Michigan's local officials are growing more pessimistic about their ability to maintain-let alone expand-services under the current local government funding system, according to a University of Michigan study.
That's the main takeaway from the latest installment of the Michigan Public Policy Survey conducted by the University of Michigan's Center for Local, State, and Urban Policy.
Drilling down, the survey found just 29% of local officials statewide say Michigan's current system of funding local government will allow them to at least maintain their jurisdiction's current services-down from 40% in 2016 and 43% in 2012. Only 16% believe they will be able to improve or expand services in the future.
Correspondingly, the proportion of local governments saying they won't be able to maintain their current services has been growing, from 34% in 2010 to 43% now.
The main source of state revenue for local governments is the local property tax, which is strictly limited at the community level by the 1978 Headlee Amendment and at the individual parcel level by Proposal A of 1994. State statutory revenue sharing, another key source of funding for many local governments, has declined over decades and is hundreds of millions of dollars below full funding each year.
The trends, researchers say, suggest Michigan's current system is falling short of providing flexible, sustainable funding for local governments, especially as demands on local services grow.
Except in the case of police or fire services, most local officials think residents in their community would prefer service cuts to avoid paying higher taxes for general government operations, economic development and public transit, as well as parks, recreation and libraries.
Some policy experts recommend expanding access to local-option taxes, which are relatively rare in Michigan, to provide local officials more opportunities and discretion to raise revenue locally. Expanding them would likely require legislative change in Lansing before local governments could weigh whether to seek approval from residents.
Ultimately, researchers note there's no clear consensus among the state's local leaders on policies to expand local taxing authority.
"Other states give their local units more tools for capturing revenues from regional and local economic activity such as tourism taxes or local sales tax," said Debra Horner, the survey's senior program manager. "Michigan policymakers must recognize not only the limitations of the existing system of funding but also the variety of local preferences and willingness to embrace new revenue streams."
The survey was conducted April 7-June 12. Respondents include county, city, township and village officials from 1,328 jurisdictions across the state, resulting in a 72% response rate by unit.
