“By the Numbers” is a series of short articles evaluating the finances of Michigan local governments, primarily through the use of U.S. Census reports on Local Government Revenues and Expenditures by Type of Government, and State and Local Government Revenues and Expenditures. The articles will look at how Michigan compares over time to the rest of the nation.
Several articles will benchmark changes in revenues for local governments comparing the years 2002, 2007, and 2012. Changes in revenue collections, as well as transfers from the State and Federal governments, will be evaluated for each type of local government in Michigan – municipalities, counties, townships, and school districts. Another installment looks at two distinct types of own source revenues: taxes and fees.
Later in this series, articles will benchmark Michigan’s state and local expenditures on various categories of services on a per capita basis as compared to other states, using information from 1992, 1997, 2002, 2007, and 2012.
Finally, the results will be evaluated overall with a critical look at Michigan’s current system of funding local governments and the services they provide.
Over the past five weeks, my blogs have covered the revenue side of the different types of local governments in Michigan from 2002-2012. The results range from discouraging to downright scary. However, one of the key takeaways was that different types of local governments were impacted in different ways over the course of the decade.
We know that Southeast Michigan – including all of the counties that make up the SEMCOG region – were among the hardest hit areas of the state when looking at declining property values during the Great Recession. Many local government officials in our area might be surprised to learn that there were significant areas of the state that continued to see growth in overall Taxable Value during the recession.
The U.S. Census numbers reinforce what local government officials saw. Cities were getting hammered by the recession, while many townships, especially those outside our region, were seeing some growth in revenues even during the worst of times. Counties saw a mixture of experiences; the greater the area of the county that was urbanized, the greater the likelihood the county saw diminished property tax revenues.
The actions by Michigan’s state government compounded the problems of many local governments. Once again, cities took the biggest blow. The loss of hundreds of millions of dollars each year in reduced revenue sharing distributions during the time when these local governments were seeing huge blows to their property tax revenues reverberated throughout the SEMCOG region. Again, because townships received little of the revenue sharing money that is under legislative control, they were generally shielded from the budget cuts made by the state.
A recent report by the University of Michigan Center for Local, State, and Urban Policy (CLOSUP) confirms in a very real way the findings from the study of census numbers. In the most recent CLOSUP poll, 71 percent of township officials who responded considered the fiscal stress on their community as relatively low; only half of the cities, villages, and counties came to the same conclusion. This comes after four years of growth relative to the time of the census study and end of the recession. Local governments in Michigan are still struggling from the effects of the past 15 years.
My blogs over the coming weeks are going to change direction. Instead of looking at revenue growth, I will instead look at the cost of providing various types of governmental services. How much does Michigan spend on police protection compared to other states? What about basic administrative costs? Beginning next week, my blogs will explore these issues. The focus will be on services that are typically provided at the local level of government in most states. However, it will look at all expenditures regardless of whether it is at the state or local level. For example, police protection is generally considered a local government expenditure, but our state police force certainly is an integral part of our police system.
The analysis will focus on per capita expenditures at the combined state and local level for a multitude of governmental services. The analysis will look at both how much is spent on a per capita basis as well as where Michigan ranks nationally. The analysis looks at the U.S. Census reports in five-year increments from 1992 to 2012. This will give readers a good comparison of how we operate in Michigan, as compared to the rest of the nation. It will also give good information on how our local governments reacted to the reduced revenues caused by the Great Recession.
Next week’s blog may be one of the more interesting categories: public employee wages and salaries: What has happened to public employees in Michigan compared to other states over the past two decades? Come back next week for the answer.
Leave a Reply