homes for the typical home-owner. $3million building, $10, $30 million value for a large building -- those services are paid for by the building owner. You use the local restaurants -- they pay property taxes that pay for the services provided to you. Using your logic, people who rent don't pay for the services they receive. Except -- the landlords pay for the services indirectly which pay for the services they receive. In that case, that proves my point.
Sharlan Douglas
Wed, 05/18/2016 - 10:00am
In 1994, to compensate for wide disparities in local school district's revenue, voters chose to decrease property taxes and increase the sales tax. The state was to compensate cities for their portion of the lost property taxes by sharing that sales tax revenue. https://www.michigan.gov/documents/propa_3172_7.pdf
Robert Kleine
Fri, 12/30/2016 - 10:37pm

The main reason for revenue sharing is that the state severely restricts the revenue raising ability of local governments. Because of these restrictions the state adopted a revenue sharing program. Today's legislators seem to have no understanding of the history.The second reason is to help local units with low tax bases. Flint's taxable value per capita is about $7,500. The state average for cities is $30,000. Without revenue sharing a city like Flint must raise taxes more than a city with a larger tax base. Higher taxes will encourage people and business to leave. If taxes are not raised poor public services will cause people a nd businesses to leave. Our cities are in an impossible situation.

Cheryl Farmer
Thu, 05/12/2016 - 10:21am
“Michigan incubates municipal financial distress,” This is the best synopsis yet of how Michigan cities are being starved for funds by the tax structure, a topic I have been talking about since I was Mayor (1995-2006) The article contains a calculation for each Michigan municipality. The amount of Revenue Sharing lost since 2002 for my city of Ypsilanti was $10,511,032.06. Check out how much revenue your own city has been denied! “If all these cities are struggling, it tells you there’s something wrong with the model,” Minghine said. “We lose sight of how everyone is dancing on the edge of the cliff.” Only our state legislature can bring us back from the edge of the cliff by fixing the state's broken tax structure. Every additional year that our legislators ignore this problem, more cities in Michigan slip closer to bankruptcy. And we have seen how unsuccessful the Emergency Manager model is in addressing these problems!
Thu, 05/12/2016 - 10:39am
Left Michigan years ago and only go back to vacation in summer. Live in Cincinnati now, where the new mayor has hired 100 police and firemen, it's a city that works and feels safe.
Mike Wilkinson
Thu, 05/12/2016 - 11:43am
Eric, come back next week when we take a look at how differently Ohio treats cities.
Thu, 05/12/2016 - 10:54am
There is a political dimension/reality at play here very infrequently discussed. Local government officials tend to handle pubic safety expenditures in tandem, it more or less dollars are deemed available, police and firemen are treated equally. This ignores the reality of modern municipalities. For the past 60 years, the need for and role of police protection has increased, while the necessity of fire fighting bodies has markedly decreased (think building codes, sprinkler systems, modern fireproofing and alarms). But the better political skills of firefighters, keeps spending in equilibrium with police. It is true the unfunded pensions (again think of the political aspect) won't be addressed in time to prevent municipal downfalls in 10-15 years, but the inability to evaluate two different services on their respective need will lend itself to an earlier police crisis.
Phil Hathaway
Thu, 05/12/2016 - 11:32am
This public finance argument has foundations from 70+ years ago and then onward as many have stated in this string of observations. Other influences such as ex-urban subdivision developments spurred through the interstate highways system (for commuters), affordable personal transportation, subsidized single family home ownership policies, and the Clean Water Act with water and sewer system grants to localities. Resultant Independent fiefdoms developed together with woeful city policies mimicking General Motors generosity in job benefits, poor annexation proposals (versus justifiable ones), state boundary commission decisions, state law fixing boundaries, voluntary tax base sharing (i.e., hit or miss results), disinvestment in older commercial properties in favor of strip development taxed at lower rates in ex-urban government locales. As examples of better--not perfect--treatments exist in the Battle Creek region and Midland where the concept of a city-state governance model shows how relative municipal prosperity can operate. Just about everyone can take a bow in this story's assignment of responsibility. I am a fan of cautious government restraint and am even a greater fan of how government is organized to provide services. Michigan and most of the Northwest Territorial States (except the Minneapolis/St. Paul city-state) are designed, unintentionally at the outset, to reside in a compromised setting. Sadly, as an inner urban official once said when these arguments were posed at a think-tank symposium awhile back, "Still, you got to get in the game."
