Despite sustained economic growth, Michigan local government fiscal health still lags

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

Despite sustained economic growth, Michigan local government fiscal health still lags

Key Findings •

By Debra Horner, Natalie Fitzpatrick, 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 ten statewide survey waves of the Michigan Public Policy Survey (MPPS) conducted annually each spring from 2009 through 2018. >> 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 investigates local officials’ opinions and perspectives on a variety of important public policy issues.

Respondents for the Spring 2018 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 1,372 jurisdictions across the state.

Michigan Public Policy Survey November 2018

Statewide, Michigan local governments report continued marginal improvement in year-over-year fiscal health, with 37% of local governments saying they are better able to meet their fiscal needs today than they were last year. This is up slightly from 35% that said the same in 2017. Meanwhile, 16% say they are less able to meet their needs this year, the lowest percentage since MPPS tracking began in 2009. »»

•

The greatest overall improvement this year is found among the state’s larger jurisdictions. When looking at the number of jurisdictions better able to meet their needs minus those less able, jurisdictions with more than 30,000 residents report sharp gains, from 20% net improvement in 2017 to 45% in 2018.

However, another summary indicator shows fiscal decline among some jurisdictions. While 72% of Michigan local governments self-rated their level of fiscal stress as relatively low in 2014, this has declined to 62% today.

Meanwhile, local leaders in 8% of Michigan jurisdictions—approximately 149 local governments—say they are currently experiencing relatively high levels of fiscal stress, essentially unchanged over the last few years. »»

Among jurisdictions with 10,001-30,000 residents, the percentage reporting low stress increased from 58% in 2017 to 68% in 2018, while the largest jurisdictions (with over 30,000 residents) improved from 56% to 63%.

»»

Meanwhile, the smallest jurisdictions—as well as those that consider themselves mostly rural, and townships in general—report higher levels of fiscal stress overall this year.

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Jurisdictions of all sizes report continued gains compared with last year in both property tax revenues and state aid. In addition, local officials’ concerns regarding their current levels of general fund balances and cash flow remain relatively low. On the other hand, one in three (30%) predict they will have to increase their reliance on their general fund balance next year in order to meet needs.

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When it comes to expenditures, 61% statewide plan to increase employee pay next year (including 90% of the state’s largest jurisdictions). And while just 21% plan to increase overall service provision, this is the largest such percentage since MPPS tracking began. In another change from last year, local officials predict that increased needs in infrastructure and public safety should not outpace projected spending increases overall; however, some jurisdictions with significant needs may only increase spending “somewhat.”

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Looking ahead, optimism about general local economic conditions continues to increase: 55% of local officials expect “good times” next year, compared with 51% who said the same in 2017. But in other continuing trends, fewer (34%) believe this will translate to improved fiscal health for their local governments, and more expect their levels of fiscal stress will worsen over the next five years.

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

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Fiscal trends: Statewide fiscal health trends still below 2015 levels for all jurisdictions combined, but larger jurisdictions see sharp uptick in yearover-year improvement Each year the MPPS asks local leaders a summary question regarding changes in fiscal health: whether their jurisdictions are better able or less able to meet their financial needs at that time, compared to the previous year. In its tenth year of gathering expert opinions on Michigan local government fiscal health, the Michigan Public Policy Survey (MPPS) finds local government officials statewide in 2018 report continued marginal improvement trends, with many simply holding steady despite continued improvement in the economy. Michigan’s largest jurisdictions are the most likely to report an increased ability to meet fiscal needs this year, although some smaller jurisdictions also have seen gains since last year.

Figure 1a Percentage of jurisdictions reporting they are better or less able to meet their fiscal needs in current year compared to previous year, 2009-2018

24% 11%

9%

2009

2010

29%

36%

38%

2014

2015

2016

20%

22%

31%

35%

37%

2017

2018

16% 2011

Better able 2012

34%

2013

29%

24%

18%

16%

Less able

48%

52% 61%

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

Since its inception, the MPPS has covered a period of sharp economic decline in 2009 and 2010, followed by a trend of gradual improvement that first emerged in 2011. In 2016, for the first time since the end of the Great Recession, the trend of gradual improvement in ability to meet fiscal needs reversed. However, that turned out to be a one-year drop, and reports in 2017 and 2018 now continue the longer-term trend of gradual improvement overall.

With the exception of 2016, each year since 2011 the percentage of jurisdictions saying they were better able to meet their needs has increased. The 2018 survey finds that 37% of local governments overall say they are better able to meet their fiscal needs compared with last year, and this is up slightly from the 35% that said the same in 2017 compared with 2016 (see Figure 1a). However, despite sustained economic growth across the state, most jurisdictions reporting improvement only say they are “somewhat” better able to meet needs (32%), while just 5% say they are “significantly” better off this year. This pattern of marginally improving fiscal health has been a hallmark of the recovery since 2010. Still, only 16% of local leaders report their jurisdictions are now less able to meet their fiscal needs compared to last year, and this is the lowest such percentage since MPPS tracking began a decade ago.

Statewide, nearly half of all local governments (45%) report they are simply holding steady, with no significant change in their fiscal health from last year.

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Michigan Public Policy Survey

Figure 1b presents the changes in local fiscal health over the last decade by jurisdiction population-size category. It shows “net” fiscal health in each 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.

Figure 1b Net fiscal health yearly change: Percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2018, by population size 50% 40% 30% 20% 10% 0 -10% -20% -30% -40% -50% -60% -70%

Breaking the data out by jurisdiction size reveals some important differences in the overall improvement trend, especially at any given point in time. Michigan’s largest jurisdictions (those with more than 30,000 residents) show a sharp gain from 20% net improvement in 2017 to 45% in 2018.

Mid-sized jurisdictions also show improvements, with an increase from 19% to 25% among jurisdictions with 1,5005,000 residents, and a larger increase from just 7% in 2017 to 25% in 2018 for jurisdictions with 5,001-10,000 residents.

By contrast, Michigan’s smallest jurisdictions (those with a population of fewer than 1,500) show no net improvement this year despite significant improvement last year. Finally, jurisdictions with 10,001-30,000 residents show only a slight net improvement, from 16% last year to 18% in 2018.

-80% 2009

2010

2011 <1,500

2012 1,500-5,000

2013

2014

5,001-10,000

2015

2016

2017

2018

>30,000

10,001-30,000

Figure 1c Net fiscal health yearly change: Percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2018, by jurisdiction type 50% 40% 30% 20% 10% 0 -10% -20% -30%

Although this first look at short-term changes in fiscal health appears to be especially positive for Michigan’s largest jurisdictions, there may still be reasons for concern.

A recent report from the National League of Cities (NLC) finds a similarly high percentage of large cities nationwide in 2018 reporting they are better able to meet financial needs compared with last year, but it also sounds the alarm that growth in spending will outpace growth in revenues and lead to increased financial challenges down the road.1 Officials from Michigan’s largest local governments have echoed these futurelooking concerns in the past, as well,2 and as seen later in this report, do so again this year.

