How We Fund Local Government: How We Fund Local Government:

Michigan’s Local Leaders Michigan’s Local Leaders See Need for Reform See Need for Reform

Presentation by the Center for Local, State, and Urban Policy (CLOSUP) Presentation by the Center for Local, State, and Urban Policy (CLOSUP) for the for the

University of Michigan Wolverine Caucus ForumUniversity of Michigan Wolverine Caucus ForumFebruary 13, 2013February 13, 2013

Presentation OutlinePresentation Outline

Introduction to the Michigan Public Policy SurveyIntroduction to the Michigan Public Policy Survey Era of Local Government RetrenchmentEra of Local Government Retrenchment

A 2A 2ndnd Retrenchment Looming? Retrenchment Looming?

What Local Leaders Say Should Be DoneWhat Local Leaders Say Should Be Done

What is the MPPS?What is the MPPS?

A census survey – every county, city, township, and A census survey – every county, city, township, and village in MIvillage in MI

Respondents - chief elected and chief appointed Respondents - chief elected and chief appointed officialsofficials

Two surveys per year: spring and fallTwo surveys per year: spring and fall

Administered online and via hardcopyAdministered online and via hardcopy

Content developed in partnership with MML, MTA, Content developed in partnership with MML, MTA, MAC, and topic expertsMAC, and topic experts

Why Conduct the MPPS? Why Conduct the MPPS?

Michigan ranks 7Michigan ranks 7thth in the number in the number of general purpose local of general purpose local governments (1,856): governments (1,856):

83 counties83 counties 256 villages256 villages 277 cities277 cities 1,240 townships.1,240 townships.

These governments: These governments: spend about $26 billion per yearspend about $26 billion per year employ about 150,000 peopleemploy about 150,000 people hold approximately $45 billion in debt (and hold approximately $45 billion in debt (and billions more in unfunded retiree obligations). billions more in unfunded retiree obligations).

-U.S. Census of Governments, 2007-U.S. Census of Governments, 2007

What does the MPPS aim to do?What does the MPPS aim to do? Improve understanding of local government to help improve Improve understanding of local government to help improve

policymaking and quality of lifepolicymaking and quality of life

Inform local leaders about peers across the state: their challenges and Inform local leaders about peers across the state: their challenges and responsesresponses

Inform state policymakers and other stakeholders about local level Inform state policymakers and other stakeholders about local level challenges and responses with data not available from any other source.challenges and responses with data not available from any other source.

Build a longitudinal data archive to allow tracking of fundamental Build a longitudinal data archive to allow tracking of fundamental changes (such as the economic transition, aging population, etc.)changes (such as the economic transition, aging population, etc.)

Foster academic research and teaching on local government issues.Foster academic research and teaching on local government issues.

MPPS is not a typical opinion pollMPPS is not a typical opinion poll

Census approachCensus approach 72% response rates – extraordinary efforts to maximize72% response rates – extraordinary efforts to maximize TransparencyTransparency

Questionnaires on lineQuestionnaires on line Pre-run data tables on linePre-run data tables on line Sharing data with other researchersSharing data with other researchers

Expert advisors on questionnaire contentExpert advisors on questionnaire content Borrow from other proven sources such as NLC and ICMABorrow from other proven sources such as NLC and ICMA Double blind coding of open-end responsesDouble blind coding of open-end responses Technical memos for quality control analysisTechnical memos for quality control analysis

MPPS Spring 2012 QuestionnaireMPPS Spring 2012 Questionnaire

Presentation OutlinePresentation Outline

Introduction to the Michigan Public Policy SurveyIntroduction to the Michigan Public Policy Survey Era of Local Government RetrenchmentEra of Local Government Retrenchment

A 2A 2ndnd Retrenchment Looming? Retrenchment Looming?

What Local Leaders Say Should Be DoneWhat Local Leaders Say Should Be Done

A Decade of Severe Fiscal StressA Decade of Severe Fiscal Stress- Revenue sharing cuts, property tax declines, rising costs -- Revenue sharing cuts, property tax declines, rising costs -

Local Government Reactions to Fiscal CrisisLocal Government Reactions to Fiscal Crisis

Pressures on local fiscal health Pressures on local fiscal health showed continued easing in 2012 showed continued easing in 2012

% of % of jurisdictiojurisdictions ns less less ableable to to meet their meet their financial financial needs this needs this yearyear

Easing felt in Michigan jurisdictions of all sizesEasing felt in Michigan jurisdictions of all sizes

% of % of jurisdictiojurisdictions ns less less ableable to to meet their meet their financial financial needs this needs this yearyear

Local leaders mostly positive on 2 key indicators:Local leaders mostly positive on 2 key indicators: - - - General Fund Balances -- General Fund Balances -

Local leaders mostly positive on 2 key indicators:Local leaders mostly positive on 2 key indicators: - - - Cash Flow - - Cash Flow -

Widespread satisfaction with jurisdiction’s Widespread satisfaction with jurisdiction’s current package of servicescurrent package of services

Widespread satisfaction with jurisdiction’s Widespread satisfaction with jurisdiction’s current package of servicescurrent package of services

Officials believe other stakeholders are also Officials believe other stakeholders are also satisfied with current package of servicessatisfied with current package of services

Presentation OutlinePresentation Outline

Introduction to the Michigan Public Policy SurveyIntroduction to the Michigan Public Policy Survey Era of Local Government RetrenchmentEra of Local Government Retrenchment

A 2nd Retrenchment Looming?A 2nd Retrenchment Looming?

