Almost two thirds of all local government leaders in Michigan say the state’s system of funding cities, towns, and counties is broken — and that number continues to increase. That’s according to a new survey from the University of Michigan’s Center for Local, State, and Urban Policy (CLOSUP).
Local leaders say one of the biggest problems is that they can’t make up for the revenue they lost when property values tanked during the housing crisis. That’s because Michigan’s constitution caps the amount of new revenue a city can bring in every year. It’s one of the byproducts of the voter-approved Headlee Amendment.
For the city of Ferndale, that created a serious situation for that community’s library.
Kevin Deegan-Krause served on the Ferndale Library board from 2004 to 2010 and currently serves on the Ferndale School Board. He’s also a professor of political science at Wayne State University.
He explains that Ferndale voters enthusiastically approved a millage rate increase in 2007 for the library. But in the 2008 housing crash, the library lost about a third of its revenue, making it very difficult to pay for the improvements the library had already made. When property values came roaring back in Ferndale in recent years, it was still unable to recoup those losses because of state caps on revenue increases.
Municipal finance in Michigan “really is like a vice that only squeezes in one direction,” Deegan-Krause tells Detroit Today host Stephen Henderson.
“(Tax revenues) can drop as fast as the market goes down, but it only goes back up at (the rate of) inflation,” he continues. “And by only going back up at the rate of inflation, what that means is you can’t improve anything because everything else is rising at that same level.”
That situation caused library officials to seek another millage request, a campaign which Deegan-Krause helped coordinate, which voters approved in August. It increases the amount from 2 mills to 3.5 mills for a 10-year period.
CLOSUP administrator Thomas Ivacko also joins Detroit Today to talk about municipal finance issues in Michigan. He says the situation in Ferndale highlights grave concerns that local officials across the state share.
“It doesn’t matter if they’re from a big jurisdiction or a small one, it doesn’t matter if they’re Republicans or Democrats, it doesn’t matter if they’re in the Southeast Michigan or the U.P., majorities of all kinds of local leaders think that Michigan’s system of funding local government is broken,” says Ivacko.
To hear the full conversation, click on the audio player above.