-40% -50% -60% -70% -80% 2009

2010

2011

2012 County

2013 Township

2014

2015 City

2016

2017

2018

Village

Meanwhile, looking at the data by jurisdiction type (counties, cities, townships, and villages) also shows mixed results.

Townships continue to report the highest net fiscal health, at 26%—up from 20% in 2017 and 15% in 2016. Villages also continue to see some improvement, with net fiscal health at 15%, while they were underwater as recently as 2016. However, by contrast, among counties and cities there has been little overall change recently, with net fiscal health increasing only slightly from 6% to 8% among counties, and no change from 2017-2018 among cities.

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The Center for Local, State, and Urban Policy The maps in Figure 1d display the same “net fiscal health” for jurisdictions across Michigan aggregated at the county level. The ten maps contrast those counties (in shades of red) where more jurisdictions are suffering fiscal decline than are experiencing improved fiscal health (i.e., “below the zero axis”), against those counties (in shades of green) where more jurisdictions are experiencing improved fiscal health than decline (i.e., “above the zero axis”). Counties where there are equal numbers of jurisdictions experiencing improvement and decline are shaded grey.

The color shades are scaled by the magnitude of the aggregated fiscal changes, with three categories and shades each for improving (green) and declining (red) conditions. The darkest shades of green and red show where the net calculation of jurisdictions improving minus those declining is greater than 50% (positive if green, negative if red), 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 (and the rest have no change), the net calculation is 27%-33%=-6%, which results in a light pink-shaded county. It should be noted that in several counties, a large percentage of jurisdictions report no change in their fiscal health, so it may be the case that only a small number of jurisdictions in those counties are included in the net calculations.

At the low point of statewide fiscal health in 2010, the map was almost uniformly red, showing widespread fiscal decline across the state. Now, in 2018, the map is the most green it has been since tracking began. However, there are still counties seeing net declines in their jurisdictions’ fiscal health, particularly counties in the western Upper Peninsula and Northern Lower Peninsula.

Appendix A at the end of this report displays the actual percentage net change for each of Michigan’s 83 counties for 2018.

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Michigan Public Policy Survey

Figure 1d Net fiscal health yearly change: Percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2018, by county 2009

2010

2012

2011

2013

2016

2014

2017

2015

2018

Greater than 50% net decline

26-50% net decline

0-25% net decline

Between 0-25% net improvement

26-50% net improvement

Greater 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 (â&#x20AC;&#x153;small Nâ&#x20AC;?) overall.

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The Center for Local, State, and Urban Policy

Fiscal status today: Nearly twothirds of local officials report low fiscal stress today, but confidence eroding over time The MPPS looks not only at changes in fiscal health year over year, but it also captures a current snapshot by asking local officials to rate their jurisdiction’s current fiscal health on a scale of 1-10, where 1 is perfect fiscal health and 10 is fiscal crisis. This is known as the MPPS Fiscal Stress Index (FSI).

This year, as shown in Figure 2a, 62% of local leaders rate their jurisdiction’s current level of fiscal stress as relatively low (at 4 or less on the 10-point scale). By comparison, 28% rate their fiscal stress at “medium” levels (scores of 5 or 6 on the scale), and 8% rate their stress as “high” (scores of 7-10). The 8% of jurisdictions with high stress scores today equates to about 149 of the state’s local governments.

Once again, in order to compare over time, we look at “net” assessments of fiscal health via the FSI: the percentage of local officials who say their jurisdiction has low fiscal stress (1-4 on the 10-point scale) minus the percentage that have either medium (5-6) or high (7-10) stress. While these net scores have only changed slightly from last year, there has been a noticeable decline in fiscal health over the last five years, as seen in Figure 2b. Back in 2014, 72% reported low stress, while 17% reported medium stress, and 9% reported high stress. Therefore, the “net” calculation is 72%-17%-9%=46%. As of 2018, the calculation is 62%28%-8%=26%, a 20 percentage-point decline in net fiscal health assessed by the FSI since 2014.

Thus, even while the MPPS has tracked a long-term trend of marginal annual improvements in fiscal health with jurisdictions saying they were somewhat better able to meet their current fiscal needs compared to the prior year, on another summary indicator the MPPS has tracked an opposite trend of worsening fiscal health when looking at a series of snapshots of fiscal status at any given time. These opposing trends are difficult to reconcile, but preliminary research at CLOSUP and at the Ford School of Public Policy finds that local leaders tend to consider long-term factors likely to impact their jurisdiction in complex ways when answering the FSI, more than just thinking of simple year-over-year budget status. This research is continuing.

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Figure 2a Officials’ assessments of their jurisdiction’s current fiscal health, via the MPPS Fiscal Stress Index, 2018

2%

1: Perfect health

1% 3%

2

9%

5%

Low stress

3

7%

4

19%

5 Medium stress

6

21%

7 8

High stress

9

21% 13%

10: Fiscal crisis Don’t know

Figure 2b Net current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2014-2018 50% 40% 30% 20% 10% 0 2014

2015

2016

2017

2018

Meanwhile, this evidence of declining fiscal health assessed on the FSI, along with just marginal long-term improvements in jurisdictions’ ability to meet their fiscal needs, highlights a disconnect between growth in the overall state economy on one hand, and the specific system of funding local government on the other. Prior MPPS surveys have explored this issue, finding in 2016 that 64% of local leaders believe the state’s system of funding local government is broken.3 Furthermore, in that same survey just 40% of local officials were confident the current system will provide sufficient revenues to their jurisdiction to maintain local services going forward, and only 23% said they will be able to improve or expand services in the future under the current system.

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Michigan Public Policy Survey

As with the year-over-year trends in fiscal health improvement when asked about ability to meet fiscal needs, larger jurisdictions also saw some improvement in net current fiscal health in 2018 when assessed through the FSI. The proportion of local officials reporting positive fiscal health (that is, net low fiscal stress on the FSI) increased from 18% in 2017 to 37% in 2018 among jurisdictions with 10,001-30,000 residents (see Figure 2c). Similarly, among the state’s largest jurisdictions, this increased from 14% last year to 28% this year. By contrast, the state’s mid-sized and smaller jurisdictions all lost ground this year in net fiscal health assessed through the FSI. When comparing between jurisdiction types, as shown in Figure 2d, counties have seen a great deal of volatility in net fiscal health as assessed on the FSI over the past five years. This year shows a large improvement in counties’ net fiscal health, up to 17% in 2018 from just 1% in 2017. Meanwhile, townships have shown a steady decline over the last five years, while cities and villages have shown declines followed by somewhat more stability. It is worth noting that cities have been underwater since 2016, with 49% reporting low fiscal stress, while 50% report medium or high levels of stress today.

Beginning in the Spring 2017 wave, the MPPS started asking local officials to characterize their jurisdictions on an urban-rural spectrum of rural, mostly rural, mostly urban, or urban. As shown in Figure 2e, jurisdictions described as urban continue for a second straight year to be the least likely to report positive fiscal health.

Meanwhile, jurisdictions characterized as mostly rural reported a steep decline in net fiscal health when assessed on the FSI, from 41% last year to 23% this year.

