Government layoffs, service cuts start as coronavirus guts Michigan budgets

Detroit Mayor Mike Duggan, citing an estimated $348 million budget hole for the state’s largest city, on Tuesday announced plans to lay off 200 part-time workers, cut hours for 2,200 full-time employees, freeze planned pay increases and cut top official salaries by 5 percent.

LANSING — Local governments across Michigan are beginning to lay off and furlough workers as they brace for a “perfect storm” of increased spending demands and revenue shortfalls resulting from the coronavirus pandemic that has ground the state economy to a halt. 

Detroit Mayor Mike Duggan, citing an estimated $348 million budget hole in Michigan’s largest city, on Tuesday announced plans to lay off 200 part-time workers, cut hours for 2,200 full-time employees, freeze planned pay increases and cut top official salaries by 5 percent. 

“We’re going to see some cuts to services,” Duggan warned residents, noting plans to delay local road repairs, close recreation centers and pause blight removal efforts. “You can’t cut $348 million and not have it affect you … that’s the truth. These are painful cuts.”

Detroit is unique in that it is one of 24 Michigan cities with state authority to assess a local income tax and is heavily dependent on tax revenue from its three casinos, which were forced to close last month under order of Gov. Gretchen Whitmer. But other Michigan cities like East Lansing, Madison Heights and Clawson have also reduced staff in recent weeks. 

Across the country, more than 2,100 cities are anticipating major budget shortfalls this year, according to a recent survey by the National League of Cities that points to expected layoffs, furloughs and local service cuts. Detroit is not planning cuts to police or fire, but more than half of the local governments surveyed said their budget crunch will impact public safety.  

Michigan could face longer and deeper cuts than other parts of the country because the state’s “system for funding local governments is broken,” said Tom Ivacko, associate director of the Center for Local, State and Urban Policy at the University of Michigan. 

“We’ve known this for a good long time now, and we’re going to pay the price for it now probably more than ever if this pandemic and the economic shutdown lasts too long.”

Michigan local governments have few options to generate revenue on their own — they cannot assess a local sales tax or quickly recover from property tax losses, for instance — making them reliant on the largesse of the state. But state government is facing its own projected budget shortfall of up to $3 billion this fiscal year and up to $4 billion in 2021. 

Cities and townships face a daunting challenge as they divert budgeted funds to buy safety equipment for first responders and increase services for vulnerable populations while bracing for sharp revenue losses, said Roseville City Manager Scott Adkins. 

“We’re facing this perfect storm in an imperfect way,” Adkins said Tuesday in a press call with U.S. Rep. Andy Levin, D-Bloomfield Township, who is pushing for local government aid in Congress.  “We are in uncharted water at this time.” 

Madison Heights City Manager Melissa Marsh said her city has already furloughed “many non-essential employees” and has nowhere left to cut except for “key services our residents depend on for their well-being.”

“At a human level, the biggest loser at the end of the day is going to be our residents,” she said.

Federal rescue sought

The $2 trillion federal rescue package signed by President Donald Trump on March 27 included $150 billion for state and local governments. Michigan is getting about $3.8 billion, but only $800,000 is earmarked for locals, said state budget department spokesman Kurt Weiss. 

Under the law, the funds can only go to local governments with at least 500,000 residents, meaning Detroit and the state’s four largest counties: Wayne, Oakland, Macomb and Kent. It also appears the federal dollars can only be used to cover new costs resulting from the public health crisis, not to fill budget holes created by the ensuing economic disaster. 

“That really is a problem,” Levin said, noting that even larger metropolitan areas like Flint will not qualify for the initial aide. He’s co-sponsored bipartisan legislation that would provide another $250 billion in aid to cities and counties with populations of less than 500,000 residents. “We know local governments need all the help they can get right now.”

Congress is planning to extend an emergency “paycheck protection program” for small businesses, but Democrats and Republicans are at odds over whether to also include new funding for hospitals, states and local governments. 

State sales tax revenue that Michigan doles out to cities, villages and townships is expected to plummet as unemployed or underemployed workers curtail their spending and as businesses close. National data released Wednesday show retail sales collapsed in March, dropping 9 percent in what was the largest decline of its kind on record.

Federal assistance is “imperative” for state and local governments, according to University of Michigan economists who are projecting the state will lose 1.2 million jobs during the pandemic, hit a 23 percent unemployment rate and lose $8 billion in tax revenue over three fiscal years. 