Thu, 05/12/2016 - 4:18pm
"The impact on public safety is not immediately clear. There’s no crime data to suggest the decline in police officers in Michigan cities has made cities less safe. Crime rates in Michigan have dropped over the past 20 years, as they have nationally." So what is the point here??? Fewer police equals less crime? Fewer police doesn't equal more crime? Is this arguing that we should have more police even though there's less for them to do? This seems like another Bridge article arguing for higher taxes to spend on something that we're not sure really makes any difference.
David Zeman
Thu, 05/12/2016 - 4:35pm
Actually, Matt, it's another Bridge article that gives readers nuance as well as both sides of the equation. If we were in the tank for more money to spend on cops, that statistic about crime going down over this period wouldn't have found its way into the story. There seems to be a lot of room for research on whether the former level of public safety personnel was in fact too high across the country as well as in Michigan. But as this and the other Bridge stories in this package also point out, this drop in cops has perhaps hurt communities in ways that can't always be measured by crime statistics. Such as more police having to work gruelingly long shifts, often with no partners. Or struggling towns that lose good cops to other communities that can pay them better or offer better hours. As one city discovered, fewer cops meant fewer arrests of drunk drivers, which almost certainly creates other problems.
John Q. Public
Thu, 05/12/2016 - 11:19pm
Fewer arrests of "drunk drivers" almost certainly ELIMINATES a whole host of problems for people whose only reason for being pulled over was having a tail light out, or driving 40 in a 35 zone (i.e., they weren't any sort of observable menace to others, unlike the fellow below). We'll never know how much unnecessary disruption to the financial and social fabric of individual households has been prevented because fewer police are available to arrest people with .08 BAC levels. The legislative branch passed the "super-drunk" law to remove the really dangerous menaces--like their colleague--from the road, and this is what the executive and judicial branches give us instead: MARQUETTE - State Rep. John Kivela, D-Marquette, was sentenced Jan. 13 to 12 months probation and fined $1,510 on a drunk driving charge. Kivela was arrested in November and charged with operating while intoxicated after he was driving 80 mph on a freeway near Lansing, swerving in and out of traffic and nearly causing an accident, according to police. His blood-alcohol content was nearly three times the legal limit for operating a vehicle. An open bottle of whiskey was also found in his pickup truck. (The Mining Journal 1/21/2016) Given how the DUI laws are enforced, (Joe Sixpack sometimes getting jail for a first-offense .08, while super-drunks who belong in prison but are well connected get probation), on balance fewer DUI arrests seems more good than bad. The bigger point, as you note, is the begging of the question as to the right number of officers. It is entirely possible that we were "over-policed" a few years ago, and now have the right number--or even still are overstaffed, only not as much. "We're understaffed, simply because we have fewer than we used to" doesn't fly. And while working long hours with no partner is certainly distasteful to the officer who has to do it, is there any real evidence that such a situation is tangibly harmful to the communities?
