Fiscal health rated relatively good for most, but improvement slows and decline continues for many

The Center for Local, State, and Urban Policy Gerald R. Ford School of Public Policy >> University of Michigan

Fiscal health rated relatively good for most jurisdictions, but improvement slows and decline continues for many

Key findings •

By Sarah Mills and Thomas Ivacko

This report presents Michigan local government leaders’ assessments of their jurisdictions’ fiscal conditions and the actions they plan to take in the coming year given their financial situations. The findings are based on responses from seven statewide survey waves of the Michigan Public Policy Survey (MPPS) conducted annually each spring from 2009 through 2015. >> The Michigan Public Policy Survey (MPPS) is a census survey of all 1,856 general purpose local governments in Michigan conducted by the Center for Local, State, and Urban Policy (CLOSUP) at the University of Michigan in partnership with the Michigan Municipal League, Michigan Townships Association, and Michigan Association of Counties. The MPPS takes place twice each year and investigates local officials’ opinions and perspectives on a variety of important public policy issues. Respondents for the Spring 2015 wave of the MPPS include county administrators, board chairs, and clerks; city mayors, managers, and clerks; village presidents, managers, and clerks; and township supervisors, managers, and clerks from 1,328 jurisdictions across the state.

Michigan Public Policy Survey September 2015

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For more information, please contact: closup-mpps@umich.edu/ (734) 647-4091. You can also follow us on Twitter @closup

Most Michigan local governments (66%) self-rate their current level of fiscal stress as relatively low. However, local leaders in 7% of Michigan jurisdictions—about 137 jurisdictions—say that their local government is currently experiencing a high level of fiscal stress. »»

Jurisdictions in high fiscal stress are disproportionately in urban areas, with 12% of both cities and villages reporting high fiscal stress.

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They are also geographically concentrated in Southeast Michigan (where 12% of jurisdictions report high stress) and in the Upper Peninsula (10%).

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While nearly a quarter (23%) of high-stress jurisdictions say they are better able to meet their financial needs this year compared to last, 43% are less able to do so.

Looking across the state, there is a slight improvement in financial conditions this year compared to last, with 38% of jurisdictions reporting being better able to meet their needs this year (barely up from 36% last year). However, an additional 40% overall report no change in their fiscal health status. »»

Looking over the past seven years, the pace of improvement appears to be decelerating.

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Jurisdictions of all sizes report slight increases in fiscal health this year compared to last, though the largest jurisdictions (those with more than 30,000 residents) continue to show the biggest gains.

For the first time in the MPPS series, more local governments report property tax revenues increased (45%) rather than decreased (26%) compared to the previous fiscal year. »»

Larger jurisdictions are more likely than smaller ones to report improvements in these revenues.

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Most (64%) local leaders say their jurisdiction’s general fund balance is at about the right level, though 63% of leaders in the state’s largest cities believe their balance is too low.

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Looking to the future, many officials predict that their community will have good times financially in the coming year (46%). However, fewer (36%) believe this will translate into improvements for their jurisdiction’s fiscal health, while 19% believe their jurisdiction’s fiscal health will decline.

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The Center for Local, State, and Urban Policy

Fiscal status today: Most local governments report relatively good fiscal health; those in fiscal stress are disproportionately in urban areas Since its inception, the MPPS has reported on the fiscal health of local governments by looking at trends, such as whether jurisdictions were better able or less able to meet their financial needs compared to the previous year, or whether local government debt had increased or decreased over time. While this kind of analysis provides a picture of how fiscal health is changing, it hasn’t necessarily identified the current state of fiscal health at any given time. Now, for the first time, the survey can also report on results from a single summary variable that provides a snapshot of the level of fiscal stress being felt by Michigan local governments today.

The results are based on a MPPS Fiscal Stress Index (FSI) question, asking local officials to rate their jurisdiction’s current fiscal stress on a scale of 1-10, where 1 is perfect fiscal health and 10 is fiscal crisis. The FSI is modeled on another index: the local government Fiscal Indicator Score originally developed by the Michigan Department of Treasury, now modified and calculated annually by Munetrix, Inc.1 However, while Munetrix’s score is an objective measure of fiscal stress based on financial data submitted by local governments to the state of Michigan, the MPPS’s FSI is a subjective measure based on the opinion of local officials. Comparing the MPPS and Munetrix scores for each jurisdiction shows a relatively strong correlation across the two scales: most scores (65%) are within two points of each other on the relevant scales. However, roughly one in three local officials self-rated their jurisdiction’s fiscal stress as worse on the MPPS scale than is found on the Munetrix scale. Some of these differences may be because local officials appear to give more weight to the impact of current and future expenditures—in particular, on roads and other infrastructure needs—and less emphasis on general fund balance and population loss than is the case in the Munetrix algorithm.2 Research is planned to try to better understand these differences. Current hypotheses are that perhaps local officials are naturally conservative when assessing fiscal stress, that they may be taking into account factors that have not yet shown up in financial data submitted to the state, or that these local officials may simply have a more lenient definition of fiscal stress or crisis.

Either way, local leaders’ perceptions of their jurisdiction’s fiscal health can provide unique insight into the current status of local governments’ finances across the state.

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Michigan Public Policy Survey

The MPPS finds that, based on local officials’ own assessments, most jurisdictions in the state are currently experiencing relatively low levels of fiscal stress. In 2015, 66% of local leaders rate their jurisdiction’s current fiscal stress at 4 or less on the 10-point scale, including 13% of local officials who say their jurisdiction is in perfect fiscal health (see Figure 1). Another 23% of jurisdictions give themselves a score of 5 or 6, indicating medium levels of stress, and 7% of jurisdictions say that they are in high fiscal stress. While that number may seem low, it equates to about 137 of the state’s local units.

Figure 1 Officials’ assessments of their jurisdiction’s current fiscal stress, 2015

2% 4%

1%

1: Perfect health

3%

2

13%

Low stress

6%

3 4 5

Medium stress

19%

17%

6 7

High fiscal stress is felt by jurisdictions of all sizes, from small villages to large cities, but jurisdictions that perceive themselves to be in high stress are disproportionately urban and geographically concentrated. While only 3% of counties and 5% of townships report being in high fiscal stress, 12% of cities and another 12% of villages report FSI scores of 7 or higher. Geographically, local leaders in Southeast Michigan (12%) and the Upper Peninsula (10%) are about twice as likely to report high fiscal stress compared with any other region of the state.

When comparing jurisdictions that report having high fiscal stress to those reporting low fiscal stress, the high-stress communities are more likely to report property tax revenues decreasing this year compared to last (38% of high-stress jurisdictions vs. 20% of low-stress jurisdictions), are less likely to report increasing state aid (22% vs. 31%), and are more likely to say that cash flow is at least somewhat of a problem (20% vs. 1%). The high-stress jurisdictions are also more likely to plan increasing reliance on their general fund balances in the coming year (40% vs. 21%) and more often report plans to increase their amounts of debt (28% vs. 13%).

