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Despite sustained economic growth, Michigan local government fiscal health still lags

This report presents Michigan local government leaders’ assessments of their jurisdictions’ fiscal conditions and the actions they plan to take in the coming year given their financial situations. The findings are based on responses from ten statewide survey waves of the Michigan Public Policy Survey (MPPS) conducted annually each spring from 2009 through 2018.

Key Findings

• Statewide, Michigan local governments report continued marginal im-provement in year-over-year fiscal health, with 37% of local governments saying they are better able to meet their fiscal needs today than they were last year. This is up slightly from 35% that said the same in 2017. Mean-while, 16% say they are less able to meet their needs this year, the lowest percentage since MPPS tracking began in 2009.

» The greatest overall improvement this year is found among the state’s larger jurisdictions. When looking at the number of jurisdictions better able to meet their needs minus those less able, jurisdictions with more than 30,000 residents report sharp gains, from 20% net improvement in 2017 to 45% in 2018.

• However, another summary indicator shows fiscal decline among some jurisdictions. While 72% of Michigan local governments self-rated their level of fiscal stress as relatively low in 2014, this has declined to 62% today. Meanwhile, local leaders in 8% of Michigan jurisdictions—approximately 149 local governments—say they are currently experiencing relatively high levels of fiscal stress, essentially unchanged over the last few years.

» Among jurisdictions with 10,001-30,000 residents, the percentage report-ing low stress increased from 58% in 2017 to 68% in 2018, while the larg-est jurisdictions (with over 30,000 residents) improved from 56% to 63%.

» Meanwhile, the smallest jurisdictions—as well as those that consider themselves mostly rural, and townships in general—report higher levels of fiscal stress overall this year.

• Jurisdictions of all sizes report continued gains compared with last year in both property tax revenues and state aid. In addition, local officials’ con-cerns regarding their current levels of general fund balances and cash flow remain relatively low. On the other hand, one in three (30%) predict they will have to increase their reliance on their general fund balance next year in order to meet needs.

• When it comes to expenditures, 61% statewide plan to increase employee pay next year (including 90% of the state’s largest jurisdictions). And while just 21% plan to increase overall service provision, this is the largest such percentage since MPPS tracking began. In another change from last year, local officials predict that increased needs in infrastructure and public safe-ty should not outpace projected spending increases overall; however, some jurisdictions with significant needs may only increase spending “somewhat.”

• Looking ahead, optimism about general local economic conditions contin-ues to increase: 55% of local officials expect “good times” next year, com-pared with 51% who said the same in 2017. But in other continuing trends, fewer (34%) believe this will translate to improved fiscal health for their local governments, and more expect their levels of fiscal stress will worsen over the next five years.

>> The Michigan Public Policy Survey (MPPS) is a census survey of all 1,856 general purpose local governments in Michigan conducted by the Center for Local, State, and Urban Policy (CLOSUP) at the University of Michigan in partnership with the Michigan Municipal League, Michigan Townships Association, and Michigan Association of Counties. The MPPS investigates local officials’ opinions and perspectives on a variety of important public policy issues. Respondents for the Spring 2018 wave of the MPPS include county administrators, board chairs, and clerks; city mayors, managers, and clerks; village presidents, managers, and clerks; and township supervisors, managers, and clerks from 1,372 jurisdictions across the state.

For more information, please contact: [email protected]/ (734) 647-4091. You can also follow us on Twitter @closup

By Debra Horner, Natalie Fitzpatrick, and Thomas Ivacko

www.closup.umich.edu

The Center for Local, State, and Urban PolicyGerald R. Ford School of Public Policy >> University of Michigan

Michigan Public Policy Survey November 2018

2 www.closup.umich.edu

The Center for Local, State, and Urban Policy

Fiscal trends: Statewide fiscal health trends still below 2015 levels for all jurisdictions combined, but larger jurisdictions see sharp uptick in year-over-year improvement Each year the MPPS asks local leaders a summary question regarding changes in fiscal health: whether their jurisdictions are better able or less able to meet their financial needs at that time, compared to the previous year. In its tenth year of gathering expert opinions on Michigan local government fiscal health, the Michigan Public Policy Survey (MPPS) finds local government officials statewide in 2018 report continued marginal improvement trends, with many simply holding steady despite continued improvement in the economy. Michigan’s largest jurisdictions are the most likely to report an increased ability to meet fiscal needs this year, although some smaller jurisdictions also have seen gains since last year.