Figure 2c Net current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2014-2018, by jurisdiction size 60% 50% 40% 30% 20% 10% 0 2014 <1,500

2015

1,500-5,000

2016 5,001-10,000

2017

2018

10,001-30,000

>30,000

Figure 2d Net current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2014-2018, by jurisdiction type 60% 50% 40% 30% 20% 10% 0 -10% 2014

2015

County

2016 Township

2017 City

2018 Village

Figure 2e Net current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2017-2018, by urban-rural self-assessment 60% 50% 40% 30% 20% 10% 0 2017

Rural

Mostly rural

2018

Mostly urban

Urban

Note: calculation for “urbanization” does not include county responses 7

The Center for Local, State, and Urban Policy

Local jurisdictions report improvements in property tax revenues, particularly among the largest places

Figure 3a Percentage of jurisdictions overall reporting changes in property tax revenue compared with previous fiscal year, 2009-2018

52% 45% 36%

Property taxes are typically the most important source of funding for Michigan’s local governments, and declines in these revenues have been one of the most difficult challenges they have faced in the wake of the Great Recession. Fortunately, since 2015 Michigan local jurisdictions have been more likely to report increasing than decreasing property tax revenues. This year, for the first time since the MPPS started tracking property tax revenue change, a majority (52%) of local jurisdictions statewide report an increase in their property tax revenues compared with the previous fiscal year (see Figure 3a). This is a 7 percentage-point improvement over last year, the largest year-over-year improvement since 2015. Still, it is important to note that almost no local governments say these revenues increased “significantly” (nearly all say they increased “somewhat”), so it is likely most changes were relatively modest, as reflected in the parallel modest bump in year-over-year ability to meet fiscal needs presented earlier. Meanwhile, 15% of jurisdictions overall continue to say they experienced decreasing revenue from property taxes compared with the previous fiscal year, which represents more than 270 individual units statewide. While that is still a large number of jurisdictions with declining revenues, it is nonetheless the smallest percentage since the MPPS began tracking this key indicator.

When breaking the data down by population size, for a second straight year jurisdictions of all sizes report net gains in property tax revenues compared with the prior year. This news is especially good among the state’s largest jurisdictions, where 83% report increased property tax revenues in 2018, while just 6% say their property tax revenues decreased. This yields a net positive of 77%, up sharply from the 45% net improvement reported last year (see Figure 3b).

While not shown in Figure 3b, urban (72%) and mostly urban (78%) jurisdictions are significantly more likely than mostly rural (60%) or rural (42%) jurisdictions to report net improvements in property tax revenue. This may not be surprising, given that local taxable values on property in Michigan are capped by Proposal A of 1994, and thus growth and change of ownership—currently more common in metropolitan areas—often drive revenue increases.

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45%

27%

27% 8% 2009

42%

2010

12% 2011

16%

2012

Increased over previous FY 2013

2014

2015

2016

26%

25%

2017

19%

2018

Decreased over previous FY

15%

38% 48%

48% 64% 78%

74%

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

Figure 3b Net property tax yearly change: Percentage of jurisdictions reporting increases in property tax revenue minus percentage reporting decreases in property tax revenue, 2009-2018, by population size 80% 70% 60% 50% 40% 30% 20% 10% 0 -10% -20% -30% -40% -50% -60% -70% -80% -90% -100% 2009

2010

2011 <1,500

2012 1,500-5,000

2013

2014

5,001-10,000

2015 10,001-30,000

2016

2017

2018

>30,000

And related to property tax revenues, tax delinquencies are another indicator tracked by the MPPS (though not shown in Figure 3b). Reports statewide are essentially unchanged in 2018 compared with last year: 15% of jurisdictions say their tax delinquencies are increasing, while the same percentage (15%) say they are decreasing. Notable exceptions include larger jurisdictions, which again report strong improvements, with 33% saying tax delinquencies have decreased in 2018. In addition, jurisdictions in the U.P. continue to be more likely to report increased tax delinquencies (22%) compared with the statewide average.

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Improvements in levels of state aid among jurisdictions of all sizes State aid is another critical source of revenue for many local governments in Michigan. This includes statutory revenue sharing for some jurisdictions, which has often been a point of contention due to a series of cuts since the early 2000s.4 This year, as shown in Figure 4a, twice as many jurisdictions report an increase in overall state aid (30%) than report a decrease (15%). However, these increases are likely to have been relatively small, with no jurisdictions reporting that state aid had significantly increased.

Almost half (48%) of jurisdictions report no change in their funding from the State.

This year, for the first time since 2015, jurisdictions of all sizes report net positive changes in state aid. However, Michigan’s largest jurisdictions continue to be the most likely to report continuing declines in state aid. For this population category, 25% report such declines, while 27% report increases, resulting in a net positive of only 2% (see Figure 4b).

Meanwhile, reports of increases in state aid compared with the previous year are less likely to come from rural jurisdictions (25%) than from urban (39%), mostly urban (38%), or mostly rural (35%) communities.

Figure 4a Percentage of jurisdictions overall reporting changes in state aid compared with previous fiscal year, 2009-2018

27% 3%

1%

9%

2009

2010

2011

15%

17%

2012

2013

2014

21%

30%

28%

2015

14%

18%

17%

2016

2017

20%

19%

Increased over previous FY 2018

Decreased over previous FY

15%

34% 45% 61% 69% 86%

Note: responses for “neither better nor less able” and “don’t know” not shown Figure 4b Net state aid yearly change: Percentage of jurisdictions reporting increases in state aid minus percentage reporting decreases in state aid, 2009-2018, by jurisdiction size 60% 50% 40% 30% 20% 10% 0 -10% -20% -30% -40% -50% -60% -70% -80% -90% -100% 2009

2010

2011 <1,500

2012 1,500-5,000

2013

2014

5,001-10,000

2015 10,001-30,000

2016

2017

2018

>30,000

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The Center for Local, State, and Urban Policy

Evaluations of local government general fund balances mostly hold steady, while mid-sized to larger jurisdictions most likely to report gains

Figure 5a Percentage of officials saying their general fund balance is too high, too low, or about right, 2010-2018

27%

56%

23%

23%

62%

61%

26%

24%

59%

61%

20% 64%

23%

22%

21%

60%

60%

71%

Too low About right

To further gauge budgetary stress, the MPPS carries several questions regarding local governments’ general fund balances.

One item asks local officials to think about their jurisdiction’s fiscal needs and to evaluate, overall, whether their jurisdiction’s unreserved/unassigned general fund balance is too high, about right, or too low. Compared with prior years, officials today feel particularly confident that their general fund balance is at about the right level. Statewide, 71% say their general fund balance is “about right,” and only 3% say it is currently “too high” (see Figure 5a). However, one in five jurisdictions (21%) still report their general fund balance is too low for their fiscal needs.

Looking by jurisdiction size, reduced concerns about general fund balances over the last year are found only among jurisdictions with more than 5,000 residents, with the steepest drop in concerns among those with 10,001-30,000 residents (see Figure 5b).