Thu, 05/12/2016 - 4:51pm
The authors say, "By 2015, about $5.5 billion in revenue sharing had been diverted from the cities and towns that were supposed to benefit from that money (another estimated $2 billion has been kept from counties)." Unfortunately, they don't enlighten us about the possible alternatives. Would they recommend that the state should have raised taxes in order to make the revenue sharing payments? As I recall, those were difficult times in this state; would raising taxes and making the revenue sharing payments been a net benefit? And the authors say, "With full revenue sharing since 2002, Grand Rapids would have $82 million more in its coffers; Lansing, $63 million; Flint, $62 million." That would have been much more meaningful if those figures had been expressed as percentages of their revenue. And the authors also say, "There’s no crime data to suggest the decline in police officers in Michigan cities has made cities less safe. Crime rates in Michigan have dropped over the past 20 years, as they have nationally." If the authors could not detect any difference between the decline of crime rates in Michigan and the decline of national crime rates, what was the point of including the material about police layoffs? There is no question that the citizens of Michigan made a large mistake by not allowing property tax revenues to grow more quickly in exceptional circumstances like the housing boom and bust. Bridge should make a sustained effort to persuade the voters to rectify that mistake.
Thu, 05/12/2016 - 6:03pm
One of the big drivers of our revenue problem is the insane idea of basing tax on your home's "value". A better, more stable and cheaper to administrate approach would be to scrap value based approach and go to a square footage approach. Revenues would stabilize and the tax system wouldn't be a disincentive to new residents moving in or existing residents keeping their homes in top appearance. Fundamental systemic reforms are rarely discussed by the Center for Michigan and too much time on hand ringing. Another disservice the authors do here, for that matter almost never do, is ask why some towns/cities were able to go through the last ten years with little to no decline in police numbers where others had a huge drop. What was different between them? Seems like they're reluctant to take the chance of assigning blame to a city's own choices.
David L Richards
Sun, 05/15/2016 - 6:09pm
Cities vary in their ability to raise money. A city with very valuable real estate (such as Bloomfield Hills or Dearborn) can afford to pay for city services even in a downturn. A city with real estate having a low SEV relatively speaking (such as Detroit), which usually means a high tax rate to start with, has no room to deal with a downturn in values, resulting in a downturn in tax revenue and reduced services. Other municipalities are between extremes, and therefore have varying degrees of hardship.
Thu, 05/12/2016 - 6:19pm
We need to consider a very substantial change in the way we fund municipal governments in Michigan. Proposition A decoupled the funding of public schools from local property values and produced a much more equitable system for funding education. Do we need a Proposition A for supporting municipal governments. Could we establish one property tax rate for home owners, another for commercial properties and a third for non-profits? Let the state collect all those funds and then distribute them to municipalities primarily on the basis of their population as counted in the last census or a special census. And then some consideration should be given to reducing the number of local government. Is it cost efficient to have 124 municipal governments in the three county Detroit metro area? Some of the southern states switched to a county system of local government. Could that be considered in Michigan?
Thu, 05/12/2016 - 8:32pm
Mr. Farley, It seems your focus is paying money and how to the cities get more of it. I the focus should start with what are the appropriate services, what results the services should deliver before we figure out ways to grow the amount of money the cities have to spend. I would start with what are the appropriate services for governments to provide, what services the cities can deliver better than others, what are the results the services should deliver [using metrics that are measuring results rather then simply amount being spent], how to ensure those services are maintained , focus on how they can consistently deliver those results. Once those are established then we determine how much it will cost and how to pay for it. By talking about the number of municipalities you suggest efficiency is the key in getting value for the money. I would allow the communities to have their independence/authority and encourage them to decide on what services they felt were most important and then contract with those that deliver most effectively. The people contracting for the services have to most leverage over those providing the services, ask any business [if the don't deliver what the customer wants they risk the customer going elsewhere]. Consider Apple they provide a high cost service [Apple eco-system] and yet they have an abundance of customers. Why not turn municipalities into customers rather then employers, get the value and people will be much more open to how they pay for the value. Determine the results, identify the services that will provide it, identify the most effective provide, and then establish how to pay for the value.