Notably, while the MPPS has previously found more jurisdictions with improving rather than declining fiscal conditions since 2011 overall, the jurisdictions that report currently being in high stress are more likely to report declining fiscal health over the past year (see Figure 2). For example, 43% of high-stress jurisdictions say they are less able to meet their financial needs this year compared to last, compared to just 23% that are better able to do so. By contrast, nearly half (46%) of jurisdictions in the low-stress category had improved finances over the course of the year, while only 13% declined. Thus, while some jurisdictions in high fiscal stress are showing signs of improvement, more appear to be falling even further behind. Perhaps even more worrisome, those in the medium stress category are more likely to say financial conditions declined (35%) than improved (25%) in the past year, meaning the high-stress group might grow larger next year.

High stress

8 9

12% 22%

10: Fiscal crisis Don’t know

Figure 2 Percentage of jurisdictions overall reporting they are better or less able to meet their fiscal needs in current year compared to previous year, 2015, by MPPS Fiscal Stress Index (FSI) score 46% 25%

23% Better able to meet needs this year

Low stress (FSI 1-4)

Medium stress (FSI 5-6)

High stress (FSI 7-10)

Less able to meet needs this year

13% 35% 43%

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The Center for Local, State, and Urban Policy

Fiscal Trends: Financial conditions continue to improve for some local governments, but the improvement is slowing and is not universal Using this same metric of being better or less able to meet financial needs—but looking at all Michigan local governments, not just those in decline—the seven-year MPPS dataset has tracked the sharp economic decline in 2009 and 2010, followed by gradual improvement that first emerged in 2011. These trends generally mirror experiences of cities across the nation, tracked annually in surveys conducted by the National League of Cities.3 The year 2014 was a notable tipping point, when more jurisdictions reported being better able to meet their fiscal needs than being less able to do so compared to the previous year. The 2015 survey finds the trend of improvement continues for the fifth straight year, though the improvement appears to be slowing and is not universal, with still hundreds of jurisdictions across the state reporting fiscal decline from 2014 to 2015.

Figure 3a Percentage of jurisdictions reporting they are better or less able to meet their fiscal needs in current year compared to previous year, 2009-2015

24% 11%

9%

2009

2010

29%

36%

38%

16% 2011

Better able 2012

2013

2014

2015

Less able 34%

29%

24%

20%

48%

52% 61%

Note: responses for “neither better nor less able” and “don’t know” not shown

The trend of improvement that began in 2011 and continues into 2015 is illustrated in Figure 3a. In 2015, nearly twice as many jurisdictions report improvement (38%) compared to those reporting decline (20%). However, the plurality (40%) of jurisdictions report no change from last year, indicating that any rebound may be petering out in many local governments. Figure 3a also shows a flattening of the improvement curve over time. While in previous years the percentage of jurisdictions that reported being better able to meet their fiscal needs increased by at least five percentage points year-to-year, from 2014 to 2015 the MPPS found an improvement of only two percentage points, from 36% in 2014 to 38% in 2015.

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Michigan Public Policy Survey

The latest MPPS findings show fiscal health improving in aggregate in jurisdictions of every size, though improvements tend to increase with population size. Figure 3b presents a combined summary of these changes over the last seven years. It shows “net” fiscal health in each population-size category: the percentage of jurisdictions that were better able to meet their needs minus the percentage that were less able. A data point below the zero-axis shows that more jurisdictions in that category reported declining fiscal health than reported improving health in that year. Conversely, a data point above the zero-axis shows that more jurisdictions in that category reported improving fiscal health than reported declining health.

Thus, while jurisdictions of all sizes reported “net” declines in 2012, all but the state’s smallest jurisdictions (those with fewer than 1,500 residents) were net positive in 2013. In 2015, jurisdictions of all sizes posted gains over the previous year, but the state’s largest jurisdictions (those with populations over 30,000) posted the highest net positive of 45%. By contrast, the state’s smallest jurisdictions posted only an 8% net improvement in 2015. The small net improvement numbers in these smallest jurisdictions are—at least in part—because more of these small jurisdictions are reporting no change in fiscal conditions over the past year; 43% of officials in the smallest jurisdictions report no change compared to 24% of officials in the state’s largest jurisdictions.

Figure 3b Net fiscal health yearly change: percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2015, by population size 50% 40% 30% 20% 10% 0 -10% -20% -30% -40% -50% -60% -70% -80% 2009

2010

<1,500

2011

1,500-5,000

2012

2013

5,001-10,000

2014

2015

10,001-30,000

>30,000

Figure 3c Net fiscal health yearly change: percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2015, by jurisdiction type 50% 40% 30%

When looking at the data by jurisdiction type, the overall trend has jurisdictions of all types generally improving over time (see Figure 3c). However, in 2015, there is a slight downturn for villages. While villages posted net improvement in 2014, in 2015 more villages said they are less able to meet their fiscal needs (33%) than those that said they are better able to meet their fiscal needs (29%), resulting in a net decline of 4%. From Figure 3c it also appears that while townships were the first to post net positive numbers in 2012, their improvement seems to be slowing, with more townships now reporting no change from year-to-year (in 2015, 43% of townships report no change). Counties and cities, on the other hand, have seen steady improvement for the last three or four years.

20% 10% 0 -10% -20% -30% -40% -50% -60% -70% -80% 2009

2010 County

2011

2012 Township

2013 City

2014

2015

Village

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The Center for Local, State, and Urban Policy Figure 3d displays the same “net fiscal health” for jurisdictions across Michigan aggregated at the county level. The seven maps contrast those counties (in shades of red) where more jurisdictions are suffering fiscal decline than are experiencing improved fiscal health, compared with those counties (in shades of green) where more jurisdictions are experiencing improved fiscal health than decline. Counties where there are equal numbers experiencing improvement and decline are shaded grey.

The color shades are scaled by the magnitude of the aggregated fiscal changes, with three categories each for improving and declining conditions. The darkest shades of red and green show where the net calculation of jurisdictions improving minus those declining is greater than 50%, the middle shades show where the net calculation is between 26% and 50%, and the lightest shades show where the net calculation is between 0 and 25%. For example, if 76% of jurisdictions in a county are improving, while 24% are declining, the net calculation is 76%-24%=52% improving, which results in the darkest shade of green. Or, if 27% of jurisdictions in a county are improving while 33% are declining, the net calculation is 27%-33%=-6%, which results in a pink-shaded county.

At the low point in 2010, the map is overwhelmingly deep red, showing widespread fiscal decline across the state. By 2014, more than half of the counties in the state (55 of 83) were some shade of green, and four more counties posted net improvement in 2015. However, since 2012 the colors in the map have been more muted, with a majority of counties either the lightest shade of green, the lightest shade of red, or—for the first time in 2014—grey. These muted colors are largely a result of a high percentage of jurisdictions saying that fiscal conditions have not changed over the course of the past year.

Figure 3d Net fiscal health yearly change: percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009 – 2015, by county 2009

2012

2010

2013

2011

2014

2015

more than 50% net decline

26-50% net decline

0-25% net decline

between 0-25% net improvement

26-50% net improvement

more than 50% net improvement

No net change

Note: The jurisdictions responding within each county vary from wave to wave, which may result in larger longitudinal swings in counties that have only a few jurisdictions (“small N”) overall.

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Michigan Public Policy Survey

Property tax revenues pass tipping point, even in large cities One of the most devastating financial effects of the Great Recession on local governments has been the decline in property values, which subsequently caused property tax revenues to plummet.

Because Michigan law (both the Headlee Amendment and Proposal A) limits the rate of tax revenue growth, it may take a decade or more for revenues to fully rebound to pre-Recession levels,4 even as property values themselves increase more rapidly.