“Should this help take too long, state-level balanced budget amendments and reductions in revenue sharing will force dramatic cuts in a sector of the economy that only recently recouped its Great Recession-era employment losses, five years after the private economy had done so,” the U-M economists said in a recent report.

At the state level, Whitmer last month canceled $80 million in planned spending, suspended new hiring and restricted all non-essential spending by government departments. Senate Appropriations Chair Jim Stamas this week suggested the governor lay off non-essential state employees, and House Appropriations Chair Shane Hernandez asked department heads to explain how they are monitoring workloads and staff needs. 

The National Governors Association is urging congress to appropriate an additional $500 billion in “state stabilization funds” to meet budget shortfalls, on top of additional dollars for local governments.

“The magnitude of the crushing economic impact this virus has had on our states and residents cannot be overstated,” Whitmer and fellow governors from Wisconsin and Pennsylvania told Trump in a Wednesday letter

“These cuts will undoubtedly lead to continued and major job losses in my state, where over 1 million new unemployment claims have been filed since March 15, a 5000 percent increase over a four-week period, representing roughly a quarter of the state’s workforce,” Whitmer wrote.

‘This is going to devastate us’

Local officials are bracing for some residents to skip fall property tax payments, and they fear that property tax values could drop if shuttered businesses are unable to reopen or jobless residents can’t pay rent or lose their homes. 

That’s a particularly frightening scenario for local governments because of a state law that caps annual growth in taxable property values at five percent or the rate of inflation, whichever is lower. If property values fall sharply, it can take years for revenue to rebound. 

“We’re used to doing less with more, but this is going to devastate us,” said Clawson Mayor Reese Scripture. Her city “never fully recovered from the Great Recession” a decade ago and has already furloughed 42 part-time employees amid the pandemic, she said.

Longer term, recent stock market losses could escalate pension or retiree health care costs for local governments, said Lansing Mayor Andy Schor, whose city is saddled with roughly $700 million in unfunded debt.

“The pension boards make assumptions on interest and the rate of return, and if those assumptions don’t come in and the pension boards don’t hit the marks they expect, then the city has to backfill that,” Schor said. 

In Mt. Clemens, overtime pay for first responders has “just skyrocketed” after the city was forced to quarantine a full shift of firefighters who came in direct contact with an infected patient, said Mayor Laura Kropp. The city also purchased new technology allowing it to communicate with residents by text message or email, which is a “good thing” but wasn’t budgeted for.

At the county level, sheriff departments are paying increased overtime, some have instituted hazard pay for first responders and costs have risen for health departments on the “front lines” of the pandemic, said Stephan Currie, executive director of the Michigan Association of Counties.

Even animal control agencies are facing increased expenses “because people are just dropping off animals,” he said. 

The National Association of Counties is backing calls for another $250 billion in local government aid from the federal government and asking for permission to use the money to replace lost revenue from the pandemic, not just cover new costs. 

Michigan counties rely on statutory revenue sharing payments from the state and property tax payments from local residents, both of which could be jeopardized. Wayne County, the state’s largest, is projecting up to a 30 percent drop in property tax collections this summer alone. 

To date, most Michigan counties have not had to lay off or furlough workers, but “all those things that are sort of unknown at this point are concerns,” Currie said. 

In Monroe County, officials are expecting a $1 million to $2 million budget hit this year but plan to tap reserves to avoid staff reductions, said Administrator Michael Bosanac. He’s anticipating revenue from district court fees to decline about 16 percent since all civil hearings for March and April have already been canceled.

Next year is less clear. Whitmer’s proposed budget would have sent $3.3 million to Monroe County next year, but the state’s “ability to share revenues with us I think is going to be severely diminished,” Bosanac said. 

“Our financial picture is gonna be not as rosy as what it used to be, but I don’t have a crystal ball,” Bosanac said. “I don’t know how long the local economy and the state economy is going to be impacted.”

Local governments have also seen information technology costs rise as they secure additional laptops so employees can work remotely, and are incurring new legal bills as they attempt to analyze and interpret the maze of executive orders coming from the state, said Otsego County Administrator Rachel Frisch.

“We’re just trying to keep our head above water,” she said. 

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Comments

Jimmy L
Thu, 04/16/2020 - 8:28pm

Government layoffs? Government service cuts? This is great news! How do we keep this ball rolling!?