Robert Kleine
Thu, 05/12/2016 - 6:28pm
No one who has commented seems to understand why revenue sharing is needed. It is because of unequal tax bases. A city with a taxable value of $20,000 per capita will need levy a tax rate twice as high as a city with a tax base of $40,000 per capita. The result is that people and business will move out of the city to lower tax jurisdiction. If the low tax base city does not charge higher taxes they will have a low level of services and people and business will also move out. Without a strong revenue sharing program the only way many cities can survive is with metro government so the tax base is spread over a wider area. A number of states have metro or county governments. With few exceptions the cities fiscal problems are not due to mismanagement but to a dysfunctional system of organizing and financing local governments. This is a problem that only the state can solve. Michigan will never be in the top tier of. states economically without fiscally stable cities. Michigan has the lowest taxes in the Great Lakes region which is why our roads, cities and schools are all among the worst in the country. It seems that many of the commenters do not.care how poorly this state is doing.
Thu, 05/12/2016 - 8:42pm
Are you saying that tax cuts and smaller government doesn't automatically make everything better? I'm shocked!
Fri, 05/13/2016 - 10:37am
Jamie, Are you suggesting that increasing taxes and spending makes governments better? I'm skeptical.
Robert Kleine
Fri, 05/13/2016 - 2:47pm
No, but there is a point where taxes are so low you can no longer provide a reasonable level of public services. I think we have passed that point. Adjusted for inflation many cities have suffered revenue losses of 25 to 30 percent or more. It is going to get worse. Because of the cap on taxable value it will be 20 to 30 years before many cities get back to the 2008 level and adjusted for inflation they will never get back to the 2008 level. You should ask yourself why does Minnesota with the highest taxes in the region have the strongest economy and better financed schools, roads and cities.
Fri, 05/13/2016 - 6:15pm
Robert, How can you be so sure? Do you have some criteria you use to measure the quality and effectiveness of the services our tax dollars are paying for? Do you have a particular threshold in those service that show when the taxes have gone too low? Would you share you criteria do those of us who have lost confidence in our those spending our tax dollars can verify that we should begin trusting the government officials and support increases in our taxes?
Robert Kleine
Fri, 05/13/2016 - 9:43pm
By .ny measure our roads are among the worst in the nation. We have many more cities under state control than any other state. Our school districts ha ve the lowest credit rating of any governmental units in the nation. We have the sixth highest college tuition in the nation. We rank 37 th in per capita income. We have the lowest state business taxes nationally but we are growing no faster than the national economy. We have cut spending more than any state in the country. From 2002 to 2012 state aid to municipalities increase 48 percent nationwide.. In Michigan it declined 56 percent, dead last by a mile. If you need more I can give you more.
Sat, 05/14/2016 - 9:29am
Duane - when it comes to local government services, the record shows most voters still trust government to deliver value for their tax dollars. Local millages for all kinds of services, even for general operations, have repeatedly been approved across the state for the last decade.
Sun, 05/15/2016 - 8:37pm
Robert, The roads almost make sense, but how would measure a change in quality? Simply raising taxes doesn't mean the roads will be any better, that the construction or repairs will be done better, that the ride on the roads will be any smoother. So how would raising taxes for roads change anything? I rode on roads this weekend that had no visible problems but we bumped and bounced along as if they had potholes and broken concrete. How would more taxes make the agency accepting those roads, spending the taxes, change what quality they would accept. Or how many roads are a rough ride because the repairs are so sloppy that the road is no longer flat. I don't see credit rating as a measure because simply raising the taxes could raise the ratings [it's all about paying for the borrowing], but it wouldn't change what we get for the money. It would simply make it easier for more borrowing, not create more value. Paying for more of the tuition doesn't change the quality of the education, it doesn't change what is being taught, or the degrees being earned. I will admit it will give the students a better lifestyle in school, getting unlimited food, getting better housing, giving the students more money to spend, but what value would it create for the people who money is be spent. Does it change the employment rate of those graduating? I am not sure how raising the taxes would raise the per capita income [depending how you calculate per capita income (reduce income of tax payers and raise income of tax receiver?). Aside from raising the cost for those paying the taxes I don't see how it would draw higher paying jobs to the State. Simply raising taxes does change the quality and quantity of services that employer would receive for the higher taxes, . It has always seem to me the what a person earnings has much to do with their productivity not with the tax level in the state. It seems to me that the economy has shifted in the past 60s from strength [be strong, work harder, work longer] to a knowledge and skilled [work smarter, take more responsibility and exercise more authority/decision making] economy. I don't see any correlation to taxing and work value. I do see how the state and other government agencies could increase hiring but would they have meaningful work to do, how would you measure that? I don't doubt we have cut spending, in my town the government is now renting our office space they previously used. But what do you measure to show the change in value to the taxpayers? What does 'dead last' mean? Does it mean we have more [per capita] starving to death people than any other state, more are dying because of lack of housing, that more are dying because of refusal of medical care, that we have fewer seats in schools so kids are being refused an education, etc.? What does being 'dead last' mean?
