Fewer than half of Michigan's smaller and more rural communities report good fiscal health, reflecting a trend of rising financial stress among local governments across the state and growing concerns about having enough money to keep up with increased service demands.
The worries are particularly pronounced in villages and other small, rural communities but by no means limited to them: The proportion of jurisdictions reporting they have low fiscal stress has dropped to the lowest level since tracking began more than a decade ago.
The findings come in the latest installment of the Michigan Public Policy Survey conducted by the University of Michigan's Center for Local, State, and Urban Policy.
Looking ahead, the survey finds just under half (49%) of jurisdictions expect relatively good fiscal health five years from now, compared to 56% who have good health today. On the other side of the ledger, 14% predict high fiscal stress, compared to 8% who have high stress today.
The concerns have consistently increased since 2021, despite the infusion of state and federal funding during that period.
"We're especially concerned about smaller communities because, prior to the pandemic, they were typically among the healthiest," said Stephanie Leiser, executive director of CLOSUP and one of the report's co-authors. "But now across a few different indicators, we've seen a reversal, and more small communities are raising red flags about their fiscal health."
Among other findings:
- Just over half (56%) of Michigan's local leaders rate their jurisdiction's fiscal condition as relatively good in 2025, down sharply from 2020-23, when 63%-65% reported a relatively good fiscal condition.
- Currently, 5% of jurisdictions statewide report having "perfect fiscal health," down from 10% in recent years.
- Meanwhile, 31% of the state's local governments currently report medium levels of fiscal stress, up significantly, and 8% report high levels of stress, holding steady from past years.
"After the COVID pandemic, many of Michigan's larger local governments got a fiscal boost from state and federal funding sources like the American Rescue Plan Act or the Infrastructure Act," said Debra Horner, the survey's senior program manager. "Those funds are about to expire, and we'll need to be concerned that counties and cities don't also start down the slow fiscal decline that our smaller governments are currently reporting."
Despite all the concerns, some findings offer cause for optimism: Property tax revenues continue to rise, especially in larger communities, and local governments appear increasingly able to plan for spending that keeps pace with needs in areas such as public safety and infrastructure. However, personnel costs are a significant source of pressure, with many jurisdictions planning wage increases.
The survey was conducted April 7-June 12, 2025. Respondents include county, city, township and village officials from 1,328 jurisdictions across the state, resulting in a 72% response rate by unit.