Robert Kleine
Thu, 04/16/2020 - 9:41pm

What a ridiculous comment. Who do think is leading the fight against this virus. Half of local govts budgets are first responders. Without govt it is likely millions would die. Where do you think all the money for medical research comes from.

Mark
Fri, 04/17/2020 - 9:16am

Robert - Money comes from Taxpayers. And yes, the govt provides a lot of money for medical research as does corporate investments.

The unnecessary Shutdown of the economy will highlight the unnecessary or non-essential employees of both govt and business in other words, the waste.

Matt
Fri, 04/17/2020 - 11:20am

Speaking of ridiculous! Millions Dying??? With out ... first responders? Son in law is a Sherif's Dep., says biggest problem is family squabbles and such from being cooped up. Beyond that NOTHING to do, utterly bored!

Punk
Fri, 04/17/2020 - 11:34am

Why is it not shocking that the same people proudly waving the confederate flag, passing out candy to children by hand and blocking hospitals/honking disturbing sick people are the same ones celebrating people losing their jobs. I hate Hillary, but one of the few things she ever got right was calling you people deplorable. I really hope during the next round of protests they start recording you peoples license plates. You should all then go on hospital lists to receive care last when you inevitably get sick. The last to receive ventilators, the last to get a bedroom and the first to go to make shift tents if things get that bad.

Johnny C
Fri, 04/17/2020 - 8:06pm

This is indeed sad news. Government is a parasite that sucks blood from it's host, but the layoffs mean that the host is dying. You better believe that government is going to do everything they can to protect their workers- they'll hold everything and everybody up as a shield before they take any blows. The fact that government employees are feeling the pain means that the cuts have been very deep indeed.

Mike
Fri, 04/17/2020 - 8:52am

Of course the Federal money dolled out will not be going to small towns and rural areas of the state, but rather just the big cities. Northern Michigan will be especially devastated by this crisis and will receive the least amount of help. Half the businesses where I live probably will never recover from this.

Punk
Fri, 04/17/2020 - 11:44am

Gotta love the logic of rural areas. People in these places dont want to pay taxes, yet they always want the services. Its socialism only if its for the next guy! The same people voting in and currently defending Trump who offers up trillions to the rich in tax cuts, are the exact same ones complaining about the lack of rural investments. I even used to feel bad for these people. But you are putting far too many lives at risk with your politics to feel bad for the plight of rural areas and your lack of hospitals, quality schools and numerous other issues like lack of employment.
There is also the Governor conservatives put in place last time around who LITERALLY suspended the rights of citizens when he put his people in place of locally elected officials like Mayors in places like Flint. This then led to the poisoning of numerous peoples water who are STILL dealing with toxic water.
Conservative hypocrisy and victimhood knows no bounds.

middle of the mit
Fri, 04/17/2020 - 5:37pm

Punk,

Try living with them and then being related to them. They believe these things because the mentality of duane (obtuse). Truth and facts are whatever they "perceive" them to be.

It is the same the reason that people say that Bridge is a partisan outfit. They "perceive" that FOX news is fair and balanced. So any news outlet that doesn't use economic experts as opposed to health experts during a pandemic is biased. Any news organization that doesn't gloss over republicans telling their constituents that COVID-19 is fake and then after their closed door meetings sell off all of their stock and purchase new stock in medical supplies is FAKE NEWs!

All the politicians and half the people think they could save tax money if Detroit, Flint and the other major cities weren't taking THEIR TAX MONEY!

They believe this because this what republicans shove down their throat all day long on FOX News, yet FOX News is headquartered in the MOST LIBERAL TAXHOLE ON EARTH.

Don't ask me to explain it. The conservatives on this board REFUSE TO ADMIT LET ALONE EXPLAIN IT! DON'T YA?

And towards your last point, conservatives don't care if conservative Government takes over your life from an executive Governmental way unless you are a democrat doing it. And if republicans hurt cities.....they don't care. As long as they don't have to pay more taxes.

We "just found out Snyder was lying about when he knew what he knew about Flint", do you think there will be an article about it in the news? The only place I found it in State was Deadline Detroit.

https://www.deadlinedetroit.com/articles/25001/ex-michigan_gov_snyder_li...

And the statute of limitations for him being held responsible runs out in a week.