Sun, 05/15/2016 - 8:42pm
Tom, In my town, we have had special assessments be voted down [recently one passed], tax hikes for roads voted down, City meetings where so many people showed you a special lightly assessment was withdrawn. In my community many of the government officials are trying new and different ways to raise revenues and are going our to the public more often then before and into the neighborhoods to have meetings. It seems they are concerned that the voters aren't as trusting as before.
Robert Kleine
Mon, 05/16/2016 - 8:18pm
How do you explain the fact that we were doing much better in all these areas in the 1990s when taxes and spending were higher. Higher tuition means fewer can afford college or have much more deb when they graduate. The states with the most college graduates have the strongest economies. Dead last means Michigan cut state aid to locals by 56 percent and the next largest cut was 14 percent. Please do not try to defend the indefensible.
Tue, 05/17/2016 - 12:12am
Robert, Is it fewer can afford or that fewer are getting jobs that pay them enough so they can pay off the loans? As an example it the average loans for a graduate is between $30-40,000 and they had earned a BS in engineering with an average entry level salary fresh with degree in hand is more than $60,000 a year that would suggest if they only paid 10% of their starting salary toward the loan each year it would take them 5-7 years to pay off that debt. I am not clear on how burdensome that would be. As for the 90s, then we were experiencing a growing economy, the productivity improvements were growing faster than in the 80s, 70s, even 60s. Competing in a global marketplace hadn't truly been appreciated by the mid and small companies, they hadn't realized that it would reach their local markets. The wages today haven't grown as fast as the spending by the colleges/universities, the standards of living on campus have increased faster than the wages for students. With the changes in productivity and the competition by the under employed have pushed the college students out of the market or kept the wages available to them low. The schools and the government don't exist in a vacuum, there is a dynamic economy that they are a small part of that is changing all around them. The economy has change drastically around the schools and the students and the government and those changes have more influence on the jobs and wages available to students then the simple reduction in state giving to the colleges and universities. If the students earned a degree in a field that seldom offer starting jobs in that field and the graduate had to take on minimum wage employment I could see how the loans would be a burden. My question to you is when does the student take responsibility for their choices? And when do those who made more fiscally responsible choices get to benefit from those choices and their labors?
Thu, 06/08/2017 - 10:37am

Good retort!

Thu, 05/12/2016 - 10:00pm
The problems stated here have been ongoing for numerous years without action being taken to correct it. Taxpayers for the Michigan Constitution a 501c3 will be filing suit against the state of Michigan in the next two weeks to correct improper funding practices to local government and failure to follow Headlee. 13 other Michigan cities to date are supporting this effort financially and we are working with the Suger Law Center seeking that the state follow the Constitution and ensure that 48.9 % of state spending is on local government and education. Other violations include counting Charter Schools as local units of government and payments to cities reimbursing them for service on trunk lines as contributions to local government. Eastpointe initiated several unique actions to remain solvent including forming Public Safety Authority with Hazel Park that we are now hoping to extend to assist the City of Wayne. However these actions would not be necessary had the proper level of funding ha been received similar to the stories in this edition of the Bridge. This practice has been going on for years costing cities such as Flint 54 million dollars over 10 years and City of Warren 45 million dollars. There is no political solution to this crisis, a state legislature that consistently violates its own Constitution only understands one thing. Please contact me for further information 586.524.6927. sduchane@eastpointecity.org or John Mogk Professor Wayne Law j.mogk@wayne.edu
Thu, 05/12/2016 - 11:26pm
The article details what Michigan is doing to incubate financial disaster, what are Ohio and Pennsylvania doing wrong? And since crime has been going down with the reduction of police forces what metric should be used to determine success?
