Fiscal health: Mixed signals for Michigan’s local governments

December 11, 2019

ANN ARBOR—More than two-thirds of Michigan’s local government leaders rate their jurisdictions’ current fiscal stress as relatively low, according to a new survey by the University of Michigan’s Center for Local, State, and Urban Policy.

On the other hand, about 36% of local governments say they are better able to meet their fiscal needs compared with last year, while 17% say they are less able to meet their needs this year and nearly half (45%) report no change—positive or negative—in their government’s fiscal health since last year.

These numbers show a new period of stagnation over the last three years in terms of short-term fiscal improvements.

“The outlook for the fiscal health remains mixed with the local leaders less optimistic about economic conditions in their communities,” said Thomas Ivacko, interim director of the Center for Local, State, and Urban Policy at U-M’s Ford School of Public Policy.

“Michigan has experienced 10 years of steady economic recovery since the end of the great recession in 2009,” said Debra Horner, project manager at CLOSUP. “However, fewer than half of our local leaders report that their government is better off today than it was 10 years ago, and many say they are actually worse off, despite the strong state economy.”

The data come from the Michigan Public Policy Survey, an ongoing survey of Michigan’s 1,856 local governments conducted by U-M’s Center for Local, State, and Urban Policy. The spring 2019 survey received a 73%-response rate from 1,364 jurisdictions.

Among the survey’s other key findings:

  • For the first time since the survey began in 2009, the optimism for local economies has fallen. This year, about 49% predict their community’s economy will see good times, down from 55% last year.
  • A majority (57%) of local jurisdictions statewide report an increase in their property tax revenues, compared to last year, though most increases are marginal. Property taxes are the most important source of funding for the local governments.
  • Looking at jurisdictions with property tax growth, urban areas are making faster progress than rural areas. About 78% of urban jurisdictions are more likely to report next improvement, compared to 55% of rural jurisdictions.
  • Looking ahead, the jurisdictions suffering from high fiscal stress is predicted to increase from 7% this year to 11% in five years.

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Authored by Mandira Banerjee and originally published on Michigan News (December 10, 2019).