The Governor affixed his signature at the end of last week to the omnibus state budget bill. This bill (HB 4323) includes a 2.5% ($6.2 million) increase to statutory revenue sharing. This spreadsheet from the House Fiscal Agency outlines the expected revenue sharing payments for each municipality based upon this increase. These new dollars will flow strictly to communities that received a CVTRS payment in the current year and will be distributed to those units on a per capita basis. Constitutional payments are expected to grow by approximately $40 million in the coming year, subject to actual state sales tax collections.
In addition to this welcome increase in revenue sharing, the budget also includes an increase above the Governor’s original proposal to fire protections grant funding of $1.4 million. While not as high as the supplemental, one-time increase in the current year’s budget, this will be the second year in a row where fire protection grant funding has been higher than the baseline recommendation. State PILT payments for purchased lands will also see a slight increase in this new budget. The budget estimates $4 million in revenue coming in from the new medical marijuana law that will be distributed as grants to local units of government. A new grant program has $500,000 available within Treasury that will provide reimbursements to local units that implement a financial data analytic tool. Project Rising Tide will receive an additional $2 million to expand beyond the current 10 communities in that program. The Michigan Enhancement Grant program will receive nearly $36 million to fund 20 projects in communities around the state. Within the MDOT portion of the budget, an additional $49 million is anticipated being distributed from the MTF to cities and villages, along with additional revenue appropriated to transit and the TEDF.
From a broader level, the budget deposits another $150 million into the state’s Budget Stabilization Fund and $35 million into the Governor’s new Michigan Infrastructure Fund.
Supplemental budget language was added for the current (FY16-17) budget, as well. The Ambulance Quality Assurance Assessment Program (QAAP tax) was eliminated from the current year budget, but language allowing for its inclusion in the coming budget was retained, though it was amended in an attempt to tighten the revenue base upon which this new tax could be assessed. Efforts will continue to keep DHHS from implementing this new tax and repealing the language in the Public Health Code.
New funding has been added to the current budget year aimed at providing reimbursement dollars for the under-development local Indigent Defense Commission standards to the tune of $5 million. As these plans continue to be finalized within each county, the picture will become clearer as to how much more will need to be appropriated for full implementation of those plans.
New funding was also included in this supplemental section for the newly created Municipal Wetland Alliance for wetland mitigation banks ($3.9M) and for a Regional Infrastructure Asset Management Pilot ($2M), both of which could benefit communities around the state.
The Governor’s line item vetoes focused mainly on education or human services program additions and did not impact any of the items referenced above. The new budget goes into effect on October 1, 2017.
Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and email@example.com.
A joint House/Senate conference committee met this morning (June 8, 2017) and approved a revenue sharing proposal for the upcoming 2017-18 state fiscal year.
Lead by former Walker mayor, State Rep. Rob VerHeulen and State Sen. Jim Stamas, the budget report included a 2.5% increase ($6.2 million) in funding for those cities, villages and townships that have been receiving statutory revenue sharing. This increase, alongside the expected improvement in sales tax collections that are estimated to improve Constitutional revenue sharing payments by more than $40 million, would reverse last year’s overall revenue sharing decline and provide the first increase on the statutory side in more than three years.
It should be noted that this morning’s conference agreement on SB 142 (http://www.legislature.mi.gov/documents/2017-2018/billanalysis/House/pdf/2017-HLA-0142-7AA49F7E.pdf) was developed without any input from the Snyder Administration or the Department of Treasury, as the Administration and Legislature continue to haggle over Legislative leadership’s desire to include a closure of the MI Public School Employees Retirement System as a part of the spending for the upcoming budget year.
This means that while both chambers have consistently supported increases for cities, villages and townships throughout this year’s budget development process, the Administration did not originally recommend any increase and could resist the proposed increase if this version is presented for his signature without an overall deal in place on the MPSERS situation.
League members should contact the Governor’s office and urge his support for this proposed increase and for a long-term plan for restoration of the devastating cuts of the past decade.
