How Michigan’s Cities Are Set Up to Fail
State government tells cities in Michigan that they’d better balance their budgets, keep debt under control and not promise more to retirees than can be paid.
Slip up too many times, and local elected officials can be displaced by emergency managers — or, in the historic case of Detroit, municipal bankruptcy can be the consequence.
That relationship, the expectation that municipal governments stay out of financial trouble or face state intervention, puts a lot of responsibility on local officials. They deliver most of the services people need, and have to maintain them (or cut them) without over-spending.
But Michigan’s laws also handcuff cities when it comes to the ways in which they might grow revenue (even in accordance with overall economic growth) or find new sources of it. And state policy has deprioritized the share of state tax dollars that are sent to local governments (the ones that provide most of the services people need) in the name of cost-cutting and frugality.
The result is a set-up of sorts, according to a report released last week by Michigan State University. “Michigan incubates financial distress (with its) particular mix of stringent limitations on local revenue and its relatively low level of financial assistance to cities,” the report said.
A week ago, I wrote that an obsession with dollars and cents, unmoored from considerations of the value of the services they buy or provide, had made state government in Michigan something of a joke. Money matters — but effectiveness, and whether spending delivers on its promise, has become secondary.