Since its inception, the MPPS has covered a period of sharp economic decline in 2009 and 2010, followed by a trend of gradual improvement that first emerged in 2011. In 2016, for the first time since the end of the Great Recession, the trend of gradual improvement in ability to meet fiscal needs reversed. However, that turned out to be a one-year drop, and reports in 2017 and 2018 now continue the longer-term trend of gradual improvement overall.

With the exception of 2016, each year since 2011 the percentage of jurisdictions saying they were better able to meet their needs has increased. The 2018 survey finds that 37% of local governments overall say they are better able to meet their fiscal needs compared with last year, and this is up slightly from the 35% that said the same in 2017 compared with 2016 (see Figure 1a). However, despite sustained economic growth across the state, most jurisdictions reporting improvement only say they are “somewhat” better able to meet needs (32%), while just 5% say they are “significantly” better off this year. This pattern of marginally improving fiscal health has been a hallmark of the recovery since 2010. Still, only 16% of local leaders report their jurisdictions are now less able to meet their fiscal needs compared to last year, and this is the lowest such percentage since MPPS tracking began a decade ago.

Statewide, nearly half of all local governments (45%) report they are simply holding steady, with no significant change in their fiscal health from last year.

Figure 1aPercentage of jurisdictions reporting they are better or less able to meet their fiscal needs in current year compared to previous year, 2009-2018

34%

Less able

Better able

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

16%

52%

11% 9%

61%

48%

24%29%

29%24%

36% 38%

20% 22%18%

31% 35% 37%

16%

Note: responses for “neither better nor less able” and “don’t know” not shown

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Michigan Public Policy Survey

Figure 1b presents the changes in local fiscal health over the last decade by jurisdiction population-size category. It shows “net” fiscal health in each category: the percentage of jurisdictions that were better able to meet their needs minus the percentage that were less able. A data point below the zero-axis shows that more jurisdictions in that category reported declining fiscal health than reported improving health in that year. Conversely, a data point above the zero-axis shows that more jurisdictions in that category reported improving fiscal health than reported declining health.

Breaking the data out by jurisdiction size reveals some important differences in the overall improvement trend, especially at any given point in time. Michigan’s largest jurisdictions (those with more than 30,000 residents) show a sharp gain from 20% net improvement in 2017 to 45% in 2018. Mid-sized jurisdictions also show improvements, with an increase from 19% to 25% among jurisdictions with 1,500-5,000 residents, and a larger increase from just 7% in 2017 to 25% in 2018 for jurisdictions with 5,001-10,000 residents. By contrast, Michigan’s smallest jurisdictions (those with a population of fewer than 1,500) show no net improvement this year despite significant improvement last year. Finally, jurisdictions with 10,001-30,000 residents show only a slight net improvement, from 16% last year to 18% in 2018.

Although this first look at short-term changes in fiscal health appears to be especially positive for Michigan’s largest jurisdictions, there may still be reasons for concern. A recent report from the National League of Cities (NLC) finds a similarly high percentage of large cities nationwide in 2018 reporting they are better able to meet financial needs compared with last year, but it also sounds the alarm that growth in spending will outpace growth in revenues and lead to increased financial challenges down the road.1 Officials from Michigan’s largest local governments have echoed these future-looking concerns in the past, as well,2 and as seen later in this report, do so again this year.

Meanwhile, looking at the data by jurisdiction type (counties, cities, townships, and villages) also shows mixed results. Townships continue to report the highest net fiscal health, at 26%—up from 20% in 2017 and 15% in 2016. Villages also continue to see some improvement, with net fiscal health at 15%, while they were underwater as recently as 2016. However, by contrast, among counties and cities there has been little overall change recently, with net fiscal health increasing only slightly from 6% to 8% among counties, and no change from 2017-2018 among cities.

Figure 1bNet fiscal health yearly change: Percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2018, by population size

Figure 1cNet fiscal health yearly change: Percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2018, by jurisdiction type

201120102009 2012 2013 2014 2015 2016 20182017

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

-80%-70%-60%-50%-40%-30%-20%-10%

010%20%30%40%50%

VillageCounty Township City

-80%-70%-60%-50%-40%-30%-20%-10%

010%20%30%40%50%

201120102009 2012 2013 2014 2015 2016 20182017



The maps in Figure 1d display the same “net fiscal health” for jurisdictions across Michigan aggregated at the county level. The ten maps contrast those counties (in shades of red) where more jurisdictions are suffering fiscal decline than are experiencing improved fiscal health (i.e., “below the zero axis”), against those counties (in shades of green) where more jurisdictions are experiencing improved fiscal health than decline (i.e., “above the zero axis”). Counties where there are equal numbers of jurisdictions experiencing improvement and decline are shaded grey.