Even so, this year the MPPS finds that many jurisdictions have hit a turning point. For the first time since the MPPS began surveying local governments in 2009, more jurisdictions report property tax revenues increasing (45%) rather than decreasing (26%) compared to the previous fiscal year. Still, it is possible that these increases may be quite small for any given jurisdiction; only 1% of local leaders, for example, report that property tax revenues greatly increased in 2015.

As Figure 4a shows, property tax revenue declines have been less and less common in each of the last five years. Not only do fewer jurisdictions continue to report declines in property tax revenues (from 78% in 2010 down to 26% in 2015), a greater percentage of jurisdictions report outright growth in these tax revenues as well (from 8% of jurisdictions in 2010 to 45% in 2015).

Figure 4b shows that this year, as in the previous two years, higher rates of improvement in property tax revenues are found among the state’s larger jurisdictions than in the smaller ones. The percentage of the smallest jurisdictions reporting year-over-year growth in these revenues in 2015 increased by just three percentage points (from 30% in 2014 to 33% in 2015), while nearly a third (31%) continue to report property tax declines. By comparison, there was a 13 percentage point increase among the largest jurisdictions reporting property tax revenue growth (from 61% in 2014 to 74% in 2015), while just 14% report continued declines in property tax revenues, down from 32% last year.

Figure 4a Percentage of jurisdictions overall reporting changes in property tax revenue compared with previous fiscal year, 2009-2015

45% 36% 27%

27% 12%

8% 2009

16%

2010

2011

Increased over previous FY

2012

2013

2014

2015

Decreased over previous FY 26% 38% 48%

48% 64% 74%

78%

Note: responses for “no change” and “don’t know” not shown

Figure 4b Percentage of jurisdictions reporting changes in property tax revenue compared with previous fiscal year, 2014-2015, by population size

74%

69% 56% 46% 30%

33%

33%

61% 51%

40%

Increased

23%

31% 39%

2014

28%

2015

Population <1,500

2014

2015

Population 1,500-5,000

2014

2015

Population 5,001-10,000

2014

Decreased

32%

35%

40%

14%

18%

23%

2015

Population 10,001-30,000

2014

2015

Population >30,000

Note: responses for “no change” and “don’t know” not shown

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The Center for Local, State, and Urban Policy While last year’s report showed that large cities were lagging significantly behind other groups, this year even these largest cities have passed a tipping point. As shown in Figure 4c, in 2015 62% of Michigan’s largest cities report that property tax revenues increased in the previous year, up from just 37% in 2014. Even so, while the gaps between cities and other jurisdiction types have narrowed significantly, the largest cities are still lagging behind the largest townships (86% now report increasing property tax revenues) and counties (79% report increases).

This year, villages appear to be lagging further behind other jurisdiction types on property tax revenue improvements. As seen in Figure 4d, villages are the only group that, in aggregate, have not yet passed the tipping point (above the zero axis) where more jurisdictions experience increases than decreases in property tax revenues. While counties and townships surpassed this milestone in 2014, cities did not see net increases of property tax revenues until 2015. While the trend line for villages is rising, it is rising much more slowly than for the other jurisdiction types, and if the trend continues, villages may not hit the tipping point until 2017.

Looking at other types of revenue to local governments, there is less change in the overall trends (see Appendix A). More than half (60%) of jurisdictions say that there has been no change in revenues from fees for services, licenses, transfers, etc. in their jurisdiction compared to the previous fiscal year, and most (50%) also report no change in federal aid. The percentage of jurisdictions reporting increases in state aid barely changed (from 27% in 2014 to 28% this year). While the state’s largest jurisdictions saw the biggest increases in state aid from 2013 to 2014, this year medium-sized jurisdictions (with populations between 10,001 and 30,000) saw the largest net increases (see Figure 5). Nearly half (46%) of these jurisdictions report state aid increases in 2015, while only 18% report decreases.

At the same time that these revenue sources appear to be generally stagnating for many jurisdictions, their spending needs remain high (see Appendix A). Local officials in more than half (52%) of the state’s jurisdictions report an increase in infrastructure needs over the course of the last fiscal year. The increases in infrastructure needs are highest in the largest jurisdictions with 82% reporting such increases. But even among the state’s smallest local governments, 42% of local officials report increases in infrastructure needs. In addition, needs are slightly up this year compared to last for general government operations (34%), public safety (29%), and human services (28%). (Note: for population-size breakdowns on these and other metrics, see the online data tables at http://closup.umich.edu/michigan-public-policy-survey/spring2015-data/.)

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Figure 4c Percentage of jurisdictions reporting changes in property tax revenue compared with previous fiscal year, 2014-2015, among jurisdictions with over 30,000 residents 73%

86%

79% 72%

62%

37% Increased

20%

9%

5%

Decreased

19% 28%

56%

2014

2015

2014

Counties >30,000

2015

2014

Townships >30,000

2015 Cities >30,000

Note: responses for “no change” and “don’t know” not shown

Figure 4d Net property tax revenue yearly change: percentage of jurisdictions reporting increasing property tax revenues minus percentage reporting decreasing revenues, 2009-2015, by jurisdiction type 80% 60% 40% 20% 0 -20% -40% -60% -80% -100% 2009

2010

2011

County

2012

2013

Township

City

2014

2015

Village

Figure 5 Percentage of jurisdictions reporting changes in state aid compared with previous fiscal year, 2014-2015, by population size 46% 29% 20%

36%

38%

37%

39%

20%

13% 24%

2014

28%

34%

2015

Population <1,500

Increased

18%

2014

Decreased

13% 21%

2015

Population 1,500-5,000

2014

17%

2015

Population 5,001-10,000

18% 24%

2014

26%

2015

Population 10,001-30,000

2014

29%

2015

Population >30,000

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Michigan Public Policy Survey

Foreclosures and tax delinquencies continue to slowly ease, but with regional differences In another sign of gradually improving fiscal health, fewer local officials across the state say they are seeing a rise in home foreclosures in their communities this year (15%) than said so last year (18%), but this improvement over time also appears to be slowing. As seen in Figure 6a, while there was an 11 percentage point improvement from 2013 to 2014 (29% reported increasing foreclosures in 2013 compared to 18% in 2014), this year saw improvement of just three points.

Nonetheless, this marks the first year that jurisdictions of all sizes report a net decrease in home foreclosures, while the state’s largest jurisdictions continue to report the most improvement. In 2015, 63% of local jurisdictions with more than 30,000 residents report decreases in home foreclosures, while less than 1% of these jurisdictions report increases (see Figure 6b). By contrast, among the smallest jurisdictions, 18% report increases in home foreclosures compared to the previous fiscal year, while only slightly more (21%) report decreases. Again, though, many (38%) local leaders overall report that the number of home foreclosures in their jurisdictions have not changed in the past year, indicating that this fiscal metric might well be stabilizing in communities across the state.