And this was his comment to the Flint mayor:

"“You have a lot of influence with him,” Weaver remembered a worried Snyder saying to her about Cummings. Weaver told Vice that Snyder asked her to get Cummings to “back off” from investigating him, saying he wanted to move on with his life as a private citizen.

I WANT TO GET ON WITH MY LIFE AS A PRIVATE CITIZEN. Others would like to have done that without being poisoned because their city was run like a BUSINESS.

What ever happened to law and order, or personal responsibility?

It's nothing but a talking point about how republicans "perceive" themselves.

Thanks to obtuse for the inside information on how republicans are changing everything.

See, I believed that a tree was a type of plant that grows out of the ground and has branches with leaves. But obtuse reminded they are dogs.

How? Why?

They both have bark!

Cathy
Sat, 04/18/2020 - 6:01pm

The Republican Party has become a death cult. Everyone should find it interesting that a group of high powered Washington Republican's have created a group called The Lincoln Project and are endorsing Joe Biden. The current state of the Republican Party is despicable and those who are middle class and supporting them fail to understand they are being used. Trump is bragging, got that? bragging deaths may 'only' be 65,000.

Johny Deep
Sun, 04/19/2020 - 11:15am

The initial estimates were that two million people would die. Trump's actions (and there are a long list of actions that he took starting in January) may have kept the death toll to 65K (based on the latest projections). That's less than a bad flu season. I think that putting in place polices that might have saved 1,935,000 people would enable someone to 'brag'. I suppose though my argument relies too much on numbers and data and reason for you- maybe I should just start calling everyone I don't like names like you did?

middle of the mit
Fri, 04/17/2020 - 8:20pm

Punk,
I posted a comment earlier today ,4/17 about the Flint water crisis. And some revelatory information that came out just today, and Bridge decided not to post it.

So much for Bridge being a leftist site huh?

For some reason the papers in MI are NOT reporting what the last Governor did! Maybe the same reason they didn't report on it in the first place?

WHY?!?>!?!?!?!

Helpful Joe
Sat, 04/18/2020 - 10:41am

Middle of the Mit, I think that Bridge isn't publishing your comments because you copy and paste the same things on every story- personal opinions that sound like the rantings of a madman. You link to crazy leftwing sites where they eat a lot of pangolin steak, and you capitalize words wildly. Lay off the bat soup, my friend.

Myself, I don't mind your postings- nothing creates a better argument against your views and beliefs and policy suggestions than having you talk. Your posts are great reasons to vote the other way. So keep raving about things that happened long ago while trying to ignore what is happening now- in spite of what you think, you have the right to speak and live and I'm on your side, you silly silly person.

Matt
Fri, 04/17/2020 - 11:38am

There seems to be a thought that state and local governments spend and tax real people's money but somehow the Federal Gov't spends money that magically appears out of thin air so it doesn't matter and has no cost to anyone. For a lot of people who think there should be absolute certainty with no risk and no personal responsibility for anything, this will be an interesting experiment. Not sure I want to see it if it ends.

Only Big Cities
Fri, 04/17/2020 - 11:41am

Does anyone know who snuck in that clause that only the big cities (500k or more) get federal money? Someone made that decision, and I want to know why?

Nutty
Fri, 04/17/2020 - 11:49am

I thought hospitals were overwhelmed, why the reduction in pay and hours for the workers and the layoffs and furloughs. A crisis should be a money maker special when we are told it is overwhelming the hospital systems. If this is what they are saying that they are being overwhelmed then why are they not recruiting docs and nurses to help instead of furloughing them. Stab-us-now stated, "I know this all sounds confusing", but it is making perfect sense the masses have been being dumb down for years, like cattle who only have enough sense to come to the trough.

Trump said anyone who needed a ventilator got one and anyone who needed a bed got one. And what about all these temporary hospitals put up and where's the usage? Now we are calling people who go to work heros? Huh? the men and women who really fought wars in foreign lands or officers who take on crime in the streets what are they then? But they do what they do so you could live in such a time when you know the majority of the people prior to this and probalbe for most don't even work hard enough to earn what they do, but you are now a hero! Hurrah for you! Maybe this 4th of July all of you can march in the indepenece day and (or) the memorial day parades. Is this not what Americans do go to work? I And now your a hero because you show up and should get monetary rewards from the government?