The color shades are scaled by the magnitude of the aggregated fiscal changes, with three categories and shades each for improving (green) and declining (red) conditions. The darkest shades of green and red show where the net calculation of jurisdictions improving minus those declining is greater than 50% (positive if green, negative if red), the middle shades show where the net calculation is between 26% and 50%, and the lightest shades show where the net calculation is between 0 and 25%. For example, if 76% of jurisdictions in a county are improving, while 24% are declining, the net calculation is 76%-24%=52% improving, which results in the darkest shade of green. Or, if 27% of jurisdictions in a county are improving while 33% are declining (and the rest have no change), the net calculation is 27%-33%=-6%, which results in a light pink-shaded county. It should be noted that in several counties, a large percentage of jurisdictions report no change in their fiscal health, so it may be the case that only a small number of jurisdictions in those counties are included in the net calculations.

At the low point of statewide fiscal health in 2010, the map was almost uniformly red, showing widespread fiscal decline across the state. Now, in 2018, the map is the most green it has been since tracking began. However, there are still counties seeing net declines in their jurisdictions’ fiscal health, particularly counties in the western Upper Peninsula and Northern Lower Peninsula.

Appendix A at the end of this report displays the actual percentage net change for each of Michigan’s 83 counties for 2018.

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Figure 1dNet fiscal health yearly change: Percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2009-2018, by county

2012

2016 2017 2018

2013 2014 2015

26-50% net decline

26-50% net improvement Greater than 50% net improvement

Greater than 50% net decline 0-25% net decline No net change

Between 0-25% net improvement

Note: The jurisdictions responding within each county vary from wave to wave, which may result in larger longitudinal swings in counties that have only a few jurisdictions (“small N”) overall.

2009 2010 2011



Fiscal status today: Nearly two-thirds of local officials report low fiscal stress today, but confidence eroding over timeThe MPPS looks not only at changes in fiscal health year over year, but it also captures a current snapshot by asking local officials to rate their jurisdiction’s current fiscal health on a scale of 1-10, where 1 is perfect fiscal health and 10 is fiscal crisis. This is known as the MPPS Fiscal Stress Index (FSI).

This year, as shown in Figure 2a, 62% of local leaders rate their jurisdiction’s current level of fiscal stress as relatively low (at 4 or less on the 10-point scale). By comparison, 28% rate their fiscal stress at “medium” levels (scores of 5 or 6 on the scale), and 8% rate their stress as “high” (scores of 7-10). The 8% of jurisdictions with high stress scores today equates to about 149 of the state’s local governments.

Once again, in order to compare over time, we look at “net” assessments of fiscal health via the FSI: the percentage of local officials who say their jurisdiction has low fiscal stress (1-4 on the 10-point scale) minus the percentage that have either medium (5-6) or high (7-10) stress. While these net scores have only changed slightly from last year, there has been a noticeable decline in fiscal health over the last five years, as seen in Figure 2b. Back in 2014, 72% reported low stress, while 17% reported medium stress, and 9% reported high stress. Therefore, the “net” calculation is 72%-17%-9%=46%. As of 2018, the calculation is 62%-28%-8%=26%, a 20 percentage-point decline in net fiscal health assessed by the FSI since 2014.

Thus, even while the MPPS has tracked a long-term trend of marginal annual improvements in fiscal health with jurisdictions saying they were somewhat better able to meet their current fiscal needs compared to the prior year, on another summary indicator the MPPS has tracked an opposite trend of worsening fiscal health when looking at a series of snapshots of fiscal status at any given time. These opposing trends are difficult to reconcile, but preliminary research at CLOSUP and at the Ford School of Public Policy finds that local leaders tend to consider long-term factors likely to impact their jurisdiction in complex ways when answering the FSI, more than just thinking of simple year-over-year budget status. This research is continuing.

Figure 2aOfficials’ assessments of their jurisdiction’s current fiscal health, via the MPPS Fiscal Stress Index, 2018

Figure 2bNet current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2014-2018

1: Perfect health

2

3

4

5

6

7

8

9

10: Fiscal crisis

Don’t know

9%

19%

21%

13%

21%

7%

5%

2%3%

1%

Low stress

Medium stress

High stress

201620152014 2017 2018

0

20%

40%

50%

30%

10%

Meanwhile, this evidence of declining fiscal health assessed on the FSI, along with just marginal long-term improvements in jurisdictions’ ability to meet their fiscal needs, highlights a disconnect between growth in the overall state economy on one hand, and the specific system of funding local government on the other. Prior MPPS surveys have explored this issue, finding in 2016 that 64% of local leaders believe the state’s system of funding local government is broken.3 Furthermore, in that same survey just 40% of local officials were confident the current system will provide sufficient revenues to their jurisdiction to maintain local services going forward, and only 23% said they will be able to improve or expand services in the future under the current system.