Too high

13%

11%

5% 4% 12% 11%

6% 9%

6% 10%

12%

5% 13%

2010

2011

2012

2014

2015

2016

2017

4%

4%

2013

5%

Don't know 5%

3%

2018

Figure 5b Percentage of officials saying their general fund balance is too low, 2010-2018, by population size 50%

40%

30%

20%

10%

0 2010

2011 <1,500

10

2012

2013

1,500-5,000

2014

2015

5,001-10,000

2016

10,001-30,000

2017

2018

>30,000

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Michigan Public Policy Survey

On the other hand, looking ahead, 30% of local officials statewide predict their jurisdictions will have to increase their reliance on their general fund balance in order to meet their governments’ budget needs in the coming year, a slight uptick over 2017.

Meanwhile, only 4% of local officials say they will be decreasing their reliance on the general fund balance (see Figure 6a).

Figure 6a Percentage of jurisdictions overall predicting upcoming changes in reliance on general fund balance compared with previous fiscal year, 2010-2018 49% 36%

34%

30%

27%

26%

30%

28%

30%

2018

Increase reliance

By population size, the state’s larger jurisdictions are less likely than they were last year to predict increased reliance on their general fund balance, while smaller jurisdictions are more likely than they were a year ago to draw upon their savings in the general fund (see Figure 6b).

Looking at other budgetary indicators (not shown in Figure 6b), only 6% of local leaders overall report that their jurisdictions’ cash flow and ability to pay bills is “somewhat” of a problem or a “significant” problem, essentially unchanged from recent years.

Similarly, only 2% of jurisdictions statewide say their ability to repay debt decreased in 2018, compared with 63% that say there was no change, and 14% that report an increased ability to repay debt.

2010

2011

2012

2013

2014

2015

2016

2017

8%

8%

5%

6%

5%

6%

5%

5%

Decrease reliance

4%

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

Figure 6b Net general fund reliance change: percentage of jurisdictions predicting increases in reliance on their general fund balance minus percentage predicting decreases, 2010-2018, by jurisdiction size 70% 60% 50% 40% 30% 20% 10% 0 2010

2011 <1,500

2012

2013

1,500-5,000

2014 5,001-10,000

2015

2016 10,001-30,000

2017

2018

>30,000

11

The Center for Local, State, and Urban Policy

Plans for the coming year: Expenses include widespread employee pay increases, especially among largest jurisdictions

Figure 7a Percentage of jurisdictions reporting planned changes to employee pay in the coming year, 2011-2018

40%

47%

53%

56%

61%

48%

30% 21% Increase

Again this year, the percentage of local jurisdictions looking to increase employee pay has gone up. Statewide, 61% plan to increase employee pay “somewhat” (60%) or “significantly” (1%) next fiscal year, continuing the long-term trend since the end of the Great Recession (see Figure 7a). And while the percentage of jurisdictions planning to reduce employee pay has been low in each MPPS survey, for the first time, no jurisdictions report such plans today.

The plans to increase employee pay in 2018 are particularly notable among jurisdictions with more than 30,000 residents, where a full 90% predict increased employee pay rates, up substantially from the 75% that said the same in 2017 (see Figure 7b). Nonetheless, even among the smallest jurisdictions, the multi-year upward trend now has nearly a majority (47%) of jurisdictions with fewer than 1,500 residents planning to increase employee pay.

2011

2012

2013

2014

2015

2016

2017

2018

6%

4%

3%

2%

1%

1%

1%

0%

Decrease

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

Figure 7b Percentage of jurisdictions reporting planned increases to employee pay in the coming year, 2011-2018, by population size 100% 90% 80%

However, balancing those planned employee pay increases are continued demands on employees to help out with the cost of their benefits. Among jurisdictions that offer health benefits to employees, one in three (30%) predict they will ask employees to contribute more toward premiums, deductibles, and/or co-pays on health insurance, about the same percentage as in 2017 (29%). This includes 47% of the state’s largest jurisdictions that offer benefits (see Figure 7c).

70% 60% 50% 40% 30% 20% 10% 0 2011

2012 <1,500

2013 1,500-5,000

2014

2015

5,001-10,000

2016

2017

10,001-30,000

2018 >30,000

Appendix C provides long-term tracking data for a number of items related to employee compensation and benefits.

Figure 7c Percentage of jurisdictions reporting planned increases in current employees’ share of contributions to health insurance in the coming year, 2011-2018, by population size, among those that offer health benefits to employees 90% 80% 70% 60% 50% 40% 30% 20% 10% 0 2011

2012 <1,500

12

2013 1,500-5,000

2014

2015

5,001-10,000

2016 10,001-30,000

2017

2018 >30,000

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Michigan Public Policy Survey

Plans for the coming year: Predicted spending on public safety and infrastructure expected to match increasing demands in many jurisdictions In response to the fiscal pressures of the Great Recession, many Michigan local governments pursued cost-control strategies—such as increasing levels of intergovernmental cooperation, increasing reliance on their general fund balance, increasing employees’ share of fringe benefit costs, postponing infrastructure spending, and more—in an effort to protect their services from cuts.5 As a result, even in the depths of the fiscal crisis in 2010, only 29% of local jurisdictions statewide planned cuts in their overall level of services (although the percentages were much higher among larger jurisdictions, including 63% of the largest places). Since then, the number of jurisdictions planning service increases has climbed slowly, with 21% of local leaders now saying they plan to increase services overall in the coming year (see Figure 8).

Figure 8 Percentage of jurisdictions reporting planned changes in overall service provision in the coming year, 2009-2018

9%

7%

10%

12%

13%

15%

15%

6%

2009

2010

2011

2012

2013

2014

2015

2016

24%

21%

15%

Last year, local leaders in communities of all sizes also reported that increased infrastructure needs would likely outpace increases in their jurisdiction’s infrastructure spending. However, in 2018, predicted infrastructure spending is more in line with the expected pace of demands (although there is still significant ground to make up given extended delays in infrastructure investment in recent years). Statewide, 48% of local officials now note their infrastructure needs increased over the past year, while 49% predict their jurisdictions will increase infrastructure spending in the coming year (see Figure 10). However, 14% overall say they have significantly increased infrastructure needs, while only 9% predicted significantly increased spending. Among mid-sized jurisdictions, there is a particularly large gap between assessed need and predicted spending—for example, almost a quarter (23%)

6%

5%

21%

2017

2018

4%

5%

Increase

Decrease

29%

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

Figure 9 Percentage of jurisdictions reporting increases in public safety needs and planned increases in actual public safety spending in the coming year, 2018, by population size 4% 3% 3%

The MPPS also asks local officials about the service demands they face, as well as their plans for spending on particular service areas.

For example, 32% say their jurisdictions have faced increased demands to provide public safety services over the past year, while 35% predict they will increase spending on public safety services in the coming year (see Figure 9). Last year, predicted spending lagged increased demands. In general, the larger the jurisdiction, the greater is the demand for services, and the greater is the likelihood for increased spending. Thus among the state’s largest jurisdictions, 55% face somewhat (44%) or significant (11%) increased public safety needs, while 62% predict they will somewhat (54%) or significantly (8%) increase their public safety spending to meet those needs.