The Michigan House just adjourned session for the day (Tuesday) after adopting a substitute version H-3 for HB 4001 that would reduce the income tax rate from 4.25% down to 3.9% by January 1, 2021 and stopping at that point. Following hours of caucus and floor discussion, the new version was introduced and adopted on the House floor with no explanation of the new version. The House Fiscal Agency analysis of the new proposal pegs the state’s General Fund loss in the first year and $195 million and progressing upwards to $1.1 billion in FY2021-22. The H-3 version of the bill is now on 3rd reading in the House and has been listed for action on TODAY’s (Wednesday’s) House calendar. So it is just as important to contact your Reps today and ask them to oppose the sub version of HB 4001. Governor Snyder came out with a statement last night opposed to the revised bill (he was also against the original bill).
Legislation being considered in Lansing would eliminate the state income tax, potentially blowing a massive hole in our budget and destroying vital programs and services communities and your residents rely on every day. Let’s face it, nobody likes to pay taxes. But we need the services those taxes support – police and fire protection, road maintenance, street lighting, drinking water, libraries, parks, and the list goes on and on.
This plan to eliminate the state income tax is moving quickly and we need your help to oppose it. On Feb. 15, a state House committee passed out HB 4001, which would cut $680 million from the state budget in the first, partial year alone. This idea is poor fiscal policy that would harm the state’s future ability to provide critical services for its residents, communities, and businesses. There is no question that with revenue reductions of that magnitude, the remaining statutory revenue sharing payments would be at risk and any future restoration of the cuts from the past decade would be a virtual impossibility.
Proponents of the tax cut say it would spur economic growth and allow people living paycheck to paycheck to see meaningful tax relief and allow them to buy more. A recent Midland Daily News editorial disagreed and broke it down like this: “But the reality is that is a bunch of bunk. A person making $50,000 a year would see a tax cut of $175 — about $3.37 per week (48 cents a day). That’s hardly going to bail out people living paycheck to paycheck and is a very minimal increase in buying power.”
Governor Snyder and Michigan Treasurer Nick Khouri also have spoken against the proposal and recent polling reveals little support for an income tax cut from voters, regardless of political party or geography, and almost no support once voters are told of the impact of the repeal. The poll found 74 percent of people oppose the idea of eliminating the income tax without a plan to replace revenue lost by the state.
Michigan communities have already lost $7.5 billion in revenue sharing dollars since 2002. This is money that should have gone to local communities, but instead state leaders kept the funds for their own budget priorities. Further risking cuts in revenue sharing, coupled with the dramatic declines in property tax revenues from the Great Recession, will only further devastate local governments. We should be talking about growth, not more cuts. With Michigan’s economy finally recovering, we should be looking for ways where our communities can share in that recovery, not push them further into crisis.
Matt Bach is director of media relations. He can be reached at firstname.lastname@example.org.
About 60 local municipal officials from throughout the state were at the state Capitol Thursday in Lansing for the Michigan Municipal League’s Legislative Committee Kick-Off Orientation. The first-time event for the League was highly successful as members from the League’s various legislative policy committees heard from state lawmakers, League staff and communications experts.
The League makes policy decisions based on the input from its five League policy committees that are broken into topics – energy, environment and technology (chaired by Brighton City Manager Nate Geinzer); land use and economic development (chaired by Lake Isabella Village Manager Tim Wolff); municipal finance (chaired by Howell City Manager Shea Charles); municipal services (chaired by Novi City Manager Pete Auger); and transportation infrastructure (chaired by Farmington Hills Public Services Director Gary Mekjian).
The event was hosted by State Rep. Dan Lauwers in the Speakers Library in the Capitol across the street from the League’s Lansing office. Lauwers welcomed the group to the Capitol and was followed by League CEO and Executive Director Dan Gilmartin who thanked the members for their services on the policy committees and explained how important their work is to the League’s success as an organization.
Other event speakers were League staff members Chris Hackbarth, director of state and federal affairs; John LaMacchia, assistant director of state and federal affairs; Jennifer Rigterink, legislative associated; Emily Kieliszewski, member engagement specialist; and Shanna Draheim, policy director. There was also a panel discussion moderated by Kyle Melinn, news editor and co-owner of Michigan Information and Research Service (MIRS) and featuring State Rep. Christine Greig, House Democratic Floor Leader; State Rep. James Lower; and State Sen. Ken Horn.