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As with the year-over-year trends in fiscal health improvement when asked about ability to meet fiscal needs, larger jurisdictions also saw some improvement in net current fiscal health in 2018 when assessed through the FSI. The proportion of local officials reporting positive fiscal health (that is, net low fiscal stress on the FSI) increased from 18% in 2017 to 37% in 2018 among jurisdictions with 10,001-30,000 residents (see Figure 2c). Similarly, among the state’s largest jurisdictions, this increased from 14% last year to 28% this year. By contrast, the state’s mid-sized and smaller jurisdictions all lost ground this year in net fiscal health assessed through the FSI.

When comparing between jurisdiction types, as shown in Figure 2d, counties have seen a great deal of volatility in net fiscal health as assessed on the FSI over the past five years. This year shows a large improvement in counties’ net fiscal health, up to 17% in 2018 from just 1% in 2017. Meanwhile, townships have shown a steady decline over the last five years, while cities and villages have shown declines followed by somewhat more stability. It is worth noting that cities have been underwater since 2016, with 49% reporting low fiscal stress, while 50% report medium or high levels of stress today.

Beginning in the Spring 2017 wave, the MPPS started asking local officials to characterize their jurisdictions on an urban-rural spectrum of rural, mostly rural, mostly urban, or urban. As shown in Figure 2e, jurisdictions described as urban continue for a second straight year to be the least likely to report positive fiscal health. Meanwhile, jurisdictions characterized as mostly rural reported a steep decline in net fiscal health when assessed on the FSI, from 41% last year to 23% this year.

Figure 2cNet current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2014-2018, by jurisdiction size

Figure 2dNet current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2014-2018, by jurisdiction type

Figure 2eNet current fiscal health, via the MPPS Fiscal Stress Index: Percentage of jurisdictions reporting low fiscal stress minus percentage reporting medium or high stress, 2017-2018, by urban-rural self-assessment

201620152014 2017 2018

0

20%

40%

50%

60%

30%

10%

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

201620152014 2017 2018

0

20%

40%

50%

60%

30%

10%

-10%

VillageCounty Township City

2017 20180

20%

40%

50%

60%

30%

10%

UrbanRural Mostly rural Mostly urban

Note: calculation for “urbanization” does not include county responses



Local jurisdictions report improvements in property tax revenues, particularly among the largest placesProperty taxes are typically the most important source of funding for Michigan’s local governments, and declines in these revenues have been one of the most difficult challenges they have faced in the wake of the Great Recession. Fortunately, since 2015 Michigan local jurisdictions have been more likely to report increasing than decreasing property tax revenues. This year, for the first time since the MPPS started tracking property tax revenue change, a majority (52%) of local jurisdictions statewide report an increase in their property tax revenues compared with the previous fiscal year (see Figure 3a). This is a 7 percentage-point improvement over last year, the largest year-over-year improvement since 2015. Still, it is important to note that almost no local governments say these revenues increased “significantly” (nearly all say they increased

“somewhat”), so it is likely most changes were relatively modest, as reflected in the parallel modest bump in year-over-year ability to meet fiscal needs presented earlier. Meanwhile, 15% of jurisdictions overall continue to say they experienced decreasing revenue from property taxes compared with the previous fiscal year, which represents more than 270 individual units statewide. While that is still a large number of jurisdictions with declining revenues, it is nonetheless the smallest percentage since the MPPS began tracking this key indicator.

When breaking the data down by population size, for a second straight year jurisdictions of all sizes report net gains in property tax revenues compared with the prior year. This news is especially good among the state’s largest jurisdictions, where 83% report increased property tax revenues in 2018, while just 6% say their property tax revenues decreased. This yields a net positive of 77%, up sharply from the 45% net improvement reported last year (see Figure 3b).

While not shown in Figure 3b, urban (72%) and mostly urban (78%) jurisdictions are significantly more likely than mostly rural (60%) or rural (42%) jurisdictions to report net improvements in property tax revenue. This may not be surprising, given that local taxable values on property in Michigan are capped by Proposal A of 1994, and thus growth and change of ownership—currently more common in metropolitan areas—often drive revenue increases.

