The news remains grim on the financial front for Michigan local governments. More survey data from local officials reported by the Center for Local, State and Urban Policy at U-M find Michigan's city, township and village governments are still being battered by a confluence of negative trends:
1. Declining state aid due to political decisions made in Lansing.
2. Declining local revenue due to a tough economy, joblessness and crashing property values.
3. Rising costs on key budget lines, especially health and retirement benefits for employees.
About half of the responding governments say they are less able to meet their fiscal responsibilities than in the previous year. And this constitutes good news, since the same figure was much higher a year ago.
"While the easing trend in which fewer jurisdictions report problems could continue and expand in the future, it seems equally if not somewhat more likely that fiscal trends will again turn negative for more and more local governments. Potential problems include the state of the Michigan and U.S. economies in the second half of 2011 and the possibility of a “double-dip recession,” the likelihood of further cost increases for health care and municipal service provision, the potential for further revenue declines tied to state policymakers’ focus on eliminating the personal property tax, and even Michigan’s constitutional caps on local government property tax revenue increases which could restrict revenue growth if or when the housing market finally begins to climb again," the report states.
And this week, word came out from the Snyder administration that its plan to repeal the personal property tax (which pumps $1.2 billion into local governments and schools) includes only partial replacement of the lost revenue from other sources. Any bets on whether the Legislature even agrees to Snyder's preferences? I could easily see the House and Senate voting to repeal PPT first and then "forgetting" to enact changes to generate any replacement revenue.
Make no mistake, local government finance is a major crisis in Michigan. It's inconvenient for state legislators to think about right now, but Michigan residents who care about the public services in their communities might want to help lawmakers "recast" their priorities.