City manager calls attention to local government funding

By: Sara Kandel | Roseville - Eastpointe Eastsider | Published May 28, 2013

EASTPOINTE — Armed with two new studies, Eastpointe City Manager Steve Duchane is hoping to draw attention to problems with the way local municipalities are funded in Michigan.

Duchane has long attested that funding for local governments is in need of statewide reform, and now with a couple of studies backing the theory — the CLOSUP survey results from the Gerald R. Ford School of Public Policy and the Local Government Finance Study, a joint study by students at the University of Michigan-Dearborn, the Citizens Research Council of Michigan and Macomb Area Communities for Regional Opportunities (MACRO) — he’s hoping lawmakers in Lansing will start paying attention.

“The majority of public officials, some 58 percent, think there is a need for some type of reform,” Duchane said, quoting the CLOSUP survey. “And about 43 percent say they do not have significant resources to meet continued demands at the current level of service.”

The CLOSUP survey, which is conducted by the Center for Local, State and Urban Policy at the Gerald R. Ford School of Public Policy at the University of Michigan, collects local officials’ opinions and perspectives on a variety of policy issues.

According to the 2013 study, 58 percent of municipal officials in 1,300 Michigan communities believe “there is a significant need for reform of the state’s system of funding local government.” When narrowed to only include the state’s largest districts, 77 percent of municipal officials believe there is a need for reform.

By jurisdiction type, the numbers break down to 83 percent of city leaders, 78 percent of county leaders, 68 percent of village leaders and 48 percent of township leaders believing there is a need for reform.

The CLOSUP survey pairs well with the Local Government Finance Study, as that study, while still a work in progress, aims to determine how many municipalities are struggling financially; it also aims to define the problems with the current system of financing local governments and offer solutions.

Phase one of the study compared data from 458 cities and villages in Michigan from 2005 to 2012 and found that 78 percent lost significant amounts of revenue during the period of the study and that the most major areas of loss were state-shared revenue and property tax revenue.

Moreover, the study found that the cities that had taken the hits had performed all the necessary cuts, joint operations and cost-saving ventures they could, but were still losing money.

“We get to this point where we have maximized virtually all the revenues we can maximize for Eastpointe, made all the cuts we can make, and we still have to come up with about another $700,000. Everything we’ve done up to today — maximized revenues, 55 percent cut in personnel, 17.5 percent cuts in labor costs, salary and benefits, all of our directors do two or three jobs — I’m proud of the place, what we’ve done and where we are, but it’s not enough,” Duchane said.

“People say, ‘Oh, you’ll survive,’ but it’s almost like a sense of fiction — tell me what that something is. After 30-some years in this business, tell me what we are going to do now, because I don’t see the answer out there the way the system operates right now. The funding of local governments needs to be reformed and reshaped in our governmental system in Michigan.”

In neighboring Roseville, the problems aren’t any different — cuts and cost savings have been met with deeper losses in revenue.

“I think the state’s system of funding our cities is in dire need of repair,” Roseville Mayor John Chirkun said. “They’ve cut our revenue sharing, and our property taxes have declined; combined, it’s 40-some percent in revenue losses since 2008.

“We’ve tried to address the losses through attrition, not replacing positions when someone retires, but you hit a critical level, especially in police and fire, that you can’t go below. It’s frustrating, there’s a pension tax in place and now I’m hearing about a road tax, but we aren’t seeing any of that. (Gov. Rick Snyder) talks about the rainy day fund, but it’s already raining all over the state.”

It’s an issue that local leaders, like Chirkun and Duchane, are passionate about and it’s a topic they think residents should care about, too.

“Local government is the government when you need it most, because we are the government that handles public safety, police, fire, code enforcement, public works, sewer, water and streets,” Duchane said. “We are the government when and where you need it most.”

Neither Chirkun nor Duchane wanted to make specific suggestions for reform until they had all the data from the Local Government Finance Study. Suggestions for alternatives will be part of phase three of the study, which as of now does not have a date for completion.