Fri, 05/13/2016 - 9:13am
Yet the pay and PENSIONS of other employees continue to rise !! When the annual retirement pay of a government employee is bigger than he/she ever earned while working, you know the system is CORRUPT !!
Michael Kiella
Sat, 05/14/2016 - 3:30pm
Perhaps it is time that we stop speaking poorly of pensioners. I posit that the process of attracting and maintaining qualified workers via delayed compensation packages is not the problem. The process and impact of municipalities not making payments to fully fund their promises to workers might well be studied on a state and regional basis. Indeed, externalities, such as down-turns in the stock market, which fund much of pension annuities; and mechanisms to mitigate the impact of the down-turns should likewise be studied to determine...to see if there are any generalizable observations and conclusions. This alone would provide meaningful information regarding the habits of employers (municipalities, in this case) with respect to actively managing total compensation packages. I suspect that the liabilities of those systems, exceeds asset. But by how much, on a city, county, and state basis? In its simplest terms, time (t) is in the exponent of the compound interest function; that means that if pension payments are not made in full on time, then the anticipated growth over future time is not possible....AND the crisis is realized in exponential terms over time (e.g. the shortfalls increase exponentially as years of under-funding go by...year after year). It is irrational to remain reliant on linear means of correction (if any) to correct this problem (e.g. the fix over time requires reimbursement of the missed fund contribution PLUS the loss of planned income from those funds over that time interval). Remember, the payment to pensioners is a constant value, regardless of the growth of the annuities that fund those payments. I would be beneficial for citizens to ask this question of their municipalities: does your budget reflect 100% funding of your delayed compensation plan. If the answer is no, make demands that they are fully funded including any "make-up" funding that is required. Just because diversion of delayed compensation is legal, it is certainly not prudent. If a municipality chooses not to pay today, then the citizens should demand that they pay at a time certain...in an amount that keeps the system solvent. Let's stop blaming working people, who are reliant upon promises made to them at the time of hire, for the systemic failures in city hall. Here is the first question: OK, ______city name______, how did you spend the money promised to pay for delayed compensation; how will you pay the compounded amount back into the system?
Barry Visel
Fri, 05/13/2016 - 9:29am
This is a story about picking winners and losers, which unfortunately, government at all levels has become too good at. The State of Michigan fails to collect over $30Billion dollars each year because of tax exemptions, tax deductions and tax incentives. We all take advantage of these tax expenditures in one form or another (just take a look at your last tax filing and see how that "adjusted income" was calculated). It's also a story about legacy costs, although not much was said. We know about unfunded retirement accounts...consider that our crumbling infrastructure is also an unfunded liability...we put it in the ground and forgot that it might need replacement someday. Finally, this is a story about us, and how we have come to expect government to take care of all our problems...if only we gave them more money. This is especially true at the Federal level, but this problem creeps in at all levels of government. I'm not sure what the ultimate solution is (but I've concluded government will not have the answers), but I would begin by eliminating tax expenditures, and use the revenue to reduce tax rates at the State level so citizens would have more money to support local needs.
