The Michigan Municipal League is hosting public forums talking about the state’s system for funding municipalities that it believes is broken. The MML says mayors have consolidated services saving taxpayer dollars but more needs to be done.
During its Save MI City stop in Grand Rapids, WGVU spoke with the Michigan Municipal League about the fallout from the Great Recession and how decreases in revenue sharing are impacting cities across the state.
“With the Great Recession our communities lost a huge source of their revenue in the form of property tax revenue.” That’s Matt Bach, director of media relations with the Michigan Municipal League. “As the economy has improved our communities haven’t recovered as quickly. So, although our housing values, particularly in the Grand Rapids area have been going up and things have been getting better, the revenue back to the city are still way below the levels they were prior to the recession of 2008. The other issue has to deal with what is called revenue sharing. And that’s another source of major income for cities. So, a percentage of the sales tax the cities get, so you buy goods and services that goes to cities and the state has also cut the revenue sharing to cities tremendously over the past dozen years.”
This is at a time when state legislators are considering rolling back the income tax from 4.25 percent to 3.9 percent.
“We feel that that would have a devastating impact on our communities and the services that people have come to rely on such as police and fire protection, roads, safe drinking water, all of the services that they basically take for granted. Now, a lot of that stuff we feel would be potentially in jeopardy should income tax be cut without any full replacement.”
If revenue streams remain the same, where does Bach see local governments in the next five to 10 years?
“I think they’re going to be in some trouble. I think we’re going to see more and more communities struggling. In particular, if there’s another recession we’re going to see a whole large number of communities that are going to be facing some dire financial straits."
Patrick Center, WGVU News.