Print Friendly and PDF

CS Mott Foundation: More Funding for Local Municipalities Critical to Michigan’s Economic Competitiveness

Michigan’s system of funding for local municipalities is not sustainable and approaching a breaking point panelists said during the session “Funding Michigan Cities: The Path Forward” hosted by the Charles Stewart Mott Foundation. Addressing the challenges of properly funding emergency services, aging infrastructure and utilities, panelists said state leaders must look past politics and be willing to invest in communities or Michigan will continue to fall behind the rest of the country in attracting business and investment.

Key takeaways

  • Michigan’s municipal funding model does not track with the economy and over time the state has responded to fiscal emergencies by ratcheting up tax and expenditure limits, hurting cities’ ability to raise money for critical projects.
  • The state continually underfunds municipalities lower than statutory levels. From 2002 to 2012 state revenue has gone up 29 percent but investment in local governments has gone down by 56 percent.
  • The single biggest revenue source for most municipalities is property taxes, but there are two state constitutional limits on that: Proposal A and the Headlee Amendment.
  • As a result, municipalities and schools are increasingly relying on millage votes to fund infrastructure and education.
  • Many financial problems cannot be fixed locally and require city leaders to have a seat at the table during state budget discussions. Local municipalities cannot be an afterthought.
  • Post-industrial states such as Ohio and Pennsylvania that are investing in transportation and infrastructure could help provide innovative solutions for funding Michigan cities.
  • Local funding is complicated and exasperated by the learning gap in Lansing due to term limits in the state Legislature.

Moderated by Ron Fournier, publisher and editor of Crain’s Detroit Business, the panel featured: Grand Rapids Mayor Rosalynn Bliss; Michigan Municipal League’s Anthony Minghine; and Michigan State University’s Joshua Sapotichne.