Thomas Yack
Fri, 05/13/2016 - 12:34pm
It should also be noted that Michigan Tax Tribunal judges and their convoluted approach to valuing property has led to the loss of revenue in the hundreds of millions, if not more to the State of Michigan and local taxing authorities. The judges have permitted big boxes, apartment owners and corporations to get huge tax reductions based on flawed thinking. They have permitted these owners to use as comps empty similar sized buildings, all the while there rent sheets show huge profits. Headlee and Proposal A working in tandem with a series of Governors and legislatures that don't value local government has pushed scores of municipalities to the brink. As was pointed out revenue sharing was used by the State to balance its budget....in good and bad times. In the case of Canton it started under big John who capped the amount of revenue sharing a community could receive via increased population. In just ten years that lost revenue amounted to over $15,000,000. Every Governor since has continued the practice of slowly killing communities.
Vincent Caruso
Fri, 05/13/2016 - 10:51pm
Shame on you! Flint did not switch its water suppy, it was Snyder and the EM! Fix your copy. Hard to beleive the rest of this story with this falshood.
Kris Douponce
Sat, 05/14/2016 - 1:41pm
Time to look at term limits.... Need to go back to professional legislators. By the time they learn how things work they are out of office....
Mon, 05/16/2016 - 12:07am
Kris, Why, what special knowledge and skills can people only learn in office? Or does it might the quality of who is elected have to do with who is running and the lack of criteria people should be using when they make their selections?
Greg Thrasher
Tue, 05/17/2016 - 8:41pm
Less cops fewer lawsuits and unarmed Black Americans being executed without due process in American streets
Fri, 05/20/2016 - 9:03am
Headless is Amani's issue as is state revenue sharing. Education is another state cause failure. State aid doesn't keep up with inflation and charter schools redistribute debt payments over fewer students reducing classroom spending per student. Excessive public sector costs for medical and pension erode public trust. Buyouts paid to voluntarily departing or terminated for cause is disproportionate problem. We are becoming Micissippi.
Fri, 05/20/2016 - 10:28am
I don't get how they can't collect enough money from property taxes in Michigan. Michigan is in the top ten (number 7) for highest paid in property taxes throughout the United States. I lived in North Carolina for 6 years owned a really nice new $200,000 house and paid $1200 a year in property taxes. Roads, schools, and police were funded nicely, not only that my house payment was about $1105 a month and I could afford a really nice house there because of the lower property taxes. How is it, I move to Michigan buy a $135000 home and they want $2200 a year in for property tax which would make my house payment $1000 a month. On that note every house in Michigan is old and cost a fortune to remodel since they are all out of date. Oh yes, I want to move to Michigan so I can by a tiny cruddy house with one bathroom and will cost me an additional $30,000 to get the house out of 1960s. Everyone says houses are super cheap but forget to mention the tax on the house are going to raise the cost significantly since Michigan charges mileage on 50% of the worth of the property and then the mileage is added and that is confusing in it self. Maybe it is a spending problem with the state and also the state not allowing the sales tax of items sold in those cities to go to the cities.If you keep raising property taxes people won't be able to afford houses. I am trying to leave this state but I am tied here due to the state law not allowing me to take my child out of state. I pay 4.25% income, have a .5 percent income tax for the city I work in, then 25% federal taxes, property taxes, 6% sales tax that doesn't go to my city on items I buy, so please tell me where the money is going in Michigan and why I should stay in a state that wants to bleed me dry of all my money? Don't even get me started with the cost comparison for car insurance compared to North Carolina, Virginia, and Missouri, which Michigan takes the cake for over priced with spotless driving record . Of 9.9 million people in Michigan, why is it they can't afford to pay teachers, police, and fix the roads. What are salary averages elected government officials compared to other states elected? How is increasing taxes going to fix the problem when they collect so much already. I am no expert by far but this is only my observation from someone that is not from Michigan and new to the state. Even comparing state budgets between Michigan and North Carolina, same population and income collected for each state. I am sure I could compare to other states as well, but at least we are not in New Jersey. End of Rant.
Cheryl Farmer
Wed, 07/20/2016 - 4:43pm
This should be required reading for every Michigan citizen!
Thu, 06/08/2017 - 10:33am

Proposal A has saved many home owners on fixed incomes from the threat of foreclosure.