In pursuit of a more stable tomorrow

MACRO looks for better ways to fund local government

By: Sara Kandel | C&G Newspapers | Published December 20, 2012

MACOMB COUNTY — First, it was home values; then, state-revenue sharing; now, personal property taxes — in less than a decade, the main sources of revenue for funding local governments have plummeted.

Municipalities across the state have felt the sting, again and again, throughout the past few years. And some of them want nothing to do with it anymore.

Enter MACRO.

“The Macomb Area Communities for Regional Opportunities was created in 2011 to address the unprecedented financial challenges that are threatening to compromise or eliminate the delivery of public services,” said Sterling Heights City Manager Mark Vanderpool, at the start of the Dec. 13 MACRO meeting.

The group, made up of 12 local governments, including Macomb County, was formed with the purpose of finding ways to work together to cut costs while continuing to provide the same quality of essential services to residents and businesses in their communities.

And now they’re teaming up with other local and state organizations to address one of Michigan’s biggest problems: the funding of local governments.

Partnered with the University of Michigan-Dearborn and the Citizens Research Council of Michigan, MACRO will begin a study this winter to determine alternative means of funding local governments.

“What we are looking at is benchmarking Michigan’s local government finance structure against 49 other states,” said Eric Lupher, director of local affairs at the CRC. “It’s clear that our finance structure isn’t working as well as it once did.”

“So, if this system isn’t working, what is a better system? The best way to figure out a better system is to look at our laboratory of democracy and figure out how other states have tried to finance their local governments and what are the best practices we can draw from that?”

A small group of graduate students — headed by Dale Thomson, the director of the Institute for Local Government at the University of Michigan-Dearborn — will be tasked with compiling and analyzing the data.

“We are going to work on it throughout the winter semester and hopefully have some useful product,” Thomson said, before handing the lead to Lupher to describe more specifically what areas the study would look at.

Lupher offered up examples.

“If you look at the Oklahoma system, what do you need to know about Oklahoma to say if that is a practice that would fit into Michigan or not? To look at their finance systems: which states use taxes to fund local government? Income taxes? Down in Florida they have impact fees. How is that done? Is it done on the most local level, or is it done on the county level?”

“Clearly, we will have to look at the tax limitations here with Headlee, with Proposal A and the tax caps; those clearly play a big roll, but a lot of other states have tax limitations, too, and how have those defined their finance systems?”

The specific parameters of the study are still being worked out, but the goal is set, and that is for the students participating in the study to develop enough plausible solutions, or product, so Lupher, along with representatives from MACRO and the Michigan Municipal League, can analyze each method and see which ones might work in Michigan. Then they can develop policy that can be taken to the Legislature for consideration.

To aid in the group’s goal of finding new ways to collaborate and alternative means of funding local governments, Eastpointe City Manager Steve Duchane worked with representatives from the county to apply for a Competitive Grant Assistance Program grant from the state.

The grant would cover the cost of a feasibility study for the cities of Macomb County to form an organization, which would bring together community leaders and administrators to solve common problems and form an incubator for future opportunities, with a goal of offering more services to Macomb County residents at less of a cost.

The total estimated cost of the project — a study into the feasibility of forming MACRO into an independent organization — is estimated at $53,000. Macomb County is picking up the tab on legal fees, reducing the total cost by $18,000. The grant application requests the remaining $35,000.

If the grant is approved and the group can become an organization, Duchane is confident that they will be able to offer a platform for the formation of partnerships, collaborations and future opportunities, and a place where local governments can come together and, backed by research, determine unique ways to solve problems faced by local governments, such as the funding issue they’re currently working on.

“I had a vision the other night,” Duchane said before the close of the meeting. “And it was a Citizens Research Council report that said there’s a better way to fund local government in Michigan.”