7%

12%

19%

2% 19%

1% 20%

Population <1,500

6% 25%

31%

Population 1,500-5,000

7% 35%

47%

62%

7% 51%

11%

8% 54%

44%

3% 5% 27%

Population 5,001-10,000

Population 10,001-30,000

Population >30,000

32%

Total

Public safety needs signficantly increased vs. previous FY

Plans for public safety spending significantly increase in coming FY

Public safety needs somewhat increased vs. previous FY

Plans for public safety spending somewhat increase in coming FY

Figure 10 Percentage of jurisdictions reporting increases in infrastructure needs and planned increases in actual infrastructure spending in the coming year, 2018, by population size

17%

9% 29%

6% 34%

Population <1,500

15% 33%

9%

48%

23% 10% 49%

39%

Population 1,500-5,000

Population 5,001-10,000

46%

12%

28%

52%

Population 10,001-30,000

13% 51%

39%

Population >30,000

9%

14% 34%

40%

Total

Infrastructure needs signficantly increased vs. previous FY

Plans for infrastructure spending significantly increase in coming FY

Infrastructure needs somewhat increased vs. previous FY

Plans for infrastructure spending somewhat increase in coming FY

13

The Center for Local, State, and Urban Policy of jurisdictions with between 10,001-30,000 residents say they will have significantly increased needs, but only 12% say they will significantly increase spending.

Looking at other areas of service expenditures, even though 23% of jurisdictions report human service needs have increased in the last year, only 11% say they plan to increase spending on human services in the coming year (see Figure 11). Among the stateâ&#x20AC;&#x2122;s largest jurisdictions, this rises to 50% reporting increased human services needs, yet less than a third (31%) are planning increases in spending. Meanwhile, 39% of local governments statewide expect to increase spending on general government operations. This includes 59% of jurisdictions with 10,001-30,000 residents and 53% of those with over 30,000 residents, compared to just 5% overall that expect to decrease such spending.

14

Figure 11 Percentage of jurisdictions reporting increases in human service needs and planned increases in actual human services spending in the coming year, 2018, by population size

1% 14%

5% 29%

3% 19% 4%

10%

Population <1,500

Population 1,500-5,000

1% 15%

Population 5,001-10,000

5% 29%

8% 42% 1% 19%

4% 27%

3% 20%

1% 10%

Population 10,001-30,000

Population >30,000

Total

Human service needs signficantly increased vs. previous FY

Plans for human services spending significantly increase in coming FY

Human service needs somewhat increased vs. previous FY

Plans for human services spending somewhat increase in coming FY

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Michigan Public Policy Survey

Plans for the coming year: Many of the largest local governments will seek more intergovernmental cooperation, but most others plan no increases In terms of how those services will be provided, statewide plans to increase privatization, outsourcing, or service sharing in collaboration with other jurisdictions are generally holding steady compared with last year. Overall, just 13% of jurisdictions expect to increase service privatization efforts in the coming year (essentially the same as the percentage each year since 2014), while just 2% expect to decrease these efforts.

Figure 12 Percentage of jurisdictions reporting plans to increase number and/ or scope of interlocal agreements next year, 2009-2018, by population size 32%

38%

40%

40%

34%

30% 22%

18%

18%

17% Increase

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2%

1%

1%

1%

1%

1%

1%

1%

1%

1%

Decrease

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

Meanwhile, as shown in Figure 12, when it comes to intergovernmental service sharing activities, 17% expect to increase the number and/or scope of their cooperative service sharing activities with other governments, also about the same as in recent years. However, this rises to 41% among the state’s largest jurisdictions (not shown in Figure 12), where the breadth and scope of local services offered in those communities provides more opportunities for collaboration. Trends in planned intergovernmental cooperation among jurisdictions of various sizes, including the largest places, remain generally unchanged from 2017.

Again, data from 2009-2018 on local officials’ plans for the coming year on a range of topics are available in Appendix C.

15

The Center for Local, State, and Urban Policy

Optimism about local economies continues upward trend, while confidence in future local government fiscal health continues to lag, despite small improvement Beyond questions about the fiscal health of local governments themselves, the MPPS also asks local leaders to think about general business conditions in their area, and to predict whether their communities will have good times or bad times financially in the coming year. This measure has shown slow but steady improvement since the end of the Great Recession in 2009.

In 2018, officials’ predictions continue to mirror positive indicators in Michigan’s economy.6 This year, 55% predict their community will have good times, up from 51% in 2017 (see Figure 13). Just 6% predict bad times, down slightly from 8% in 2017. Both the positive and negative predictions reflect the most optimistic points since MPPS tracking began.

Officials from the state’s largest jurisdictions (73%) are the most likely to predict good times in their local economy compared to officials from smaller jurisdictions. And, similarly, officials who describe their communities as “mostly urban” are more likely to predict their local economies will see good times (73%), compared with those from urban (58%), mostly rural (61%), and rural (47%) communities.

However, despite optimism about the economy, just one-third (34%) of local leaders predict their jurisdictions will be better able to meet their fiscal needs in the coming year, while 18% say they will be less able to do so (see Figure 14). While this doesn’t match the optimism about the wider economy, it does represent an improvement over expectations in 2016 and 2017. Overall, 43% predict they will be in about the same fiscal shape next year as they were this year.

Figure 13 Percentage of jurisdictions overall predicting their community will have good or bad times financially, 2009-2018

36%

51%

55%

46%

46%

2014

2015

2016

2017

2018

12%

11%

11%

8%

6%

40%

27% 6% 2009

13% 2010

19% Good times 2011

2012

22%

2013

18%

Bad times

33% 50% 58%

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

Figure 14 Percentage of jurisdictions predicting they will be better or less able to meet their fiscal needs in coming year, 2009-2018

9%

8%

2009

2010

15% 2011

22%

28%

35%

36%

2014

28%

29%

2015

2016

2017

19%

22%

22%

34%

Better able next year 2012

2013

22% 34%

2018

18%

Less able next year

30%

50% 62%

65%

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

Michigan cities are particularly divided in outlooks on their near-term fiscal health. City officials are both the most likely to be optimistic, with 40% predicting they will be better able to meet needs, and most likely to be pessimistic, with almost a third (31%) saying they will be less able to meet their needs next year.

Meanwhile, more than half (53%) of officials in the state’s largest jurisdictions believe they will be better able to meet their fiscal needs next year. Nearly half of officials from urban (49%) and mostly urban (47%) jurisdictions predict improvement next year compared to 2018, while officials from rural (47%) and mostly rural (42%) jurisdictions are more likely to predict they will stay the same, neither improving nor falling further behind next year.

16

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Michigan Public Policy Survey

Looking even farther down the road reveals additional concerns. When asked about expected fiscal conditions five years from now, using the MPPS Fiscal Stress Index, 11% of local leaders predict their jurisdictions will have high stress (up from 8% today), and just 54% predict they will have low stress (down from 62% today, and 72% back in 2014). These concerns are most prevalent among officials from the state’s largest jurisdictions, as seen in Figure 15.