There are also notable regional differences in foreclosure experiences. In the southeast corner of the state, for example, the worst of the home foreclosure crisis seems to have passed for most communities. This year just 4% of jurisdictions in the Southeast report increases in home foreclosures, while 57% report decreases, leading to a net decrease of 53% (see Figure 6c). This is the third straight year with a net decrease in foreclosures in Southeast Michigan. The Upper Peninsula, by contrast, has a 17% net increase in home foreclosures in 2015, with 27% of jurisdictions reporting increases and just 10% reporting decreases. Notably, the UP is the only region of the state that has not yet passed the home foreclosure tipping point (above the zero axis), with more jurisdictions still reporting increasing foreclosures than those reporting decreases.

Figure 6a Percentage of jurisdictions overall reporting changes in home foreclosures compared with previous fiscal year, 2010-2015 60%

56% 41% 29%

2010

2011

10%

16%

2012

2013

18%

15%

2014

2015

Increased over previous FY

Decreased over previous FY

17% 25%

31%

34%

Note: responses for “no change” and “don’t know” not shown

Figure 6b Percentage of jurisdictions reporting changes in home foreclosures in 2015, by population size 18%

16%

<1,500

1,500 5,000

4% 5,001 10,000

Increased over previous FY

13%

0%

10,001 30,000

>30,000

Decreased over previous FY

21% 34% 43% 57%

63%

Note: responses for “no change” and “don’t know” not shown

Figure 6c Net home foreclosure yearly change: percentage of jurisdictions reporting increasing home foreclosures minus percentage reporting decreasing foreclosures, 2009-2015, by region 60% 50% 40% 30% 20% 10% 0 -10% -20% -30% -40% -50% -60% 2009 UP

Northern LP

2010

2011 West Central

2012

2013

East Central

2014 Southwest

2015 Southeast

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The Center for Local, State, and Urban Policy These regional trends also hold true with regard to tax delinquencies. Statewide, for each of the past four years, fewer jurisdictions have been reporting increasing delinquencies. Even so, progress on this metric has been slower than many of the other fiscal health measures. In 2015, the percentage of jurisdictions overall reporting increases in tax delinquencies (20%) still exceeds those reporting decreases (16%). As with home foreclosures, though, the worst appears to have passed for Southeast Michigan, while the Upper Peninsula is worse off than all other regions of the state.

In 2015, 29% of local governments in Southeast Michigan report that tax delinquencies are on the decrease while just 10% report increases (see Figure 7). By contrast, in the UP, 6% of jurisdictions report a decrease in delinquencies and 32% report an increase, for a net 26% increase, two times higher than any other region this year.

Figure 7 Net tax delinquencies yearly change: percentage of jurisdictions reporting increasing tax delinquencies minus percentage reporting decreasing delinquencies, 2009-2015, by region 40% 35% 30% 25% 20% 15% 10% 5% 0 -5% -10% -15% -20% 2009 UP

10

Northern LP

2010

2011 West Central

2012

2013

East Central

2014 Southwest

2015 Southeast

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Michigan Public Policy Survey

For first time in seven years, a majority of jurisdictions have increased wages As fiscal conditions gradually improve or level out in many jurisdictions in the state, a majority of local governments have slowly begun increasing wages for their employees, while a minority have even begun hiring more staff.

The 2015 MPPS finds this to be the first year since the start of the survey that an outright majority of Michigan’s local jurisdictions report increasing the pay rates of employees compared to the previous year (see Figure 8). While there have been more jurisdictions that have increased rather than decreased wages for each of the past seven years, in previous years the plurality of local governments have kept wages steady year-to-year. This year, however, the majority (53%) report increasing wages, while only 1% report decreasing pay rates.

While local government staff reductions were most common in 2010 and 2011, still in the intervening years, more jurisdictions have reported decreasing the number of employees on their payroll than increasing the number of employees (see Figure 9). In 2015, however, this changed, with 10% of local jurisdictions reporting increasing the number of employees and only 7% reporting decreasing the number of employees. Still, most jurisdictions (79%) say there has been no change in the number of employees in 2015 compared to the previous fiscal year.

Meanwhile, health care benefit costs, pensions, and other legacy costs are still increasing in many jurisdictions around the state.

Among jurisdictions that offer employees health care benefits, 59% report increases in costs in 2015 while only 9% report decreases. By comparison, increases in the cost of retiree health care benefits (35%) and employee pensions (36%) are less common.

[Note: Appendix A provides time-series responses for these and other survey questions for all responding jurisdictions in the state, not just for those jurisdictions who say an issue is applicable (for example, not just those that have employees). In addition, breakdowns for 2015 responses based on jurisdiction population size are available in online data tables at http://closup.umich.edu/ michigan-public-policy-survey/spring-2015-data/.]

Figure 8 Percentage of jurisdictions overall reporting changes in pay rates for employee wages and salaries compared with previous fiscal year, 2010-2015

36%

20% 66%

21%

65%

49%

27%

46%

39%

53%

63% Increased

51%

47%

No change

41%

Decreased 15%

13%

10%

7%

5%

2009

2010

2011

2012

2013

1%

3% 2014

2015

Note: responses for “not applicable” and “don’t know” not shown

Figure 9 Percentage of jurisdictions overall reporting changes in the number of employees compared with previous fiscal year, 2010-2015

2%

2%

3%

4%

8%

10%

2010

2011

2012

2013

2014

2015

16%

9%

7%

19%

27%

23%

Increased

Decreased

Note: responses for “no change,” “not applicable,” and “don’t know” not shown

Additional analysis of local government policies regarding pensions and retiree health care will be available in separate CLOSUP reports to be released later in the year.

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The Center for Local, State, and Urban Policy

Most jurisdictions content with their general fund balance, though the majority of large cities think it’s too low In response to the Great Recession and its aftermath, when revenues were falling as costs continued to rise, many local governments in Michigan previously reported drawing on their general fund balances in order to cover budget gaps.5 At its peak, in 2010, 49% of jurisdictions reported increasing their reliance on their unreserved general fund balances. This year, that number is down to 26%, while 6% of jurisdictions expect to decrease their reliance on their unreserved fund balance in the coming year.

As an indicator of fiscal health, the MPPS asks local leaders whether they consider their jurisdiction’s unreserved general fund balance to be too high, about right, or too low. In 2015, most local officials (64%) overall say their current fund balances are at about the right levels, even after significant reliance on these funds by many jurisdictions since 2009. By contrast, only 20% of officials statewide consider their jurisdiction’s general fund balances to be too low. Jurisdictions of all sizes have improved on this metric since last year (see Figure 10a). However, officials in the state’s largest jurisdictions have consistently been more concerned about low fund balances than have leaders from other jurisdiction sizes since 2012. In 2015, 32% of officials in the largest jurisdictions say their fund balance is too low, compared to the statewide average of 20%.

When diving deeper into the data, it is primarily the state’s largest cities that are concerned about low general fund balances. Among Michigan’s largest counties, only 21% say their unreserved general fund balance is too low, and the same is true among just 9% of the largest townships. However, 63% of the state’s largest cities say their jurisdiction’s unreserved general fund balance is too low (see Figure 10b).

Figure 10a Percentage of officials saying their general fund balance is too low, 2010-2015, by population size 50%

40%

30%

20%

10% 2010 <1,500

2011

2012

1,500-5,000

2013

5,001-10,000

2014 10,001-30,000

2015 >30,000

Figure 10b Local officials’ assessments of their jurisdiction’s unreserved general fund balance, 2015, among jurisdictions with over 30,000 residents 9%

17%

37%

68% 70% Too high 63% About right Too low 21% 9% Counties >30,000

Townships >30,000

Cities >30,000

As in the past, cash flow does not appear to be a problem for the vast majority of Michigan’s local governments. Overall, only 1% of jurisdictions say that cash flow is a significant problem in 2015, and just 4% more say it is somewhat of a problem. As in 2014, this year 70% of local jurisdictions report cash flow is not a problem at all.