Figure 3aPercentage of jurisdictions overall reporting changes in property tax revenue compared with previous fiscal year, 2009-2018

Figure 3bNet property tax yearly change: Percentage of jurisdictions reporting increases in property tax revenue minus percentage reporting decreases in property tax revenue, 2009-2018, by population size

64%

Decreased over previous FY

Increased over previous FY

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

12%

48%

27%

78% 74%

16%

27%

48%

38%

36%45% 45%

52%

42%

26% 25%19%

8%

15%

201120102009 2012 2013 2014 2015 2016 2017 2018

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

-100%

-80%

-60%

-40%

-20%

0

20%

40%

60%

80%70%

50%

30%

10%

-10%

-30%

-50%

-70%

-90%


And related to property tax revenues, tax delinquencies are another indicator tracked by the MPPS (though not shown in Figure 3b). Reports statewide are essentially unchanged in 2018 compared with last year: 15% of jurisdictions say their tax delinquencies are increasing, while the same percentage (15%) say they are decreasing. Notable exceptions include larger jurisdictions, which again report strong improvements, with 33% saying tax delinquencies have decreased in 2018. In addition, jurisdictions in the U.P. continue to be more likely to report increased tax delinquencies (22%) compared with the statewide average.

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Improvements in levels of state aid among jurisdictions of all sizesState aid is another critical source of revenue for many local governments in Michigan. This includes statutory revenue sharing for some jurisdictions, which has often been a point of contention due to a series of cuts since the early 2000s.4 This year, as shown in Figure 4a, twice as many jurisdictions report an increase in overall state aid (30%) than report a decrease (15%). However, these increases are likely to have been relatively small, with no jurisdictions reporting that state aid had significantly increased. Almost half (48%) of jurisdictions report no change in their funding from the State.

This year, for the first time since 2015, jurisdictions of all sizes report net positive changes in state aid. However, Michigan’s largest jurisdictions continue to be the most likely to report continuing declines in state aid. For this population category, 25% report such declines, while 27% report increases, resulting in a net positive of only 2% (see Figure 4b).

Meanwhile, reports of increases in state aid compared with the previous year are less likely to come from rural jurisdictions (25%) than from urban (39%), mostly urban (38%), or mostly rural (35%) communities.

Figure 4aPercentage of jurisdictions overall reporting changes in state aid compared with previous fiscal year, 2009-2018

Figure 4bNet state aid yearly change: Percentage of jurisdictions reporting increases in state aid minus percentage reporting decreases in state aid, 2009-2018, by jurisdiction size

45%

15%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

69%

3% 1%

86%

61%

9%17% 17%

30%

34%

27%

21%

28%

14%20%

18%

Decreased over previous FY

Increased over previous FY

19%15%

201120102009 2012 2013 2014 2015 2016 2017 2018

5,001-10,000 >30,000<1,500 1,500-5,000 10,001-30,000

-100%

-80%

-60%

-40%

-20%

0

20%

40%

60%50%

30%

10%

-10%

-30%

-50%

-70%

-90%




Evaluations of local government general fund balances mostly hold steady, while mid-sized to larger jurisdictions most likely to report gainsTo further gauge budgetary stress, the MPPS carries several questions regarding local governments’ general fund balances. One item asks local officials to think about their jurisdiction’s fiscal needs and to evaluate, overall, whether their jurisdiction’s unreserved/unassigned general fund balance is too high, about right, or too low. Compared with prior years, officials today feel particularly confident that their general fund balance is at about the right level. Statewide, 71% say their general fund balance is

“about right,” and only 3% say it is currently “too high” (see Figure 5a). However, one in five jurisdictions (21%) still report their general fund balance is too low for their fiscal needs.

Looking by jurisdiction size, reduced concerns about general fund balances over the last year are found only among jurisdictions with more than 5,000 residents, with the steepest drop in concerns among those with 10,001-30,000 residents (see Figure 5b).