These concerns about future fiscal health match the red flags raised by the recent National League of Cities fiscal conditions report, as well as other state-level analyses that suggest that state and local governments nationwide may struggle during the next economic downturn because of limited revenue growth, mounting expenditures and service demands, and enduring legacy costs associated with pensions and retiree health care debt.7 As such, Michigan local officials’ expert predictions and insights gathered on the MPPS may be useful as a way of better understanding which local units may be at risk for future fiscal stress, supplementing the standard use of purely administrative data. CLOSUP and the Ford School are pursuing research to better understand the role of expert survey responses in identifying and predicting local government fiscal health.

Figure 15 Officials’ predictions of their jurisdiction’s fiscal stress in five years, by jurisdiction size 8% 28%

8%

11%

8%

11%

34%

24%

24%

26%

11%

11%

10%

8%

7%

22%

27%

24%

23%

27%

10%

20%

25% 22%

62%

67%

54%

56%

51%

55%

61%

61%

68%

63%

63%

52%

High fiscal stress (FSI 7-10) Medium fiscal stress (FSI 5-6) Low fiscal stress (FSI 1-4) Don't know

9%

3% Current

Predicted in 5 years

Total statewide

11%

3% Current

Predicted in 5 years <1,500

10%

3% Current

Predicted in 5 years

1,500-5,000

1%

1%

5% Current

Predicted in 5 years

5,001-10,000

Current

1%

3% Predicted in 5 years

10,001-30,000

Current

5% Predicted in 5 years

>30,000

17

The Center for Local, State, and Urban Policy

Conclusion In 2018 the MPPS finds evidence of both marginal improvement and marginal decline in Michigan local government fiscal health overall, using a variety of fiscal indicators tracked over time. Although local governments in 2018 report a continuation of their overall marginal improvement in ability to meet fiscal needs, few say their fiscal conditions have gotten significantly better. And when asked to rate their levels of fiscal stress, a decline in fiscal health since 2014 is now evident. After eight years of growth in Michigan’s overall economy—eighth in the nation since the end of the Great Recession8 —the lack of better gains in fiscal health appears to be a missed opportunity to build a stronger fiscal foundation to help jurisdictions compete for economic growth today and to prepare for the next economic downturn.

For this year, when considering the number of jurisdictions with improving health minus those with declining health, some of the most optimistic reports are found among the state’s larger jurisdictions. Those with more than 30,000 residents reported sharp gains, from 20% net improvement in 2017 to 45% in 2018.

Meanwhile, although most local governments (62%) self-rate their levels of fiscal stress as relatively low today, there has been a steady gradual downward slide from 72% that said the same four years ago. The more frequent reports of increases in mid-level and high stress tend to come from the smallest jurisdictions, those that consider themselves mostly rural, and those that are townships.

Looking to the near future, over half (55%) of local officials continue to forecast good economic times for their communities. At the same time, just a third (34%) of local officials predict their own government will be better able to meet its fiscal needs next year, 18% say they will be less able to do so, and 43% predict they will stay the same. And looking further down the road, a continued drop in fiscal health is predicted, with 54% expecting to have low fiscal stress (down from 62% today), while 11% expect to face high fiscal stress (up from 8% today).

The underperformance in local government fiscal health compared with Michigan’s robust economic growth since the Great Recession, along with local leaders’ fears about falling further behind in the future, correspond with the overall belief among Michigan local government leaders that the state’s system of funding local government in Michigan is broken.9

18

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Michigan Public Policy Survey

Notes 1. National League of Cities. (2018). City fiscal conditions 2018. Washington, D.C.: National League of Cities. Retrieved from https://www.nlc.org/resource/city-fiscal-conditions-2018 2. Mills, S., & Ivacko, T. (2016). Local officials say Michigan’s system of funding local government is broken, and seek State action to fix it. 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/files/mpps-sflg-2016.pdf 3. Mills & Ivacko, 2016.

4. Citizens’ Research Council of Michigan. (2015). Reforming Statutory State Revenue Sharing. Livonia, MI: Citizens’ Research Council. Retrieved from http://crcmich.org/PUBLICAT/2010s/2015/reforming_michigan_statutory_state_revenue_ sharing-2015.pdf 5. Horner, D., & Ivacko, T. (2010). Local governments struggle to cope with fiscal, service, and staffing pressures. 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/files/mpps-fiscal-health-2010.pdf 6. Khouri, N. A., Bussis, E., Lockwood, A., Patchak-Schuster, T., Darragh, S., & Heidt, D. (2018). Economic and revenue outlook: FY 2017-18, FY 2018-19 and FY 2019-20. Lansing, MI: Michigan Department of Treasury. Retrieved from https://www. michigan.gov/documents/treasury/Administration_Michigan_Economic_and_Revenue_Outlook_May_16_2018_623291_7. pdf 7. Harrison, D. (2018, July 8). Many states are likely unprepared for next downturn. Wall Street Journal. Retrieved from https://www.wsj.com/articles/many-states-are-likely-unprepared-for-next-downturn-1531073292 8. Gallagher, J. (2018, March 30). Is Michigan back as a top 10 economic player? Depends on the metric. Detroit Free Press.

Retrieved from https://www.freep.com/story/money/business/john-gallagher/2018/03/30/michigan-economic-status-top-10player/469047002/ 9. Mills & Ivacko, 2016.

19

The Center for Local, State, and Urban Policy

Survey Background and Methodology The MPPS is an ongoing survey program, interviewing the leaders of Michigan’s 1,856 units of general purpose local government. Surveys are conducted each spring (and prior to 2018, were also conducted each fall). The program has covered a wide range of policy topics, and includes longitudinal tracking data on “core” fiscal, budgetary and operational policy questions and designed to build-up a multi-year time-series.

In the Spring 2018 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 and managers; village presidents, clerks, and managers; and township supervisors, clerks, and managers) from all 83 counties, 280 cities, 253 villages, and 1,240 townships in the state of Michigan.

The Spring 2018 wave was conducted from April 9 – June 8, 2018. A total of 1,372 jurisdictions in the Spring 2018 wave returned valid surveys (65 counties, 237 cities, 177 villages, and 893 townships), resulting in a 74% response rate by unit. The margin of error for the survey for the survey as a whole is +/- 1.35%. 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. “Voices Across Michigan” verbatim responses, when included, may have been edited for clarity and brevity.

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—are 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.