Policy committee members from throughout the state attended representing the following communities: Village of Beverly Hills, City of Novi, City of Flushing, City of Gibraltar, City of Wyoming, Village of Copemish, City of Dexter, City of Center Line, City of Howell, City of Southgate, City of Grosse Pointe, Village of Chesaning, City of Livonia, City of Taylor,
City of Brighton, City of Charlotte, City of Westland, City of Woodhaven, City of Springfield, City of Dearborn Heights, City of Ann Arbor, Village of Mendon, City of Grand Blanc, City of Menominee, City of Midland, City of Berkley, City of St. Clair Shores, Village of St. Charles, City of Ovid, City of Monroe, City of Ann Arbor, City of Hazel Park, City of Douglas, City of Farmington Hills, City of Mt. Pleasant, City of Hamtramck, City of Alma, City of Hastings, City of Farmington Hills, City of Grandville, City of Dexter, City of Adrian, City of Rochester Hills, City of Orchard Lake, City of Cadillac, City of Rochester
City of Plymouth, City of Wayne, Village of Cassopolis, City of Dexter, City of Milan, City of Midland, Village of Sparta, City of Alpena, City of Saline, City of Gladstone, City of East Lansing, City of Clio, Village of Lake Isabella, Village of Blissfield, and Village of Quincy.
After lunch, the group heard about communications, public relations and the insider’s guide to lobbying from Dave Waymire, partner at Martin Waymire; and Dusty Fancher, partner with Midwest Strategy Group.
To learn about the latest legislative issues involving Michgian’s communities, subscribe to the League’s Inside 208 blog here: http://blogs.mml.org/wp/inside208/ (view subscribe box on right side of page). Learn more about the League’s policy committees here: http://www.mml.org/advocacy/committee/index.html. View additional photos from the event here.
Matt Bach is director of media relations for the League. He can be reached at email@example.com and 734-669-6317.
The Department of Treasury recently announced that the application period for the Financially Distressed Cities, Villages, and Townships $5 million grant program is now open. According to Treasury’s announcement:
Municipalities experiencing financial struggles can apply for a grant from the Michigan Department of Treasury to help fund special projects and free up tax dollars for important services. Applications for the Financially Distressed Cities, Villages, and Townships (FDCVT) grant program are now available. Municipalities interested in applying for an award must submit applications to the Department of Treasury by 11:59 p.m. on Monday, October 17, 2016. All cities, villages, and townships, experiencing at least one condition of “probable financial distress” as outlined in Public Act 436 of 2012, the Local Financial Stability and Choice Act*, are eligible to apply for up to $2 million. A total of $5 million in funding is available for Treasury to award through the FDCVT grant program this year. Grant funding may be used to pay for specific projects, services, or strategies that move the city, village, or township toward financial stability. Preference will be given to applicants from local units in which: A financial emergency has been declared in the past ten years; or, An approved Deficit Elimination Plan for the General Fund is currently in place; or, Two or more conditions indicating “probable financial distress” currently exist; or, The fund balance of the General Fund has been declining over the past five years and the fund balance is less than 3% of the General Fund Revenues.
Please follow this link for more information about FDCVT grants and for copies of the grant application.
.Chris Hackbarth is the League’s director of state affairs. He can be reached at 517-908-0304and firstname.lastname@example.org.
The House and Senate Fiscal Agencies met with officials from Treasury this week to conduct the annual May Consensus Revenue Estimating Conference. As a follow-up to the January revenue conference that established the basis for the Governor’s original budget presentation, this week’s conference is used as the baseline for final decision-making by Legislative leaders and the Governor on the current year budget and the FY 16-17 budget scheduled to begin October 1st.
