Shrinking revenue sharing concerns local officials

By JESSICA HULETT
Capital News Service
LANSING — With up to 20 percent of a municipality’s general fund revenue may come from state revenue sharing, many local leaders are concerned about future cuts.
Surviving a scare this year was Scottville City Manager Amy Hansen, whose city stood to lose 55 percent of its revenue sharing budget. That’s the equivalent of two employees and a new police car, she said.
“We’re not looking into spending any more money this year,” Hansen said. “We’re not making any major cuts, but we’re not going to buy any luxury items.”
After Gov. John Engler’s veto of revenue sharing and an override vote by legislators to restore it, the Michigan Municipal League is trying to protect the funding by educating the public about how crucial it is to local governments.
“A lot of it is communication with our members,” said Michael Brady, director of the league’s state and federal affairs division. “We tell them the best way to talk to their legislators about their communities, telling them what the money goes to and how critical it is.
“I think we did a pretty good job of that during the revenue-sharing battle and we’re continuing that.”
Brady said local government services are “the real basics that make life livable,” such as senior centers, street lighting and police and fire, and that, when educated, most people think taxes should go toward revenue sharing. Municipalities have already taken cuts in the last two years of $120 million and can’t take much more without losing some of those services.
“Most local governments are pretty small and are already at their maximum number of mills,” he said. “If revenue sharing is cut, they’ll feel it immediately.
“We’re all in the same boat: Don’t cut it.”
If the issue of cuts comes up next year, Brady said, the most obvious way to cut revenue sharing would be to cut the overall amount. The governor could also issue an executive order to cut spending if budget expenditures surpass revenues, but only with approval from state House and Senate appropriations committees.
New revenue forecasts will be available in a couple of months. Rep. David Mead, R-Frankfort, who voted to override the governor’s veto, said concern over the possibility for future cuts is justified.
“I think it is something that the locals are going to continue to stand guard on,” he said. “The problems we see are continued budget restraints. If all other parts of the budget had a 1 to 2 percent cut, there would possibly be a similar reduction in revenue sharing.
“Otherwise, I don’t see how I could support cuts.”
Mason County would have lost $568,274 to revenue sharing cuts. At this point, County Administrator Fabian Knizacky said, the county is proposing a lowered revenue sharing figure of $520,000 in its 2003 budget.
“The County Board did not establish what they would cut; they didn’t want to scare people with dollar amounts,” Knizacky said. “They identified areas they would look at, but didn’t break them down because the override happened so quickly.”
Areas that could have been cut include animal control, road patrol, economic development, zoning and the drain commission.
Knizacky also is concerned about the future.
“The state budget continues to be in worse shape than they’ve made public,” he said. “I just heard they have a bigger deficit than they planned for this year.
“They’ll probably look at us again next year.”
© 2002, Capital News Service, Michigan State University School of Journalism