20

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Michigan Public Policy Survey

Appendices Appendix A Net fiscal health yearly change: percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2017 â&#x20AC;&#x201C; 2018, by county

% Less Able to Meet Fiscal Needs

% Neither Better nor Less Able

% Better Able to Meet Fiscal Needs

% Don't Know

Net Yearly Change for 2018

ALCONA

28.2

51.29

10.26

10.26

-17.94%

ALGER

13.11

73.78

13.11

0

0.00%

ALLEGAN

7.44

53.68

35.16

3.72

27.72%

ALPENA

16.59

53.55

29.86

0

13.27%

ANTRIM

6.66

45.35

47.99

0

41.33%

ARENAC

23.78

38.45

37.76

0

13.98%

BARAGA

41.09

40.23

18.67

0

-22.42%

0

29.44

70.56

0

70.56%

County Name

BARRY BAY

22.52

35.17

42.32

0

19.80%

BENZIE

14.29

42.36

43.34

0

29.05%

BERRIEN

15.89

34.32

49.79

0

33.90%

BRANCH

37.16

24.38

32.19

6.27

-4.97%

CALHOUN

10.06

39.68

50.25

0

40.19%

CASS

14.87

55.73

29.4

0

14.53%

CHARLEVOIX

8.4

66.3

25.3

0

16.90%

CHEBOYGAN

13.78

40.14

46.08

0

32.30%

CHIPPEWA

17.89

51.64

30.47

0

12.58%

CLARE

14.29

38.35

40.21

7.15

25.92%

CLINTON

15.51

60.91

23.57

0

8.06%

CRAWFORD

18.81

20.24

60.95

0

42.14%

DELTA

21.23

24.94

53.83

0

32.60%

DICKINSON

27.62

29.69

42.7

0

15.08%

EATON

13.44

52.69

33.86

0

20.42%

EMMET

13.7

78.75

7.55

0

-6.15%

GENESEE

20.89

37.76

41.35

0

20.46%

GLADWIN

27.25

43.75

29

0

1.75%

GOGEBIC

36.71

43.11

20.18

0

-16.53%

GRAND TRAVERSE

7.72

56.73

35.55

0

27.83%

GRATIOT

44.22

31.13

24.65

0

-19.57%

HILLSDALE

24.52

47.83

21.73

5.92

-2.79%

HOUGHTON

33.99

48.14

17.87

0

-16.12%

HURON

15.85

46.72

37.43

0

21.58%

INGHAM

14.52

35.42

50.06

0

35.54%

IONIA

18.94

48.07

28.26

4.74

9.32%

IOSCO

23.96

51.1

24.95

0

0.99%

IRON

26.04

52.37

21.59

0

-4.45%

ISABELLA

29.08

62.46

8.46

0

-20.62%

JACKSON

11.82

40.55

47.62

0

35.80%

KALAMAZOO

13.48

26.72

59.79

0

46.31% 21

The Center for Local, State, and Urban Policy KALKASKA

12

75.2

12.8

0

0.80%

KENT

3.3

63.98

32.72

0

29.42%

0

62.43

37.57

0

37.57%

LAKE

27.29

54.42

18.29

0

-9.00%

LAPEER

6.56

60.25

33.19

0

26.63%

LEELANAU

0

64.58

35.42

0

35.42%

LENAWEE

12.27

43.4

39.78

4.55

27.51%

LIVINGSTON

12.92

40.04

47.03

0

34.11%

KEWEENAW

LUCE

0

40.75

59.25

0

59.25%

MACKINAC

8.38

23.73

67.89

0

59.51%

MACOMB

11.61

32.88

55.5

0

43.89%

MANISTEE

23.48

51.25

18.88

6.39

-4.60%

MARQUETTE

24.79

33.63

41.58

0

16.79%

MASON

17.4

42

40.59

0

23.19%

MECOSTA

6.89

61.12

31.99

0

25.10%

MENOMINEE

37.45

9.49

53.06

0

15.61%

MIDLAND

21.05

46.4

32.55

0

11.50%

MISSAUKEE

6.34

71.84

14.55

7.27

8.21%

MONROE

22.85

57.31

19.84

0

-3.01%

MONTCALM

18.32

56.41

25.27

0

6.95%

MONTMORENCY

23.55

38.23

38.23

0

14.68%

MUSKEGON

15.31

50.05

34.63

0

19.32%

NEWAYGO

26.25

42.15

31.6

0

5.35%

OAKLAND

11.74

34.17

54.09

0

42.35%

OCEANA

0

40.08

59.92

0

59.92%

OGEMAW

30.76

43.84

25.39

0

-5.37%

ONTONAGON

47.43

19.55

22.01

11.01

-25.42%

OSCEOLA

23.64

63.61

12.76

0

-10.88%

OSCODA

51.71

25.03

23.26

0

-28.45%

OTSEGO

28.64

51.68

19.68

0

-8.96%

OTTAWA

9.12

31.34

59.54

0

50.42%

PRESQUE ISLE

0

65.99

34.01

0

34.01%

ROSCOMMON

9.24

60.26

30.5

0

21.26%

SAGINAW

17.7

45.3

37

0

19.30%

SANILAC

11.89

50.52

37.59

0

25.70%

SCHOOLCRAFT

20.69

58.62

20.69

0

0.00%

SHIAWASSEE

6.34

38.75

54.91

0

48.57%

0

39.88

56.32

3.79

56.32%

ST CLAIR ST JOSEPH

5.39

35.74

52.7

6.17

47.31%

TUSCOLA

19.05

59.06

21.89

0

2.84%

VAN BUREN

21.99

44.08

33.93

0

11.94%

WASHTENAW

4.99

53.32

41.69

0

36.70%

WAYNE

19.04

33.69

44.76

2.51

25.72%

WEXFORD

13.4

59.86

26.74

0

13.34%

22

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Michigan Public Policy Survey

Appendix B Conditions in the current fiscal year compared to the previous fiscal year, 2009-2018

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Revenue from property tax

Increased

27%

8%

12%

16%

27%

36%

45%

42%

45%

52%

Decreased

48%

78%

74%

64%

48%

38%

26%

25%

19%

15%

Revenue from fees for services, licenses, transfers, etc.

Increased

7%

4%

7%

10%

13%

17%

18%

19%

21%

Decreased

54%

59%

47%

34%

26%

18%

13%

12%

10%

Increased

12%

12%

14%

12%

15%

14%

16%

Decreased

18%

21%

22%

21%

20%

21%

19%

Ability of jurisdiction to repay its debt

Increased

7%

12%

14%

15%

18%

13%

14%

14%

7%

7%

6%

4%

4%

6%

3%

2%

Amount of federal aid to jurisdiction

Increased

9%

8%

3%

5%

4%

5%

6%

4%

6%

Decreased

38%

39%

29%

22%

21%

14%

11%

13%

14%

Amount of state aid to jurisdiction

Increased

3%

1%

9%

15%

17%

27%

28%

18%

17%

30%

Decreased

69%

86%

61%

45%

34%

21%

14%

20%

19%

15%

Number of tax delinquencies

Increased

46%

47%

40%

30%

23%

20%

19%

16%

15%

Decreased

20%

12%

12%

13%

15%

16%

17%

15%

15%

Number of home foreclosures

Increased

60%

56%

41%

29%

18%

15%

13%

10%

Decreased

16%

10%

17%

25%

31%

33%

29%

26%

Amount of debt

Public safety needs Infrastructure needs Human service needs General government operations needs Number of employees

Decreased

Increased

36%

29%

28%

29%

29%

28%

29%

33%

35%

32%

Decreased

9%

6%

3%

3%

3%

2%

1%

2%

2%

5%

Increased

55%

47%

43%

45%

50%

54%

52%

56%

56%

48%

Decreased

12%

7%

5%

5%

3%

2%

2%

2%

4%

7%

Increased

45%

43%

35%

35%

29%

30%

28%

27%

28%

23%

Decreased

8%

6%

3%

1%

1%

1%

1%

1%

1%

2%

Increased

34%

34%

34%

36%

37%

Decreased

1%

1%

2%

3%

3%

Increased

2%

2%

3%

4%

8%

10%

10%

13%

14%

Decreased

27%

23%

19%

16%

9%

7%

6%

5%

5%

Pay rates for employee wages and salaries

Increased

36%

20%

21%

27%

39%

46%

53%

51%

57%

Decreased

15%

13%

10%

7%

5%

3%

1%

1%

2%

Cost of employee pensions

Increased

40%

30%

22%

21%

24%

25%

26%

28%

30%

Decreased

4%

4%

3%

4%

3%

3%

2%

2%

2%

2%

Cost of current employee health benefits

Increased

51%

47%

35%

32%

31%

34%

34%

33%

36%

35%

Decreased

6%

8%

7%

8%

8%

4%

5%

4%

2%

2%

Increased

31%

24%

17%

16%

16%

17%

15%

16%

18%

15%

Decreased

4%

4%

3%

3%

4%

2%

3%

2%

1%

2%

Cost of retired employee health benefits Notes:

25%

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.