As reported in many news stories this week, the state’s sales and corporate income tax revenues have been running below what was estimated in January for the current year while Medicaid and other human services caseload costs are running higher than expected. The potential impact on the current and upcoming proposed budgets have been reported to be in the $400 million range, subject to numerous line item and policy adjustments that could alter that impact. The overall consensus is that the proposed spending levels in next year’s state budget will need to be scaled back, but whether any reduction would be proposed for statutory revenue sharing payments is yet to be determined. Early comments from legislative leaders are that they will look to reduce proposed increases from the Governor’s original proposal before looking at line items like revenue sharing. The League continues to advocate aggressively to protect the existing payment level and urge the Legislature to find ways to improve the funding level in this critical item.
The continuing weakness in sales tax collections will have an impact on Constitutional payments to communities around the state for the remainder of this year. According to the Consensus Estimate for sales tax revenue, the current projection for Constitutional revenue sharing is a 0.7% decline in FY 2015-16 relative to FY 2014-15. Because these payments track with actual sales tax collections, the impact on forthcoming Constitutional payment from Treasury will adjust according to the revenue received.
For FY 2016-17, the Consensus projection is for a 1.7% increase relative to FY 2015-16, but that number will be revised at least two more times based upon the January 2017 and May 2017 revenue estimating conferences.
Chris Hackbarth is director of state affairs for the League. He can be reached at email@example.com and 517-908-0304.
The Michigan House and Senate Appropriations committees made their opening moves on the state budget this week by reporting the full budget bills to the floors of their respective chambers. Following expected floor action on these bills in the coming week or two, each chamber will review the other’s proposal and move toward a final budget deal sometime in early June.
Both proposals continue the current practice of ignoring the fiscal needs of local government, failing to make revenue sharing and the larger issue of municipal finance a budget priority. Without a renewed focus and commitment by the Governor and Legislature, Michigan will continue to occupy last place nationally in our treatment of local government. Learn about the League’s municipal finance initiative at SaveMiCity.org. View how much money your community has lost in revenue sharing here.
The House committee reported an omnibus budget bill, House Bill 5294, to the floor which includes funding for revenue sharing. The House proposal maintains current-year funding for revenue sharing, only deviating from the Governor’s original recommendation by maintaining the $5.8 million that the Governor would have removed for approximately 100 townships that hadn’t received revenue sharing previously.
The Senate committee, on the other hand, moved Senate Bill 788 to the Senate floor with significant changes to the Governor’s proposal for revenue sharing. Statutory revenue sharing would see a 1.5% reduction ($3.85 million) in the Senate version, with the dollars from that reduction being shifted to cover a proposed local match requirement for the purchase of new voting equipment. The League urges you to contact your Senator, asking them to join us in opposition to this approach.
In the Governor’s original budget proposal, the effort to replace existing voting equipment statewide was supported by $10 million in General Fund and $5 million in requested (unidentified) local match. These dollars would be coupled with remaining federal Help America Vote Act funds and dollars appropriated for this purpose in the current budget year. The purchase of new voting equipment has been championed by the County and Municipal Clerks Associations and the Secretary of State’s office, but the call for a local match requirement had not been voiced prior to this year’s budget.
The proposal to accommodate the Governor’s local match request in the Senate version raises serious concerns for the Michigan Municipal League and member communities, even beyond the further erosion of an already devastated statutory revenue sharing base.
- All cities, villages, townships and counties would benefit from the purchase of new voting equipment, but the local match requirement would only be paid by those cities and villages and few townships that receive a statutory payment. ***Counties and townships that do not receive non-Constitutional revenue sharing payments would pay no local match.
- By paying the local match only out of the statutory revenue sharing line, there is no correlation to the actual match requirement for equipment being purchased within each community. In a sample comparing similarly sized communities, one with 19 voting precincts would forgo only about $1,500 in revenue sharing, while another community with only 12 polling places would lose more than $22,000 … and this does not account for the more than 1,000 local government units that would pay nothing in local match!
- County statutory payments, already funded at 100%, would receive a 2% increase ($4.3 million) in this proposal. Again, without any requirement for a local match for voting equipment purchases by a county.
- This match requirement would be deducted during the FY 16-17 budget year, yet voting equipment would not be received by any local government until at least 2017 and delivery would like be phased in over two to three years.
