Binding cities, with few ways out

The “Flint Syndrome” is a quick way of summing up the long-run consequences of disinvestment in our cities that have resulted in widespread breakdowns in public safety and the quality of life for citizens. While the phrase refers to the terrible water debacle in Flint, just about any expert in municipal finance will tell you the syndrome could easily apply to just about any sizable city in Michigan.

The puzzling and frustrating thing about this particular malady is that it has been largely caused not by any one error, but by a series of state policies adopted over nearly the past 40 years.

“Cities are bound and gagged financially by the state,” Mitch Bean, the widely respected former long-time director of the nonpartisan House Fiscal Agency, told the Center for Michigan’s online Bridge Magazine, as part of a series of articles on the state-inflicted crisis in municipal finance several weeks ago.

“And there’s no way out.”

One example: Bridge found that 2,300 police officers had been laid off by Michigan cities from 2005-2014, more than in any other Midwestern state. Squeezed by tight resources, many cities around the state are reducing services to residents, even undertaking such drastic measures as holding local fundraisers to buy fire equipment.

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Tue, 05/24/2016 - 10:35am
I'm sure that you and I each have a different definition of what an "essential" service includes.
Tue, 05/24/2016 - 11:40am
I agree 100% with you. Many "essential" services are not.
Tue, 05/24/2016 - 10:56am
In my mind it is a coup by a thousand cuts. The Right Wing, which has no interest in the people they WORK for, appears only interested in figuring what office to run for next after they are term limited out of their current one. A couple of examples 1. The road funding fix, as near as I can tell was a shell game. I have yet to see any REAL numbers on how this "plan" will work. 2. The right to vote continues to be restricted, whether because of "massive fraud" (numbers please) or because the Right didn't like the outcomes of down ticket races, so are going to force voters to go line by line on the ballot. Of course there was no funding provided for the additional elections workers that will need to be hired. Maybe those pesky non-right wingers will just stay home. 3. Attaching a minimal appropriation to, pretty much, every bill so the VOTERS can't overturn the legislators handiwork. Like I said: A COUP BY A THOUSAND CUTS.
Tue, 05/24/2016 - 6:48pm
bluefox, Why is it always about spending other people's money with no interest or concern about receiving value for that money? Why isn't it about results not just about more and more taxes? I can understand Mr. Power's viewpoint, he grew-up in a time when government employees were perceived as the only ones having the best interests of the people in mind, and that belief in their altruism bestowed on them an omniscience and unlimited funds and power without accountability. I can appreciate how difficult it would be for him to let go of a faith built in such difficult times. With such a deeply founded faith I can understand his emotional barrier to accepting the realities of today and how government like any organization without accountability, without limits, without expectations of delivering value when spending other people's money can make missteps that compound on previous practices and create difficulties that will be painful to undo or overcome. Unless you are a pre-baby-boomer I wonder how you can have such blind faith and are seemly so emotionally invested in continuing to give government agencies/programs unrestrained access to other people's money without any accountability, and not show any interest in taxpayers getting value for their money. I can't imagine you would trust private companies/organizations that way so why do you think the government organizations act any differently?
Roger Martin
Tue, 05/24/2016 - 7:43pm
So Observer, You offer no solution. None. If clean, safe drinking water, sewer systems that function, and public safety are not the "absolute essential" services that local and state government must provide and pay for (of course, that means we pay), who does?
Wed, 05/25/2016 - 2:31pm
Mr. Martin, If electricity and natural gas aren't 'essential services' since they are not operated by government agencies and they even provide a profit for those who own and operate them, so why not 'water and sewer' be use a similar model? If there were a power failure or gas line failure or a catastrophic event, who would be responsible for clean up and repairs? Who is accountable, in the courts, in regulatory process, for the efficiency and effectiveness of the systems? If we use Flint water experience as an example who is paying for all the screw ups, who has not been accountable? Who do you trust more to deliver their services/products? The utility companies or the government? Why?
Wed, 05/25/2016 - 6:45pm
This makes absolutely no sense. For it to do so, the last two words should have been "what is?" instead of "who does?" And I made no assertion about what is and is not an "essential service".
Miriam Meisler
Tue, 05/24/2016 - 11:04am
The starving of local services is a tragedy of our times, with many negative consequences from lousy roads to inadequate schools to the cuts in police service that you mention. I wonder whether the term limits for state legislators contributes to the problem, in reducing the experience and knowledge of our legislators. The argument regarding whether government is a force for good or for evil seems to continue as part of the 'culture wars'. It is very discouraging.
Barry Visel
Tue, 05/24/2016 - 11:25am
Not all Michigan cities, villages and townships are in trouble...not by a long shot. Some cities with income tax are in trouble, so that's not always the solution (setting aside the taxation without representation problem for non-residents, regardless of how courts have incorrctly ruled). I think Bridge should look more closely at Michigan communities that are not in trouble to see what lessons can be learned there.
Tue, 05/24/2016 - 11:47am
I have no problem changing the revenue stream to local governments. What I have a problem with is the other side of the equation: spending. When a local government is not run efficiently no amount of money will keep it solvent. Agreeing to exorbitant worker contracts that include retirement at 50, lifetime health care for the employee and their family, and maximizing the number of employees is a recipe for disaster. I don't care about if it's 'deserved", they "work hard" or any other factor. I'm pretty angry the local governments agree to these contracts for me, the taxpayer, when local officials have no skin in the game and are spending other peoples money.
