By the Numbers: Townships

“By the Numbers” is a series of short articles evaluating the finances of Michigan local governments, primarily through the use of U.S. Census report 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.

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.

This installment, third in the series, looks at township revenues.

Townships

General Revenue

From 2002-2012, Michigan townships saw a 20.7 percent increase in General Revenues. Only Maine’s townships experienced a smaller increase in revenues over the course of that decade. Overall township revenues, in the 20 states with township operations that report their information to the U.S. Census, increased by nearly 42 percent, a growth rate that was double Michigan’s.

In 2002, Michigan townships operated on $1.803 billion in General Revenue. By 2007 township revenues had increased to $2.181 billion; in 2012, revenues had declined to $2.175 billion. Michigan townships saw a 21 percent increase in general revenues between 2002 and 2007 as compared to the 28.8 percent increase in township revenues seen nationally. This placed Michigan 12th out of 20 states with township operations. The Great Recession impacted the growth of revenues for townships from 2007-2012. Michigan townships saw an overall loss of revenue of 0.3 percent. Only two other states had townships that saw a greater loss in General Revenue.

Revenue from Own Sources

Nearly 80 percent of township operations are funded by revenues collected locally. Overall, between 2002 and 2012, townships saw an increase of 30.4 percent in revenues derived from their own sources. Nationally, own source revenues for townships increased by 46.6 percent during the same time. Michigan was 17th out of the 20 states in revenue growth in this category.

From 2002-2007, Michigan townships saw a 33.6 percent increase in revenues derived from their own sources – increasing from $1.330 billion to $1.777 billion. This exceeded the national average of 30.6 percent, placing Michigan 11th out of 20 states. On the flip side, Michigan townships were the hardest hit by the Great Recession. From 2007-2012, townships in Michigan saw their Own Source revenues decrease by 2.4 percent, declining from $1.777 billion to 1.735 billion.

Federal Revenue

The federal government is not a major funding source for township operations. Michigan townships received $41 million in federal funds in 2002. Federal funds were reduced to $30 million in 2007, and then increased to $47 million in 2012.

State Revenues

From 2002-2007, Michigan townships saw a 12.3 percent decrease in state funds. During that same time, townships across the country saw an overall increase in funding of 21.8 percent. Much of this loss in state revenue can be attributed to cuts made to the statutory revenue sharing program at the state level. Most townships in Michigan were phased out of this program during this time period. By 2007, most townships were only eligible for the constitutional revenue-sharing distributions. Between 2007 and 2012, Michigan townships saw a 4.4 percent growth rate in revenues from the state. Nationally, the growth rate was an almost imperceptible 0.1 percent.

Overall, Michigan townships lost 8.5 percent of their funding from the state during the 2002-2012 time period. Townships nationwide saw an average increase of 22 percent. This placed Michigan 17th out of the 20 states in revenue growth from state sources over the decade of the study.

Conclusion

Overall, Michigan townships fared better than their city and county counterparts in sustaining their operations. However, Michigan still lagged most other states in its ability to collect revenue from taxes and other fees. Townships were not as hurt by cuts to state revenue as were cities and counties, but this was only because almost all discretionary funds sent to townships by the state had been eliminated by 2007.