Economic Development and Government

Municipalities are seeking revenue sharing increase

Michigan Municipal League will unveil online tool that explains how communities have been harmed.

March 25, 2016
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LANSING — Many Michigan communities are feeling the pinch of the loss of $7.5 billion in state revenue sharing funds since 2002.

So now they’re gearing up to lobby for its return. On Monday, April 21, the Michigan Municipal League plans to unveil a new online tool that explains how communities are harmed by these cuts.

“We are simply not adequately funding local government, and you can see the impact across the state,” said Anthony Minghine, associate executive director of finance and chief operating officer of the organization, which represents cities and villages.

“All we’ve done is put Band-Aids on the system, and I think it’s time we work to actually fix things.”

Although the league is not asking for specific changes at the press conference, it said it hopes the database’s unveiling will stoke the conversation surrounding local government, Minghine said.

“Our long-term goal is to not just create awareness, but to push an agenda of broader policy solutions,” he added.

The cut to local revenues that come from state sales taxes has harmed the quality of services as diverse as libraries and police, municipal officials say.

“It has effects across the board,” said Thad Taylor, Manistee’s city manager. “The city wants to provide for its citizens, and our ability to provide has been significantly compromised.”

The state reduced the amount of revenue shared with local governments during Michigan’s economic downturn in 2008, said Judy Allen, legislative director for the Michigan Townships Association.

“This is important funding for townships because we don’t have the ability to go out and (pass) a sales tax or anything of that nature,” Allen said.

In budgets for 2014 through 2016, the state agreed to share revenue funds with 101 of 1,240 municipalities based on population, Allen said.

That’s only a very small percentage of communities statewide that lost some funding, she said.

“We subsidize libraries, bus services and an airport that may all need reduction in hours of service,” said Steve Sobers, city manager in Big Rapids. “The next thing after those would be our public safety people and maybe getting by with fewer of those folks.”

Michigan roads are among the programs harmed by the cuts, according to some city officials.

“We’re not putting the amount of money into roads that our council or citizens would like,” Taylor said.

Sobers agreed, saying, “We don’t pave as many streets as we used to. The reduction in funds from revenue sharing, combined with a reduction in the amount of taxes local governments can collect, has seriously hurt some communities, Taylor said.

“It will take us years to recover these losses,” Taylor said. “It’s all cumulative, but the revenue sharing is a big part of this.”

Some city officials said they feel it’s wrong for the state to keep these funds.

“That revenue sharing should be going to local units of government,” Taylor said. “They have diverted money from locals for their own benefit. It’s hard to take.”

As a start to replenish the funding, local officials are calling for an increase in revenue sharing funds by $5.8 million for this year.

That would amount to an additional $2.65 in funding per township resident, Allen said.

The need for these increased funds is urgent, Sobers said.

“We’re right at the point right now where, if we don’t raise some taxes, we’re going to have to shut some things down,” he said. “Any revenue sharing increase would help forestall that.”

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