What Local Leaders Say Should Be DoneWhat Local Leaders Say Should Be Done

Less than half believe Less than half believe current system of funding local government will be current system of funding local government will be

adequate to maintain jurisdiction’s servicesadequate to maintain jurisdiction’s services

Less than half believe Less than half believe current system of funding local government will be current system of funding local government will be

adequate to maintain jurisdiction’s servicesadequate to maintain jurisdiction’s services

However, service demands continue to increaseHowever, service demands continue to increase

% of % of jurisdictiojurisdictions with ns with increased increased public public safetysafetyneeds needs compared compared to to previous previous yearyear

However, service demands continue to increaseHowever, service demands continue to increase

% of % of jurisdictiojurisdictions with ns with increased increased infrastrucinfrastructure ture needs needs compared compared to to previous previous yearyear

Just a quarter believe funding will be adequate to Just a quarter believe funding will be adequate to improve jurisdiction’s servicesimprove jurisdiction’s services

Just a quarter believe funding will be adequate to Just a quarter believe funding will be adequate to improve jurisdiction’s servicesimprove jurisdiction’s services

Presentation OutlinePresentation Outline

Introduction to the Michigan Public Policy SurveyIntroduction to the Michigan Public Policy Survey Era of Local Government RetrenchmentEra of Local Government Retrenchment

A 2A 2ndnd Retrenchment Looming? Retrenchment Looming?

What Local Leaders Say Should Be DoneWhat Local Leaders Say Should Be Done

Substantial local support for significant reform Substantial local support for significant reform to current system of funding local government to current system of funding local government

Substantial local support for significant reform Substantial local support for significant reform to current system of funding local government to current system of funding local government

Substantial local support for significant reform Substantial local support for significant reform to current system of funding local government to current system of funding local government

Substantial local support for significant reform Substantial local support for significant reform to current system of funding local government to current system of funding local government

29% 29%

37%37%

12% 12%

15%15%

15%15%

8%8%

9%9%

12%12%

6% 6%

Suggestions from local officials:Suggestions from local officials:Property TaxProperty Tax

“… “… I would revise the Headlee amendment so that I would revise the Headlee amendment so that millage rates could both be rolled back and rolled millage rates could both be rolled back and rolled up without a vote of the people.” up without a vote of the people.”

Suggestions from local officials:Suggestions from local officials:Sales TaxSales Tax

"Giving local municipalities the ability to levy a local sales "Giving local municipalities the ability to levy a local sales tax would significantly change our financial landscape and tax would significantly change our financial landscape and our dependence on property taxes ...” our dependence on property taxes ...”

Suggestions from local officials:Suggestions from local officials:Revenue Sharing (including EVIP)Revenue Sharing (including EVIP)

““EVIP needs a complete overhaul. The idea isn't bad but a EVIP needs a complete overhaul. The idea isn't bad but a one-size doesn't fit all. Most of the required initiatives are one-size doesn't fit all. Most of the required initiatives are already being done because they were the right thing to do. already being done because they were the right thing to do. Now things are being required like they're new ideas.” Now things are being required like they're new ideas.”

Key Findings from MPPSKey Findings from MPPSon System of Funding Local Governmentson System of Funding Local Governments

Despite years of retrenchment among Michigan’s local governments, Despite years of retrenchment among Michigan’s local governments, most local leaders are satisfied with their most local leaders are satisfied with their current package of servicescurrent package of services today. today.

However, fewer than half (43%) believe our current system of funding However, fewer than half (43%) believe our current system of funding local government will allow them to local government will allow them to maintainmaintain their current package of their current package of services in the future, and only 26% think the current funding system services in the future, and only 26% think the current funding system will allow will allow improvementsimprovements to current services or provision of new to current services or provision of new services in their jurisdictions.services in their jurisdictions.

Of the 58% who say reform is needed: 89% cite the gas tax; 83% point Of the 58% who say reform is needed: 89% cite the gas tax; 83% point to the sales tax; 82% cite the Headlee Amendment; 81% say to the sales tax; 82% cite the Headlee Amendment; 81% say Proposal A needs reform; and 80% say revenue sharing needs reform. Proposal A needs reform; and 80% say revenue sharing needs reform.

Future MPPS survey contentFuture MPPS survey content

Types of questionnaire items? Other survey topics?Types of questionnaire items? Other survey topics?

Targeted analysis by subgroup or region?Targeted analysis by subgroup or region?

How should MPPS data and reports be distributed to How should MPPS data and reports be distributed to reach the widest audience?reach the widest audience?

Contact us at: closup-mpps@umich.eduContact us at: closup-mpps@umich.edu

How We Fund Local Government: How We Fund Local Government: Michigan’s Local Leaders See Need for Michigan’s Local Leaders See Need for

Reform Reform

WWW.CLOSUP.UMICH.EDUclosup-mpps@umich.educlosup-mpps@umich.edu