And what about the heros trying to keep their families afloat because the Governors shut their businesses down or put them out of work arbitrarily? No business no revenue, and you can't just keep printing fiat money to make up for it. It's not good for the people or the economy as we will soon all find out as each thing perpetuate more destruction. And the verdict keeps coming in loud and clear as each day passes, the virus in not the crisis it is what people have done trying to play God that has made this into a panic and crisis. God luck waging your war really against God lets see who wins.

Agree to disagree
Sun, 04/19/2020 - 6:40am

Nutty, I have to disagree with you on your comment about health care workers not being heros. My sister is an RN and is working 3rd shift on the Covid-19 unit at Henry Ford in Jackson. I'll agree with ya that yes it is her job/duty whatever you would like to call it as a nurse to administer whatever medical plan the doctor has ordered for any person that is admitted into her care no matter what said person may be suffering from. Yes the majority of the time its just another 10-12 hour routine type shift but now my sister as well as many others in the health care field know the risks that shes being asked to take and is seeing people die from it first hand but she still puts her scrubs on everyday and kisses her 2 children and her boyfriend before she leaves for work never knowing if it may be the last time or not. She doesn't let them see her fear or worry. She doesn't think of herself as a hero cause as a nurse she's just doing her job, its us that call her a hero, her family her friends. She goes into work just like a soldier goes into war to risk her life to save people she doesn't know and will prolly never see again in her life if and when they leave the hospital. She chose to go to school to be a nurse just like a person chooses to join the military to become a soldier both hope everyday is gonna be another uneventful day but both are also prepared to stand up and fight if called to do so whether it be fighting in a war against other people with guns or as in my sister's case she's fighting a war against something she can't even see but can kill her just the same. I consider both heros. One major difference between a soldier and a health care worker is when the fight is over for a health care worker they have to worry when they get home and become a mom, dad, husband, or wife if they took every precaution possible to make sure they arent bringing the unseen enemy (Covid-19) home to their families. Im not downplaying law enforcement or military at all cause they are heros as well and just like health care workers they choose their occupations knowing the possible risks they may have to take.

Karl Krumph
Fri, 04/17/2020 - 11:57am

That comment about the court revenue points out the extent of these municipalities using their District Courts to provide revenue.

Stats
Fri, 04/17/2020 - 1:31pm

Have you seen that over half of those who were employed in Michigan prior to this a total of approx. 2,000,000 are now unemployed over a 1,000,000 with more being added daily. I don't know if that counts the self-employed, independent contractors and gig worker that started signing up this week because they are being paid out of PUA (federal government monies, new fiat funny money). The virus is proving not to be the crisis as more facts come out daily but what people are doing in response is. Not everyone agrees with what is being done, but many are walking unquestioning like an ox to the slaughter.

R.L.
Fri, 04/17/2020 - 2:32pm

Until it hits home many people don't understand or care. Continue to shop meet greet and block traffic to a hospital. When is the last time you went to your job and were told don't go home and possibly infect your family and friends. You have no idea what many of these people are dealing with. They are my family, friends, and neighbors Have a nice day. R.L.

10x25mm
Fri, 04/17/2020 - 7:35pm

This story does not tell readers that the local units of government most afflicted by the extra costs imposed by this pandemic were already in poor financial condition before the Wuhan coronavirus descended upon us. Those units of government are run by politicians who wish they were higher in the political pecking order and saddle their organizations with an endless litany of expensive, but crowd-pleasing activities that really should be performed by State or Federal entities with the wherewithal to do the activities competently.

The headlines and photo ops generated by these crowd-pleasing activities are very satisfying to the lower rung political class, but they cripple the finances of our larger municipal and county governments. When a plague or disaster hits, these politicians have to start begging for funds. Begging is not really a good look for politicians and it drives a wedge between Michigan's rural governments and its (sub)urban governments.

Robert T
Sat, 04/18/2020 - 6:43pm

Cut pensions now. $50,000 for 30 years is $1,500,000 per employee! Our 401k's are gone.

Ron
Tue, 06/30/2020 - 9:20am

That's enough whining about property taxes being capped.

Property taxes in this state are already far too high.

This is because property "value" has been totally decoupled from reality as the result of the realtors, banks and other entities conspiring to boost home selling price to maximize their profit, and the state is complicit in this by allowing assessed values to be uncapped during sales and follow these grossly inflated numbers.

How about we all stop paying property taxes for 2 seasons? You can do it without the gub'ment taking your house. Maybe that would take them to their knees because they clearly have not felt enough pain.