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Michigan Public Policy Survey

Plans for the coming year: More pay increases, less health insurance cost-sharing Looking ahead, for the first time since the MPPS began tracking the metric in 2011, more than half (53%) of the state’s local governments are planning to increase employee pay rates in the coming year, while just 1% are planning to decrease wages (see Figure 11). Increases are expected in all regions of the state and in jurisdictions of all sizes. Most notably, nearly all (89%) county governments expect to increase employee pay, as do 73% of cities, 53% of villages, and 49% of townships that have paid employees.

There may also be slightly more jobs with local governments in the coming year. Overall, 8% of jurisdictions expect to increase workforce hiring in the coming year, with large jurisdictions in particular looking to expand their workforce. The 2015 MPPS finds that 31% of the largest jurisdictions in the state plan to increase hiring in the coming year, compared to just 22% in the previous year (see Figure 12). In addition, only 1% of jurisdictions expect to increase layoffs this year, while another 1% expect layoffs to decrease. And 5% of jurisdictions statewide say they won’t fill vacancies, down slightly from 7% in 2014 (see Appendix B).

Meanwhile, continuing a downward trend for the past four years, fewer local governments expect to shift their fringe benefit costs to their employees compared to last year. Among jurisdictions for whom this issue is applicable (that is, those that offer health benefits to employees6), 37% plan to have those employees cover more of their own health care costs in the coming year (down from 43% last year). This downward trend is found among jurisdictions of all sizes (see Figure 13). There are also fewer jurisdictions that plan to increase retirees’ health insurance premiums; 26% of jurisdictions say they plan to increase premiums in the coming year, compared to 31% that said the same in 2014. Meanwhile, the percentage of jurisdictions that plan to increase their employees’ share of retirement contributions remained steady from the 2014 survey at 18%. Appendix B provides time-series data for these questions among all jurisdictions, not just those that offer employees or retirees these benefits.

Figure 11 Percentage of jurisdictions reporting planned changes to employee pay in the coming year, 2011-2015

40%

47%

53%

30% 21% Increase 2011

2012

2013

2014

2015

6%

4%

3%

2%

1%

Decrease

Note: responses for “no change,” “not applicable,” and “don’t know” not shown

Figure 12 Percentage of jurisdictions reporting planned increases in workforce hiring the coming year, 2011-2015, by population size 35% 30% 25% 20% 15% 10% 5% 0 2011 <1,500

2012 1,500-5,000

2013 5,001-10,000

2014 10,001-30,000

2015 >30,000

Figure 13 Percentage of jurisdictions reporting planned increases in current employees’ share of contributions to health insurance in the coming year, 2011-2015, by population size, among those that offer health benefits to employees 100% 90% 80% 70% 60% 50% 40% 30% 20% 2011 <1,500

2012 1,500-5,000

2013 5,001-10,000

2014 10,001-30,000

2015 >30,000

13

The Center for Local, State, and Urban Policy

Plans for the coming year: levels of overall service provision likely to hold steady or rise, while increases in privatization and intergovernmental cooperation continue to slow In the past few years, cutting the amount of services provided has been a fairly common practice among local governments, especially large ones, to help close budget gaps. At its worst point in 2010, 29% of all jurisdictions planned to cut services (including 63% of the largest jurisdictions), while just 7% planned to increase service levels (see Figure 14). Looking ahead to the coming year, most jurisdictions (76%) plan to continue providing essentially the same level of services to their citizens that they provide this year; however, more say they will increase the amount of services (15%) than say they will cut back on the amount of services they provide (5%). Further, while 10% of the state’s largest cities expected to cut services in 2014, just 3% now expect to cut services in the coming year. By comparison, 36% of Michigan’s largest cities now expect to increase services in the year ahead.

Figure 14 Percentage of jurisdictions reporting planned changes in overall service provision in the coming year, 2009-2015

9%

7%

10%

12%

13%

15%

6%

2009

2010

2011

2012

2013

2014

2015

24%

21%

15%

12%

7%

5%

Increase

Decrease

29%

Note: responses for “no change,” “not applicable,” and “don’t know” not shown

Looking at different types of services, 34% of local governments overall expect to increase public safety spending, compared to just 3% that expect to decrease spending on these services in the coming year. As with overall service provision, the state’s largest jurisdictions are more likely to anticipate an increase, with 68% of Michigan’s largest jurisdictions planning to increase public safety spending in the coming year. Looking again at all Michigan jurisdictions, 43% expect to increase spending on infrastructure, 40% anticipate increasing general government operations spending, 13% foresee spending more on economic development, and just 9% expect to increase spending on human services. Data from 2009-2015 on local officials’ plans for the coming year on a range of topics is available in Appendix B. And again, population size breakdowns are available online at http://closup.umich.edu/ michigan-public-policy-survey/spring-2015-data/.

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Michigan Public Policy Survey

In terms of how those services will be provided, plans to increase efforts to privatize, or outsource, service provision are also holding steady or dropping slightly compared with previous years. Overall, only 10% of Michigan jurisdictions expect to increase service privatization efforts in the coming year (the same percentage as in 2014), while just 1% expect to decrease these efforts. The downward trend of privatization is most dramatic among the stateâ&#x20AC;&#x2122;s largest jurisdictions. In 2011, 58% of jurisdictions with more than 30,000 residents said they planned to increase privatization (see Figure 15).

In 2015, that percentage has fallen to just 14%. While none (0%) of these large jurisdictions say they plan to decrease their outsourcing, the vast majority (79%) plan to maintain their current level of privatization in the coming year.

Figure 15 Percentage of jurisdictions reporting plans to increase privatization next year, 2009-2015, by population size 60% 50% 40% 30% 20% 10% 0 2009

Overall, the MPPS finds a similar trend with intergovernmental service sharing activities. This year, 22% of Michigan local jurisdictions expect to increase the number and/or scope of their cooperative service sharing activities with other governments in the coming year, down from 30% last year, and from 40% in 2012. Across jurisdictions of all sizes, fewer officials predict further expansion of such cooperative activities this year. As with privatization, the drop-off is particularly notable in the stateâ&#x20AC;&#x2122;s largest jurisdictions, where 41% expect to boost intergovernmental approaches to service delivery in the coming year, down from a high of 85% in 2011 (see Figure 16). However, while fewer jurisdictions are expanding their cooperative efforts, only 1% statewide say they are actively decreasing the number and/or scope of their intergovernmental agreements; most (61%) expect the number and/or scope of their interlocal agreements to remain unchanged.

