Local governments applaud Legislature’s proposed revenue-sharing boost

By LAINA STEBBINS
Capital News Service
LANSING — Proposed increases to Gov. Rick Snyder’s recommended budget for revenue sharing marks a welcome shift for cities, villages, townships and counties, which say they have not seen this part of their funding change for years despite great need for additional money.
Despite numerous cuts elsewhere to Snyder’s budget, Republicans in the House and Senate want the numbers for revenue sharing to local governments to be higher. They have proposed increases in the overall revenue-sharing budget of 5 percent and 1 percent, respectively, which has been met with praise from Michigan associations of local government units.
The revenue sharing program takes a portion of sales tax revenues collected by the Treasury and distributes those funds to local governments. The sales tax currently stands at 6 percent.
The Senate’s 1 percent increase over Snyder’s recommendation would translate to an increase of $2.49 million for cities, villages and townships to a total of $251.29 million, as well as a $2.8 million increase for counties to a total of $220.7 million.
On the House side, an increase of 5 percent in revenue sharing payments would add about $12.4 million for cities, villages and townships.
Snyder’s original revenue sharing budget for the 2018 fiscal year recommended a $1.2 billion budget overall – of which cities, villages and townships would get $248.8 million for their portion of statutory revenue sharing, and counties would get a combined $174.7 million for revenue sharing and $43.2 million for the statewide County Incentive Program.
The rest of the money is dedicated to financially struggling cities, villages and towns – a figure which has not changed from $5 million – and constitutional revenue sharing for local governments, which solely depends on sales tax revenue from the state and not subject to the governor and legislature’s discretion.
The $248.8 million Snyder has proposed for cities, villages and counties in statutory revenue sharing “is the same amount that the governor has recommended now for the third year in a row,” said Chris Hackbarth, director of state affairs for the Michigan Municipal League.
The league represents all 522 cities and villages in the state, as well as several urban townships.
“Combined, since about 2002, we’re looking at about an $8.1 billion cumulative loss of revenue sharing for cities, villages, townships and counties,” Hackbarth said.
According to Hackbarth, this is the first time in three years that the Legislature will be attempting to increase the revenue sharing amount.
“Any increase after the years of cuts, then staying flat, is welcome news,” said Hackbarth. “We are very happy that the House and Senate both, even though they have different amounts, both provided an increase for revenue sharing over the governor leaving us flat.”
During Snyder’s first year in office in 2011, Hackbarth said, revenue sharing for local units of government was cut by about 30 percent.
“Only about $30 or $40 million of that has been restored to cities, villages and townships since that year,” Hackbarth said. “We haven’t even recovered from those initial cuts.”
Even further, since the 2008 recession, local governments have not enjoyed an economic recovery on par with the state’s revenue gains, said Larry Merrill, executive director of the Michigan Townships Association.
There are plenty of unmet needs like infrastructure repair at the local level, Merrill said, and revenue sharing helps with those expenses.
A direct impact of these unmet local needs, said Hackbarth, is detrimental cuts to much-needed public services and staffing in communities across the state.
“When we look at how revenue sharing has been defunded over the last decade, it’s causing a lot of pressure on communities trying to provide basic services – police, fire, street, water, and sewer – so having additional resources is critical for our communities,” Hackbarth said.
“You have communities that are deferring maintenance on infrastructure, you see roads deteriorating because communities can’t add more money into fixing roads, you see police and fire being cut.”
Hackbarth said the state has seen a staffing cut of 25 percent at police departments in the last decade, and a 36 percent cut at fire departments.
“Those are the last people a community wants to lay off,” he said.
Either a 1 or 5 percent increase would be “wonderful,” Hackbarth said. “We’re going to continue to work for more and restore more of that loss – but it will certainly help.”
Derek Melot, director of communications for the Michigan Association of Counties, said his association is also “pleased” with the proposed increases from the House and Senate, especially since Snyder’s proposed budget is once again a continuation from the previous fiscal year.
“Our counties have been laboring for many years under a pretty severe revenue crisis, and every dollar counts in providing additional public services,” Melot said.
Whether the proposed increases would be enough to adequately meet the needs of struggling local governments, “the movement is definitely in a positive direction,” said Deena Bosworth, MAC director of governmental affairs.
The House and Senate’s differing budgets will need to be resolved before they can be signed by the governor.
“I’m encouraged because both seem inclined to increase, but we’ve got another month to six weeks of discussion,” Hackbarth said. “We’ve got a long way to go.”