Comments have been made that under this proposal, every local unit will receive at least what they received during the current budget year even with the 1.5% base reduction, but this statement assumes that there will be growth in sales tax revenue driving higher Constitutional revenue sharing payments. Early indications from the most recent Senate Fiscal Agency monthly revenue report reveal that it is unlikely that the state will even meet its already reduced sales tax estimate for the current year, let alone meet the overly optimistic 3.9% growth estimate for the coming year. It is more probable that Constitutional revenue sharing payments will be flat for a third year in a row, if not reduced at some point over the next year.
It is expected that the Senate’s revenue sharing plan will be voted on by the full chamber next week. Please remember to contact your Senator and urge them to begin restoring the cuts of the past decade and reform the way local governments are funded. They should start by rejecting the committee proposal.
Chris Hackbarth is the League’s director of state affairs. He can be reached at 517-908-0304 and firstname.lastname@example.org.
How bad is the municipal finance situation in Michigan? It’s the worse in the nation over the last decade, according to new data unveiled at a Michigan Municipal League news conference Monday, March 21.
And the culprit? State policies and politicians who have ignored the needs of cities, in the process damaging the state’s overall economy.
U.S. Census data shows Michigan is the ONLY state in the nation where municipal revenues overall declined from 2002-12 (the most recent information available).
Across the state, municipal revenues were down by 8.63 percent over that period, led by a 56 percent reduction in state revenue sharing.
Meanwhile, overall state revenues increased 39 percent. The numbers show that the state balanced its budget on the backs of cities.
The successful news conference was covered by multiple news outlets and also was live-streamed.
View articles by the Detroit News, Gongwer, the Associated Press, Crain’s Detroit Business, the Detroit Free Press, MIRS News Service and WDET radio. The Free Press report is a column by Nancy Kaffer and does a particularly good job explaining the plight of cities.
You can see all the details at SaveMICity.org, a new web site the Michigan Municipal League has set up to provide information about the severity of the municipal finance problem facing Michigan, and offer solutions over time.
The website also has a new data base showing the revenue sharing dollar amounts diverted from every community in the state from 2002 to 2015.
More than $7.5 billion has been diverted statewide in that time period. Look up your community’s information here.
“Our cities are facing desperate conditions,” said League CEO and Executive Director Dan Gilmartin.
And he pointed to “fundamentally flawed” state policies providing for municipal finance, including massive cuts in revenue sharing since 2002, limits on assessment increases, but none on decreases, and other punitive state policy decisions.
Across America, the statewide average increase in municipal revenues was more than 40 percent.
The state with the next worse municipal finance revenue growth was Ohio, and there revenue grew by 25.7 percent. Around the nation, the average increase was more than 40 percent.
League Associate Executive Director and COO Tony Minghine has been leading a task force of League members and staff in examining the situation and brainstorming solutions. Minghine explained at the news conference that state policies have led to “strategic disinvestment” by cities, as they struggle to balance budgets in the face of declining revenues. He asked rhetorically whether Flint might have been able to avoid its man-made water contamination catastrophe if it had received the $63 million in revenue sharing withheld by the state since 2002 as a part of state budget balancing.
Minghine said more revenue is just one part of the League’s plan to be laid out in coming months, to try to address the pressing situation. He said cities will ask for legislative approval to address cost issues and look at the structure of local services in ways that are today prohibited by state law.
Wayne Mayor Susan Rowe showed how the situation is facing her city, which has seen revenue sharing cut by a cumulative $7.8 million since 2002 and has lost millions more in tax base due to decisions made at the state level regarding assessment practices. Wayne has laid off half its police force and still will run out of money in 2017. “We need the state to keep its promises to cities,” she said.
Mitch Bean of the Michigan Economic Consulting Group minced no words in putting the current plight of many cities on state policies. He pointed out that the combination of the Headlee Amendment to the state constitution and Proposal A allow assessments to drop during hard times, but limit their growth during good times. As a result, even a relatively well-off community like Farmington Hills, which saw assessments drop 30 percent from 2008 to 2012, will likely not see its tax base return to 2008 levels until 2025.