<1,500

2010

2011

1,500-5,000

2012 5,001-10,000

2013

2014

10,001-30,000

2015 >30,000

Figure 16 Percentage of jurisdictions reporting plans to increase number and/ or scope of interlocal agreements next year, 2009-2015, by population size 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 2009 <1,500

2010

2011

1,500-5,000

2012 5,001-10,000

2013

2014

10,001-30,000

2015 >30,000

15

The Center for Local, State, and Urban Policy

Optimism among local officials about fiscal health in the coming year is not universal Many indicators presented so far show continued gradual improvements in Michigan local government fiscal health since the end of the Great Recession, but also appear to show that many improvement trends are decelerating. Looking ahead, local officials’ improved expectations for fiscal health compared to years past are tied to some extent to growing optimism about where the economy is headed. The MPPS asks respondents to think about general business conditions in their communities and to predict whether their community will have good times or bad times financially in the next twelve months. Once again, the 2015 survey shows continued growth in the number of officials predicting good times economically rather than bad times in the coming year. Nearly half (46%) of local officials predict their communities will have good times financially in the coming year, compared with 11% who predict bad times ahead (see Figure 17).

When focusing not on the overall local economy but instead on their jurisdiction in particular, local officials are more guarded in their optimism compared to previous years. When asked to predict whether their local government will be better able or less able to meet its financial needs in the next year compared to the current year, the 2015 MPPS finds only a 1% increase compared to 2014 (see Figure 18a). This year, 36% of local officials predict their government will be better able to meet its fiscal needs next year, compared to 35% who felt this way in 2014. Further, 19% say they will be less able next year compared to this, which is only slightly down from 22% who had the same negative outlook in 2014.

Figure 17 Percentage of jurisdictions overall predicting their community will have good or bad times financially, 2009-2015

40%

36%

46%

27% 19%

13%

6% 2009

Good times

2010

2011

2012

2013

18%

22%

2014

2015

12%

11%

Bad times

33% 50% 58%

Note: responses for “neither” and “don’t know” not shown

Figure 18a Percentage of jurisdictions predicting they will be better or less able to meet their fiscal needs in coming year, 2009-2015

9%

8%

2009

2010

15% 2011

22%

28%

35%

36%

Better able next year 2012

2013

2014

2015

Less able next year 22% 34%

19%

30%

50% 62%

65%

Note: responses for “neither” and “don’t know” not shown

Still, as first noted in 2014, jurisdictions of all sizes now have a “net” positive outlook on their fiscal health, with larger jurisdictions reporting more positive predictions than smaller jurisdictions.

Among the state’s largest jurisdictions, 59% believe they will be better able to meet their fiscal needs in the year to come. By contrast, just 27% of the state’s smallest jurisdictions believe their fiscal conditions will improve in the coming year, with an additional 42% of these jurisdictions anticipating no change in conditions.

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Michigan Public Policy Survey

Meanwhile, there is little optimism for the future among those jurisdictions that report fiscal decline this year compared to last.

Among the jurisdictions in decline today, 71% expect to be even less able to meet their needs next year, while just 5% expect to be better able (see Figure 18b). By contrast, among jurisdictions that report better health this year compared to last, 79% expect continued improvement in the coming year, while just 2% expect to be worse off. Interestingly, among the 40% of jurisdictions that report no change this year compared to last, most (76%) expect to hold steady again in the year to come, while equal numbers expect to be better (10%) and less (10%) able to meet their needs next year. In summary, those jurisdictions that are improving today expect continued improvement, those in decline expect to continue declining, and those that have plateaued expect to stay there.

Figure 18b Percentage of jurisdictions predicting they will be better or less able to meet their fiscal needs in coming year, 2015, by ability to meet fiscal need this year

This is particularly bad news for those jurisdictions that are already in high fiscal stress, and may be nearing fiscal crises. As Figure 18c shows, 41% of these high-stress jurisdictions expect to continue this decline in the coming year. By contrast, nearly the same percentage of jurisdictions reporting low fiscal stress today expect to see continued improvement in the coming year (42%).

Note: responses for “don’t know” not shown

79%

10% 76%

5% 16% 71%

Better able next year Neither better nor less able next year Less able next year

2% 13% Better able this year

10% Neither better nor less able this year

Less able this year

Figure 18c Percentage of jurisdictions predicting they will be better or less able to meet their fiscal needs in coming year, 2015, by current Fiscal Stress Index (FSI) score 42%

Looking farther down the road, this closely matches jurisdictions’ future expectations of their fiscal stress five years in the future.

Figure 19 shows that 34% of those that are in high stress now expect to pull out of that category within the next five years, though most of them don’t foresee getting all the way to good fiscal health in that time. Conversely, 17% of those in low stress today expect to be in medium (14%) or high levels of stress (3%) in five years. However, the majority of both groups expect to stay where they are.

22%

40%

29%

27%

Better able next year Neither better nor less able next year

40% 41%

Less able next year

29% 13% Low stress (FSI 1-4)

Medium stress (FSI 5-6)

High stress (FSI 7-10)

Note: responses for “don’t know” not shown

Figure 19 Officials’ assessments of their jurisdiction’s fiscal stress in 5 years, 2015, by their current fiscal stress index score

77%

26%

10% 24%

46% 53%

Low stress in 5 years Medium stress in 5 years High stress in 5 years

3%

14%

Low stress now

20% Medium stress now

High stress now

Note: responses for “don’t know” not shown 17

The Center for Local, State, and Urban Policy

Conclusion The 2015 MPPS finds continued gradual improvement in a number of fiscal health indicators for Michigan local governments.

However, looking across the seven-year span of MPPS surveys reveals that numerous trends in fiscal improvement since the end of the Great Recession appear to be decelerating.

Overall, most local governments (66%) self-rate their levels of fiscal stress as relatively low today, and just 7% rate themselves as experiencing high fiscal stress. Nonetheless, this represents approximately 137 jurisdictions in high stress today.

Looking to the near future, overwhelmingly jurisdictions expect to continue on the same path they are currently on. Among those improving today, 79% expect to continue improving next year; among those holding steady, 76% expect to do so again next year; and among those declining today, 71% expect to be even worse off a year from now.

Meanwhile, looking at expected levels of fiscal stress five years down the road, these same patterns roughly hold true, though with somewhat more variation. Among jurisdictions in low stress today, 77% expect to remain there in five years. Among those in medium stress today, 46% expect to still be in medium levels of stress in five years, while 26% expect some improvement and 20% expect to be in high stress. Finally, among those in high stress today, the majority (53%) expect to remain at high stress levels in five years, though 34% do expect to see at least some amount of improvement.

Acknowledgements The authors thank Munetrix, Inc., for their openness in sharing their data and discussing their methods for calculating Fiscal Indicator Scores for Michigan local governments.

Notes 1. Munetrix Municipal Metrics. (2015). Fiscal Indicator Score explained.

Retrieved from https://www.munetrix.com/page/site/static/indicator-score 2. Mills, S. B. (2015). Proceedings from the Michigan Local Government Management Association (MLGMA) Summer Workshop: Local government fiscal health: Self-assessments vs. external evaluations. Boyne City, MI: CLOSUP. Retrieved from http://closup.umich.edu/files/presentations/closup_2015_july_mlgma_fiscal_health.pdf 3. National League of Cities. (2014). City Fiscal Conditions. Retrieved from http://www.nlc.org/find-city-solutions/city-solutions-and-applied-research/finance/city-fiscal-conditions 4. Audia, F. W., & Buckley, D. A. (2004). System failure: Michigan’s broken municipal finance model [Executive Summary]. Detroit, MI: Plante and Moran. Retrieved from http:// www.mml.org/advocacy/resources/system_failure_executive_summary.pdf 5. Ivacko, T., Horner, D., & Crawford, M. (2012). Fiscal stress continues for hundreds of Michigan jurisdictions, but conditions trend in positive direction overall. Ann Arbor, MI: Center for Local, State, and Urban Policy at the Gerald R. Ford School of Public Policy, University of Michigan. Retrieved from http://closup.umich.edu/michigan-public-policy-survey/18/fiscal-stresscontinues-for-hundreds-of-michigan-jurisdictions-but-conditions-trend-in-positive-direction-overall/ 6. The percentages for questions related to employee and retiree benefits are derived by excluding those jurisdictions who answer the questions as “Not applicable.” There may be some jurisdictions who do not have employees and/or offer these benefits who chose another response option such as “No change.” As a result, the reported percentages may be somewhat lower than actual percentages, particularly among jurisdictions with less than 10,000 residents.