Tue, 05/24/2016 - 2:55pm
Amen Jerry. Legacy costs are killing us in Wayne.
Tue, 05/24/2016 - 12:41pm
The Michigan legislature, like congress, is as malapportioned today as it was before the Baker v. Carr US Sup Crt decision in 1962. Between various voting suppression measures and gerrymander districts it does not matter that Democratic House candidates receive 400,000+ votes more than Republicans and lose seats. The right wing has total control and spineless governor who signs whatever the put in front of him. Just returning Michigan to one person one vote---ie real democracy is the only way to achieve a long term solution. Not everyone will get what they want, but now we have a large majority of the state whose votes do not count for as much as other citizens votes. It is also no coincident that the state's policy of the last 30 years has been especially vindictive towards city's which just happen to have a majority of the state's minority community.
Barry Visel
Tue, 05/24/2016 - 12:55pm
Research question: Did urban communities reduce property tax rates when tax base was expanding faster than inflation, or did they increase spending or add services?
Barry Visel
Tue, 05/24/2016 - 1:03pm
A possible solution: Let's eliminate the first 4% of sales tax and remove any restrictions on local government from increasing taxes as approved by local voters, said taxes to apply only to the citizens of that community.
Tue, 05/24/2016 - 3:09pm
Core cities with a "majority of minorities" make it much easier to make black and white statements, such as "us and them". Political boundaries of the cities successfully walled off the urban problems, compartmentalizing them. The State continued to prosper, without addressing the decline of the core cities. Those political walls are not made of stone, although many people think that they can't be changed. It only takes the political will to do it. There are many people in the world that don't believe that democratic institutions can make difficult decisions. This is a big deal. I'm pretty sure that it's going to take sweeping changes to turn this situation around. The people should get engaged, and stay engaged for more than an election or two.
Tue, 05/24/2016 - 3:35pm
"Home rule" thinking and a complete lack of regional land use planning have exacerbated the problems of a declining economy. When there was money, everybody built whatever they wanted to, in whatever green field they wanted to, which meant they also had to build the roads, the sewer and water systems, the fire and police services, etc. But they had money then, so it didn't matter. Now the money's not so easy to come by and they are stuck with these overbuilt systems. There's no easy answer, but for a start Michigan should call a halt to all green field development and redirect investment to places that already have infrastructure and services in place. This would be particularly helpful for blighted urban areas seeking tax base.
Tue, 05/24/2016 - 5:28pm
The term "disinvestment" in our cities generally refers to the effects of the inability of those city's citizens to compete economically with the citizens of other cities in this country and around the world. There is no doubt that cuts in revenue sharing have significantly aggravated those cities' distress, but most of their problems flow from their inability to successfully compete for wealth creating jobs. Mr. Power is mistaken when he says, "The basic law calls for the first four percent of sales tax revenues to be set aside for distribution to cities. But the law does not – and cannot – require the legislature to actually appropriate funds to be passed out." Our constitution requires that fifteen percent of the first four percent of the sales tax be allocated to revenue sharing, and that is done. It is statutory revenue sharing that has been cut by five billion dollars over the last decade. But he is absolutely right about the flaws in the Headlee Amendment and Proposal A. Both should have restricted the increase in property taxes due to appreciation of property values except when approved by a vote of the taxpayers. We could, if the voters so desire, amend both provisions to allow that. That would allow voters "to restrain uncontrolled spending driven by local politicians." while still funding essential services at the desired level. Mitch Bean is not quite correct when he says, "“Cities are bound and gagged financially by the state,” . Michigan law authorizes cities, but not villages or townships, to impose an income tax. Currently, only 22 cities do so. He is also mistaken when he says, “And there’s no way out.” If the voters so desire, the legislature could raise the income tax and use the money for revenue sharing. The same taxpayers who pay the additional tax would receive it in the form of revenue sharing. Mr. Power says, " In Pittsburgh, emergency financial managers develop budgets in collaboration with locally elected officials, unlike the unilateral power exercised by Michigan EM’s." I see no reason that couldn't be easily done here. Locally elected officials could embody their spending preferences in a budget as long as total expenditures were within the overall limit set by the Emergency Manager. And it should be pointed out that under the emergency manager law, cities have the option of bankruptcy, consent agreement, or emergency manager. This whole mess illustrates how complex the world is, and how difficult it is for the political process to deal with that complex world. That is an excellent argument for limiting government to absolute essentials.
Thu, 05/26/2016 - 7:04pm
I owe Mr. Power a partial apology. Mitch Bean says that " For CVTs, the base was specified as an amount equal to 74.94 percent of 21.3 percent of the sales tax collections at a rate of 4 percent." So statutory revenue funding is based on the same revenue collected by the first four cents of the sales tax, as is the constitutional revenue sharing. Statutory revenue sharing should amount to 15.96 % of the revenue raised by the first four cents of the sales tax as opposed to 15% of that revenue for constitutional revenue sharing. My apologies.
Matt Korolden
Sun, 05/29/2016 - 10:40am
So, when there aren't enough first responders because of the MI GOP's scorched earth fiscal policy, can victims sue the state legislature?