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Trends in local fiscal health and funding local government
in Michigan
Presented at the
What’s After Bankruptcy? Lessons in Governance Reform
Detroit Branch of the Federal Reserve Bank of Chicago
November 7, 2013
The Michigan Public Policy Survey
• Census survey – all counties, cities, villages, and
townships
• Respondents – chief elected and appointed officials
• Administered – online and via hardcopy
• Timing – Spring and Fall each year
• Topics – wide range, such as fiscal health, budget
priorities, economic development, intergovernmental
cooperation, employee policies, labor unions, state
relations, environmental sustainability, citizen
engagement, much more.
2
MPPS is not a typical opinion poll
• 70+% response rates
• Census-style approach
• Transparency -- Questionnaires online -- Pre-run data tables online -- Sharing of (anonymized) datasets with other researchers
• Expert advisors on questionnaire content
• Borrow from other proven sources such as NLC and
ICMA
• Quality control such as double blind coding of open-end responses
3
Presentation Outline
• Findings on fiscal trends and budgetary health from the Spring 2013 Wave of the MPPS
Fiscal challenges facing Michigan’s local
governments
How local governments are responding
• Local officials’ concerns for the future
4
Challenge:
Declining Revenues and
Rising Costs
5
A Decade of Funding Cuts
6
Revenue sharing cuts
7
% of jurisdictions with declining state aid
Declining Revenues
Declining Revenues
8
% of jurisdictions with declining property tax revenues
Response:
Local Governments
Take Action
9
Government Actions
10
% of jurisdictions increasing reliance on GF balance
Government Actions
11
% of jurisdictions cutting staff levels
Government Actions
12
% of jurisdictions shifting health care costs to employees
Government Actions
13
% of jurisdictions increasing inter-gov’t cooperation
Government Actions
14
% of jurisdictions increasing debt
Government Actions
15
% of jurisdictions cutting service levels
Result:
Gradual Trend
Easing of Fiscal Stress
16
Spreading Fiscal Problems
17
2009: less able to meet fiscal needs, by county
Jurisdictions within County
Green: < 25%
Yellow: 25-50%
Red: > 50%
Spreading Fiscal Problems
18
2010: less able to meet fiscal needs, by county
Jurisdictions within County
Green: < 25%
Yellow: 25-50%
Red: > 50%
Easing Fiscal Problems
19
2011: less able to meet fiscal needs, by county
Jurisdictions within County
Green: < 25%
Yellow: 25-50%
Red: > 50%
Easing Fiscal Problems
20
2012: less able to meet fiscal needs, by county
Jurisdictions within County
Green: < 25%
Yellow: 25-50%
Red: > 50%
Easing Fiscal Problems
21
2013: less able to meet fiscal needs, by county
Jurisdictions within County
Green: < 25%
Yellow: 25-50%
Red: > 50%
Easing Fiscal Problems
22
net fiscal health change: percentage of jurisdictions with
improving fiscal health minus percentage with declining health
Looking Ahead:
Concerns about Michigan’s
Current System of Local
Government Funding
23
Concerns Going Forward
24
% that can maintain services in current system
8% 6% 2% 1% 1%
30% 27% 37%
48%
67%
16% 21%
17%
13%
10% 46% 46% 44%
38%
22%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< 1500 1500-5000 5001-10000 10001-30000 > 30000
Can Maintain
Neutral
CannotMaintain
Don't Know
Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size
Concerns Going Forward
25
% of jurisdictions with increased infrastructure needs
Concerns Going Forward
26
% that can improve services in current system
12% 9% 3% 1% 1%
37% 38%
46%
61%
79%
26% 26% 24%
17%
6%
25% 27% 27% 21%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< 1500 1500-5000 5001-10000 10001-30000 > 30000
Can Improve
Neutral
CannotImprove
Don't Know
Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size
Support for Funding Reform
27
% that believe significant reform is needed
9% 6% 3% 1%
17% 16%
17% 14%
10%
23%
22% 19%
15%
13%
52% 56%
61%
70% 77%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< 1500 1500-5000 5001-10000 10001-30000 > 30000
Reformneeded
Neutral
Reform notneeded
Don't know
Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size Population Size
Support for Funding Reform
28
% that believe significant reform is needed
5% 7% 5%
18% 12% 14%
22%
18% 19%
55% 63% 62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Republicans Independents Democrats
Reform needed
Neutral
Reform notneeded
Don't know
Support for Funding Reform
29
% that would target specific funding elements to reform
26%
27%
32%
37%
30%
36%
38%
42%
35%
16%
20%
32%
41%
50%
45%
44%
41%
54%
Regional taxation
Local income tax
Economic Vitality Incentive Program
Personal Property Tax (PPT)
Constitutional revenue sharing
Proposal A
Headlee Amendment
Sales tax
Gas tax
Not Important at All Somewhat Important Very Important
6%
12%
9%
8%
15%
15%
12%
37%
29%
Michigan Local Government Fiscal Health
Trends
30
key findings
• Long period of fiscal squeeze: falling revenues and rising costs.
• Local governments fiscal were very active in responding: have
largely preserved health and tried to protect services.
• As of 2013, 29% of Michigan jurisdictions say they are better
able to meet their financial needs this year, while another 29%
say they are less able to do so.
• However, only 43% believe current system of funding will allow
them to maintain their current package of services in the future;
only 26% think it will allow improvements or provision of new services.
• 58% say significant reform is needed. Among them,
overwhelming percentages say each major piece of the
system needs reform.
www.closup.umich.edu
closup-mpps@umich.edu
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