23

The Center for Local, State, and Urban Policy Appendix C Predicted actions for the coming fiscal year compared to the current fiscal year, 2009-2018

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

Increase

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

18%

10%

15%

15%

22%

23%

27%

22%

26%

25% 4%

Decrease

17%

32%

19%

15%

12%

7%

5%

6%

5%

Increase

23%

22%

20%

19%

21%

18%

18%

18%

23%

Decrease

7%

7%

3%

2%

2%

2%

1%

1%

1%

Increase

49%

36%

34%

30%

27%

26%

30%

28%

30%

Decrease

8%

8%

5%

6%

5%

6%

5%

5%

4%

Increase

38%

25%

21%

19%

17%

17%

17%

17%

Decrease

7%

4%

4%

5%

5%

5%

5%

6%

Increase

9%

7%

6%

10%

12%

13%

15%

15%

19%

21%

Decrease

24%

29%

21%

15%

12%

7%

5%

6%

4%

5%

Increase

26%

22%

20%

22%

27%

33%

34%

34%

33%

35%

Decrease

18%

22%

16%

9%

7%

4%

3%

4%

4%

3%

Increase

28%

25%

23%

32%

34%

42%

43%

42%

45%

49%

Decrease

30%

34%

21%

10%

10%

7%

5%

6%

5%

5%

Increase

6%

5%

6%

8%

9%

9%

8%

10%

11%

Decrease

17%

10%

6%

4%

2%

1%

2%

2%

2%

39%

40%

39%

38%

39% 5%

Actual general government operations spending

Increase

6%

6%

5%

5%

Funding for economic development programs

Increase

14%

12%

8%

11%

13%

12%

13%

12%

14%

Decrease

17%

20%

12%

9%

8%

5%

5%

4%

4%

Increase

21%

18%

11%

14%

15%

13%

15%

15%

17%

Decrease

12%

13%

15%

16%

17%

18%

17%

15%

16%

Increase

5%

5%

6%

6%

7%

7%

7%

9%

Decrease

1%

1%

1%

1%

0%

1%

1%

1%

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

Privatizing or contracting out of services Number and/or scope of interlocal agreements or cost-sharing plans Jurisdiction’s workforce hiring Jurisdiction not filling vacant positions Number of employees Employee pay rates

Decrease

Increase

16%

18%

15%

12%

12%

10%

10%

10%

11%

Decrease

4%

2%

1%

1%

1%

1%

1%

1%

1%

13% 2%

Increase

32%

38%

40%

40%

34%

30%

22%

18%

18%

17%

Decrease

2%

1%

1%

1%

1%

1%

1%

1%

1%

1%

Increase

3%

1%

2%

2%

4%

8%

8%

Decrease

20%

22%

14%

8%

8%

3%

3%

Increase

22%

23%

16%

10%

9%

7%

5%

Decrease

3%

3%

2%

2%

1%

1%

1%

Increase

9%

11%

11%

Decrease

4%

5%

4%

Increase

21%

30%

40%

47%

53%

48%

56%

61%

Decrease

6%

4%

3%

2%

1%

1%

1%

0%

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

Increase

33%

30%

30%

27%

26%

22%

17%

17%

17%

Decrease

2%

1%

0%

1%

1%

1%

0%

0%

0%

Employees’ share of contributions to retirement funds

Increase

15%

14%

13%

13%

11%

11%

11%

12%

10%

Decrease

1%

0%

0%

0%

0%

1%

1%

0%

0%

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

22%

18%

15%

15%

14%

13%

11%

10%

8%

1%

0%

0%

0%

0%

0%

0%

0%

0%

Notes:

24

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.

www.closup.umich.edu

Michigan Public Policy Survey

Previous MPPS reports Michigan local government leaders’ views on medical and recreational marijuana (September 2018) Rising confidence in Michigan’s direction among local leaders, but partisan differences remain (July 2018) Michigan local government officials weigh in on housing shortages and related issues (June 2018) Approaches to land use planning and zoning among Michigan’s local governments (May 2018) Workforce issues and challenges for Michigan’s local governments (January 2018) Local leaders’ views on elections in Michigan: accuracy, problems, and reform options (November 2017) Michigan local government officials report complex mix of improvement and decline in fiscal health, but with overall trend moving slowly upward (October 2017) Michigan local leaders want their citizens to play a larger role in policymaking, but report declining engagement (August 2017) Michigan local leaders’ views on state preemption and how to share policy authority (June 2017) Improving communication, building trust are seen as keys to fixing relationships between local jurisdictions and the State government (May 2017) Local leaders more likely to support than oppose Michigan’s Emergency Manager law, but strongly favor reforms (February 2017) Local government leaders’ views on drinking water and water supply infrastructure in Michigan communities (November 2016) Michigan local leaders say property tax appeals are common, disagree with ‘dark stores’ assessing (October 2016) Local officials say Michigan’s system of funding local government is broken, and seek State action to fix it (September 2016) Michigan local governments report first declines in fiscal health trend since 2010 (August 2016) Michigan local leaders’ doubts continue regarding the state’s direction (July 2016) Hospital access primary emergency medical concern among many Michigan local officials (July 2016) Firefighting services in Michigan: challenges and approaches among local governments (June 2016) Most local officials are satisfied with law enforcement services, but almost half from largest jurisdictions say their funding is insufficient (April 2016) Local leaders say police-community relations are good throughout Michigan, but those in large cities are concerned about potential civil unrest over police use-of-force (February 2016) Report: Responding to budget surplus vs. deficit: the preferences of Michigan’s local leaders and citizens (December 2015) Michigan’s local leaders concerned about retiree health care costs and their governments’ ability to meet future obligations (October 2015) Fiscal health rated relatively good for most jurisdictions, but improvement slows and decline continues for many (September 2015) 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)

25

The Center for Local, State, and Urban Policy 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) 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

26

www.closup.umich.edu

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

Shauna Ryder Diggs

Grosse Pointe Denise Ilitch

Bingham Farms Andrea Fischer Newman

Ann Arbor

Andrew C. Richner

Grosse Pointe Park Ron Weiser

Ann Arbor

Katherine E. White

Ann Arbor

Mark S. Schlissel

(ex officio)