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Michigan Public Policy Survey

Survey Background and Methodology The MPPS is a biannual survey of each of Michigan’s 1,856 units of general purpose local government, conducted once each spring and fall. While the spring surveys consist of multiple batteries of the same “core” fiscal, budgetary and operational policy questions and are designed to build-up a multi-year timeseries of data, the fall surveys focus on various other topics.

In the Spring 2014 iteration, surveys were sent by the Center for Local, State, and Urban Policy (CLOSUP) via the internet and hardcopy to top elected and appointed officials (including county administrators and board chairs; city mayors, managers, and clerks; village presidents, managers, and clerks; and township supervisors, clerks, and managers) from all 83 counties, 278 cities, 255 villages, and 1,240 townships in the state of Michigan.

The Spring 2015 wave was conducted from April 6 to June 8, 2015. A total of 1,328 jurisdictions in the Spring 2015 wave returned valid surveys (68 counties, 211 cities, 166 villages, and 883 townships), resulting in a 72% response rate by unit. The margin of error for the survey for the survey as a whole is +/- 1.44%. The key relationships discussed in the above report are statistically significant at the p<.05 level or below, unless otherwise specified. Missing responses are not included in the tabulations, unless otherwise specified. Some report figures may not add to 100% due to rounding within response categories. Quantitative data are weighted to account for non-response. Contact CLOSUP staff for more information.

Detailed tables of the data analyzed in this report broken down three ways—by jurisdiction type (county, city, township or village); by population size of the respondent’s community; and by the region of the respondent’s jurisdiction—will soon be available online at the MPPS homepage: http://closup.umich.edu/mpps.php.

The survey responses presented here are those of local Michigan officials, while further analysis represents the views of the authors. Neither necessarily reflects the views of the University of Michigan, or of other partners in the MPPS.

19

The Center for Local, State, and Urban Policy

Appendices Appendix A Conditions in the current fiscal year compared to the previous fiscal year, 2009-2015

2009 Revenue from property tax Revenue from fees for services, licenses, transfers, etc.

Amount of debt Ability of jurisdiction to repay its debt Amount of federal aid to jurisdiction Amount of state aid to jurisdiction Number of tax delinquencies Number of home foreclosures Population of jurisdiction Public safety needs Infrastructure needs Human service needs General government operations needs Number of employees Pay rates for employee wages and salaries Cost of employee pensions Cost of current employee health benefits Cost of retired employee health benefits Notes:

20

2010

2011

2012

2013

2014

2015

Increased

27%

8%

12%

16%

27%

36%

45%

Decreased

48%

78%

74%

64%

48%

38%

26%

Increased

7%

4%

7%

10%

13%

17%

18%

Decreased

54%

59%

47%

34%

26%

18%

13%

Increased

12%

12%

14%

12%

15%

Decreased

18%

21%

22%

21%

20%

Increased

7%

12%

14%

15%

18%

Decreased

7%

7%

6%

4%

4%

Increased

9%

8%

3%

5%

4%

5%

6%

Decreased

38%

39%

29%

22%

21%

14%

11%

Increased

3%

1%

9%

15%

17%

27%

28%

Decreased

69%

86%

61%

45%

34%

21%

14%

Increased

46%

47%

40%

30%

23%

20%

Decreased

20%

12%

12%

13%

15%

16%

Increased

60%

56%

41%

29%

18%

15%

Decreased

16%

10%

17%

25%

31%

33%

Increased

19%

12%

34%

27%

21%

21%

23%

Decreased

38%

38%

44%

31%

25%

18%

16%

Increased

36%

29%

28%

29%

29%

28%

29%

Decreased

9%

6%

3%

3%

3%

2%

1%

Increased

55%

47%

43%

45%

50%

54%

52%

Decreased

12%

7%

5%

5%

3%

2%

2%

Increased

45%

43%

35%

35%

29%

30%

28%

Decreased

8%

6%

3%

1%

1%

1%

1%

Increased

34%

34%

Decreased

1%

1%

8%

10%

Increased Decreased

2%

2%

3%

4%

27%

23%

19%

16%

9%

7%

Increased

36%

20%

21%

27%

39%

46%

53%

Decreased

15%

13%

10%

7%

5%

3%

1%

Increased

40%

30%

22%

21%

24%

25%

26%

Decreased

4%

4%

3%

4%

3%

3%

2%

Increased

51%

47%

35%

32%

31%

34%

34%

Decreased

6%

8%

7%

8%

8%

4%

5%

Increased

31%

24%

17%

16%

16%

17%

15%

Decreased

4%

4%

3%

3%

4%

2%

3%

Responses for “no change,” “don’t know,” and “not applicable” not shown.

Percentages are based on all responding jurisdictions (not just those that selected an option other than “not applicable”).

The “not applicable” response option was added in 2011, so direct comparisons with earlier waves may be compromised.

Question text for “pay rates for employee wage & salaries” changed slightly between 2010 and 2011. See web tables for exact question text.

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Michigan Public Policy Survey

Appendix B Predicted actions for the coming fiscal year compared to the current fiscal year, 2009-2015

Property tax rates Charges for fees for services, licenses, etc.

Reliance on general fund balance Reliance on “rainy day” funds Amount of services provided Actual public safety spending Actual infrastructure spending Actual human services spending

2009

2010

2011

2012

2013

2014

2015

Increase

18%

10%

15%

15%

22%

23%

27%

Decrease

17%

32%

19%

15%

12%

7%

5%

Increase

23%

22%

20%

19%

21%

18%

18%

Decrease

7%

7%

3%

2%

2%

2%

1%

Increase

49%

36%

34%

30%

27%

26%

Decrease

8%

8%

5%

6%

5%

6%

Increase

38%

25%

21%

19%

17%

17%

Decrease

7%

4%

4%

5%

5%

5%

Increase

9%

7%

6%

10%

12%

13%

15%

Decrease

24%

29%

21%

15%

12%

7%

5% 34%

Increase

26%

22%

20%

22%

27%

33%

Decrease

18%

22%

16%

9%

7%

4%

3%

Increase

28%

25%

23%

32%

34%

42%

43%

Decrease

30%

34%

21%

10%

10%

7%

5%

Increase

6%

5%

6%

8%

9%

9%

Decrease

17%

10%

6%

4%

2%

1%

39%

40%

Actual general government operations spending

Increase

6%

6%

Funding for economic development programs

Increase

14%

12%

8%

11%

13%

12%

13%

Decrease

17%

20%

12%

9%

8%

5%

5%

Amount of debt

Decrease

Increase

21%

18%

11%

14%

15%

13%

15%

Decrease

12%

13%

15%

16%

17%

18%

17%

Sale of public assets(i.e., parks, buildings, etc.)