Why should state policymakers care about what they are doing to cities? Shanna Draheim of Public Sector Consultants, which has prepared a new report “Creating 21st Century Communities, Making the Economic Case for Place” said the result of these state decisions is that Michigan cities are lagging successful communities in attracting new talent. And that means the state is lagging in that vital category. You can see it in state personal income data, where Michigan has gone from a top 15 state to a bottom 15 state in per capita income since 2000.
“States that have invested in cities are doing the best. They are growing economically. Michigan has the opportunity to do the same,” said Draheim.
But not unless we make some major changes to the state’s municipal finance policies, in a way that will let cities create the safe, walkable, fun locations that people want to move to. Until that happens, all of Michigan will suffer as the state’s economy sputters and fails to provide the public goods and economic opportunities that benefit all of us, whether we live in a big city, or rural township.
Matt Bach is director of media relations at the Michigan Municipal League. He can be reached at email@example.com and (734) 669-6317.
WASHINGTON, D.C. – Michigan Municipal League CEO and Executive Director Dan Gilmartin and fellow municipal leaders from across the nation called for a partnership between cities, states and the federal government to improve the country’s ailing infrastructure.
Gilmartin participated in a panel discussion at the Congressional Capitol Briefing earlier today (March 9, 2016) in Washington D.C. Gilmartin and the panel discussed national infrastructure issues and the Flint water crisis. Other scheduled panelists were Mayor Mark Stodola, of Little Rock, Arkansas; Councilmember Greg Evans, of Eugene Oregon; and Councilmember Andy Huckaba, of Lenexa, Kansas.
The panel also discussed whether federal policies are keeping pace with local efforts to reevaluate and reconfigure infrastructure for the next generation. More than 200 members of Congress and congressional staff attended the event at the Capitol Visitors Center Auditorium. The briefing is part of the National League of Cities annual Congressional City Conference concluding today.
In response to the Flint water crisis, the NLC on Tuesday announced a resolution that declared that the nation’s cities stand united in support of Flint. The resolution also included a call to Congress and the Administration to resolve the Flint Water Crisis. View the resolution here.
Here is an excerpt of the press statement about the resolution:
NLC is also calling on Congress and the administration to support robust funding for all water infrastructure mechanisms, including the Clean Water and Drinking Water State Revolving Loan Fund programs and the Water Infrastructure Finance and Innovation Act.
“The true tragedy is that the families-and children-impacted by the lead contamination in Flint will endure long-term education and mental health impacts,” said National League of Cities President Melodee Colbert-Kean, councilmember, Joplin, Mo.”The federal government must make a long-term commitment to help these families with the challenges that lie ahead.”
“The Flint drinking water crisis is unconscionable and unacceptable. Cites stand in solidarity with Flint, and the National League of Cities stands united with all American cities in the need to update our nation’s deteriorating water infrastructure,” saidNational League of Cities CEO and Executive Director Clarence E. Anthony. “We must invest in the infrastructure our communities depend on. We need the federal government to step up, and work with cities to make sure there will never again be another disaster like in Flint.”
“The tragic events in Flint are a wake-up call for the nation. Policies that ignore critical infrastructure needs result in a shameful disinvestment in our cities, leading to problems like we are experiencing in Flint,” said Dan Gilmartin, executive director and CEO of the Michigan Municipal League. “The Michigan state government has shorted communities $7 billion in revenue since 2000. The Flint crisis is the latest result of this ruinous policy.”
Access to clean drinking water is fundamental for the health and well-being of America’s communities and families. Lead-contaminated drinking water can have permanent and long-term effects on mental health, IQ and development, particularly in infants and children.
There is an urgent need to invest in our aging water infrastructure nationwide. The EPA estimates the U.S. water infrastructure capital needs to be approximately $720 billion over the next 20 years.
NLC is the nation’s largest and most representative membership and advocacy organization for city officials, comprised of more than 19,000 cities, towns, and villages representing more than 218 million Americans.
Matt Bach is director of media relations for the Michigan Municipal League. He can be reached at firstname.lastname@example.org.