Increase

5%

5%

6%

6%

7%

7%

Decrease

1%

1%

1%

1%

0%

1%

Privatizing or contracting out of services

Increase

16%

18%

15%

12%

12%

10%

10%

Decrease

4%

2%

1%

1%

1%

1%

1%

Number and/or scope of interlocal agreements or cost-sharing plans

Increase

32%

38%

40%

40%

34%

30%

22%

Jurisdiction’s workforce hiring Jurisdiction’s workforce layoffs Jurisdiction not filling vacant positions Employee pay rates

Decrease

2%

1%

1%

1%

1%

1%

1%

Increase

3%

1%

2%

2%

4%

8%

8%

Decrease

20%

22%

14%

8%

8%

3%

3%

Increase

11%

14%

8%

4%

3%

1%

1% 1%

Decrease

2%

1%

1%

1%

1%

0%

Increase

22%

23%

16%

10%

9%

7%

5%

Decrease

3%

3%

2%

2%

1%

1%

1%

Increase

21%

30%

40%

47%

53%

Decrease

6%

4%

3%

2%

1%

Employees’ share of premiums, deductibles, and/or co-pays on health insurance

Increase

33%

30%

30%

27%

26%

22%

Decrease

2%

1%

0%

1%

1%

1%

Employees’ share of contributions to retirement funds

Increase

15%

14%

13%

13%

11%

11%

Decrease

1%

0%

0%

0%

0%

1%

Retirees’ share of premiums, deductibles, and/or co-pays on health insurance

Increase

22%

18%

15%

15%

14%

13%

Decrease

1%

0%

0%

0%

0%

0%

Notes:

Responses for “no change,” “don’t know,” and “not applicable” not shown.

Percentages are based on all responding jurisdictions (not just those that selected an option other than “not applicable”).

The “not applicable” response option was added in 2011, so direct comparisons with earlier waves may be compromised.

21

The Center for Local, State, and Urban Policy

Previous MPPS reports Confidence in Michigan’s direction declines among state’s local leaders (August 2015) Michigan local government leaders’ views on private roads (July 2015) Few Michigan jurisdictions have adopted Complete Streets policies, though many see potential benefits (June 2015) Michigan local leaders have positive views on relationships with county road agencies, despite some concerns (May 2015) Michigan local government leaders say transit services are important, but lack of funding discourages their development (April 2015) Michigan local leaders see need for state and local ethics reform (March 2015) Local leaders say Michigan road funding needs major increase, but lack consensus on options that would raise the most revenue (February 2015) Michigan local government leaders’ views on employee pay and benefits (January 2015) Despite increasingly formal financial management, relatively few Michigan local governments have adopted recommended policies (December 2014) Most Michigan local officials are satisfied with their privatized services, but few seek to expand further (November 2014) Michigan local governments finally pass fiscal health tipping point overall, but one in four still report decline (October 2014) Beyond the coast, a tenuous relationship between Michigan local governments and the Great Lakes (September 2014) Confidence in Michigan’s direction holds steady among state’s local leaders (August 2014) Wind power as a community issue in Michigan (July 2014) Fracking as a community issue in Michigan (June 2014) The impact of tax-exempt properties on Michigan local governments (March 2014) Michigan’s local leaders generally support Detroit bankruptcy filing despite some concerns (February 2014) Michigan local governments increasingly pursue placemaking for economic development (January 2014) Views on right-to-work legislation among Michigan’s local government leaders (December 2013) Michigan local governments continue seeking, and receiving, union concessions (October 2013) Michigan local government fiscal health continues gradual improvement, but smallest jurisdictions lagging (September 2013) Local leaders evaluate state policymaker performance and whether Michigan is on the right track (August 2013) Trust in government among Michigan’s local leaders and citizens (July 2013) Citizen engagement in the view of Michigan’s local government leaders (May 2013) Beyond trust in government: government trust in citizens? (March 2013) Local leaders support reforming Michigan’s system of funding local government (January 2013)

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www.closup.umich.edu

Michigan Public Policy Survey

Local leaders support eliminating Michigan’s Personal Property Tax if funds are replaced, but distrust state follow-through (November 2012) Michigan’s local leaders satisfied with union negotiations (October 2012) Michigan’s local leaders are divided over the state’s emergency manager law (September 2012) Fiscal stress continues for hundreds of Michigan jurisdictions, but conditions trend in positive direction overall (September 2012) Michigan’s local leaders more positive about Governor Snyder’s performance, more optimistic about the state’s direction (July 2012) Data-driven decision-making in Michigan local government (June 2012) State funding incentives increase local collaboration, but also raise concerns (March 2012) Local officials react to state policy innovation tying revenue sharing to dashboards and incentive funding (January 2012) MPPS finds fiscal health continues to decline across the state, though some negative trends eased in 2011 (October 2011) Public sector unions in Michigan: their presence and impact according to local government leaders (August 2011) Despite increased approval of state government performance, Michigan’s local leaders are concerned about the state’s direction (August 2011) Local government and environmental leadership: views of Michigan’s local leaders (July 2011) Local leaders are mostly positive about intergovernmental cooperation and look to expand efforts (March 2011) Local government leaders say most employees are not overpaid, though some benefits may be too generous (February 2011) Local government leaders say economic gardening can help grow their economies (November 2010) Local governments struggle to cope with fiscal, service, and staffing pressures (August 2010) Michigan local governments actively promote U.S. Census participation (August 2010) Fiscal stimulus package mostly ineffective for local economies (May 2010) Fall 2009 key findings report: educational, economic, and workforce development issues at the local level (April 2010) Local government officials give low marks to the performance of state officials and report low trust in Lansing (March 2010) Local government fiscal and economic development issues (October 2009)

All MPPS reports are available online at: http://closup.umich.edu/mpps.php

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The Center for Local, State, and Urban Policy University of Michigan Center for Local, State, and Urban Policy Gerald R. Ford School of Public Policy Joan and Sanford Weill Hall 735 S. State Street, Suite 5310 Ann Arbor, MI 48109-3091

Regents of the University of Michigan The Center for Local, State, and Urban Policy (CLOSUP), housed at the University of Michiganâ&#x20AC;&#x2122;s Gerald R. Ford School of Public Policy, conducts and supports applied policy research designed to inform state, local, and urban policy issues. Through integrated research, teaching, and outreach involving academic researchers, students, policymakers and practitioners, CLOSUP seeks to foster understanding of todayâ&#x20AC;&#x2122;s state and local policy problems, and to find effective solutions to those problems. web: www.closup.umich.edu email: closup@umich.edu twitter: @closup phone: 734-647-4091

Michael J. Behm

Grand Blanc

Mark J. Bernstein

Ann Arbor

Laurence B. Deitch

Bloomfield Hills

Shauna Ryder Diggs

Grosse Pointe Denise Ilitch

Bingham Farms Andrea Fischer Newman

Ann Arbor

Andrew C. Richner

Grosse Pointe Park Katherine E. White

Ann Arbor

Mark S. Schlissel

(ex officio)

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www.closup.umich.edu