Figure 5aPercentage of officials saying their general fund balance is too high, too low, or about right, 2010-2018

Figure 5bPercentage of officials saying their general fund balance is too low, 2010-2018, by population size

27% 23% 23% 26% 24% 20% 23% 22% 21%

60% 71%60%

5% 5%

5%

64%

6%

61%

6%

59%61%

5%

62%

11% 11% 10% 12% 13%9%12%

56%

4% 4%13%

4%

About right

Too high

Don't know

Too low

2015201320112010 2012 2014 20172016 2018

3%

20112010 2012 2013 2014 2015 2016

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

2017 2018

10%

0

20%

30%

40%

50%

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On the other hand, looking ahead, 30% of local officials statewide predict their jurisdictions will have to increase their reliance on their general fund balance in order to meet their governments’ budget needs in the coming year, a slight uptick over 2017. Meanwhile, only 4% of local officials say they will be decreasing their reliance on the general fund balance (see Figure 6a).

By population size, the state’s larger jurisdictions are less likely than they were last year to predict increased reliance on their general fund balance, while smaller jurisdictions are more likely than they were a year ago to draw upon their savings in the general fund (see Figure 6b).

Looking at other budgetary indicators (not shown in Figure 6b), only 6% of local leaders overall report that their jurisdictions’ cash flow and ability to pay bills is “somewhat” of a problem or a “significant” problem, essentially unchanged from recent years. Similarly, only 2% of jurisdictions statewide say their ability to repay debt decreased in 2018, compared with 63% that say there was no change, and 14% that report an increased ability to repay debt.

Figure 6aPercentage of jurisdictions overall predicting upcoming changes in reliance on general fund balance compared with previous fiscal year, 2010-2018

Figure 6bNet general fund reliance change: percentage of jurisdictions predicting increases in reliance on their general fund balance minus percentage predicting decreases, 2010-2018, by jurisdiction size

5% 5%4%

6%6% 5%5% Decrease reliance

Increase reliance

2010 2011 2012 2013 2014 2015 2016 2017 2018

34%

8%

49%

36%

8%

30% 27% 28%26%

30% 30%

20112010 2012 2013 2014 2015 2016 2017 2018

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

0

20%

40%

60%

70%

50%

30%

10%




Plans for the coming year: Expenses include widespread employee pay increases, especially among largest jurisdictions Again this year, the percentage of local jurisdictions looking to increase employee pay has gone up. Statewide, 61% plan to increase employee pay “somewhat” (60%) or “significantly” (1%) next fiscal year, continuing the long-term trend since the end of the Great Recession (see Figure 7a). And while the percentage of jurisdictions planning to reduce employee pay has been low in each MPPS survey, for the first time, no jurisdictions report such plans today.

The plans to increase employee pay in 2018 are particularly notable among jurisdictions with more than 30,000 residents, where a full 90% predict increased employee pay rates, up substantially from the 75% that said the same in 2017 (see Figure 7b). Nonetheless, even among the smallest jurisdictions, the multi-year upward trend now has nearly a majority (47%) of jurisdictions with fewer than 1,500 residents planning to increase employee pay.

However, balancing those planned employee pay increases are continued demands on employees to help out with the cost of their benefits. Among jurisdictions that offer health benefits to employees, one in three (30%) predict they will ask employees to contribute more toward premiums, deductibles, and/or co-pays on health insurance, about the same percentage as in 2017 (29%). This includes 47% of the state’s largest jurisdictions that offer benefits (see Figure 7c).

Appendix C provides long-term tracking data for a number of items related to employee compensation and benefits.

Figure 7aPercentage of jurisdictions reporting planned changes to employee pay in the coming year, 2011-2018

Figure 7bPercentage of jurisdictions reporting planned increases to employee pay in the coming year, 2011-2018, by population size

Figure 7cPercentage of jurisdictions reporting planned increases in current employees’ share of contributions to health insurance in the coming year, 2011-2018, by population size, among those that offer health benefits to employees

Decrease

Increase

2011 2012 2013 2014 2015 2016 2017 2018

47% 48%40%

30%

21%

53% 56%

1% 1% 1% 0%2%3%4%6%

61%

201320122011 2014 2015 2016 2017 2018

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

0

20%

40%

60%

70%

80%

90%

100%

50%

30%

10%

201320122011 2014 2015

0

2016 2017 2018

20%

40%

50%

60%

70%

80%

90%

30%

10%

>30,000<1,500 1,500-5,000 10,001-30,0005,001-10,000

Note: responses for “no change,” “not applicable,” and “don’t know” not shown

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Plans for the coming year: Predicted spending on public safety and infrastructure expected to match increasing demands in many jurisdictionsIn response to the fiscal pressures of the Great Recession, many Michigan local governments pursued cost-control strategies—such as increasing levels of intergovernmental cooperation, increasing reliance on their general fund balance, increasing employees’ share of fringe benefit costs, postponing infrastructure spending, and more—in an effort to protect their services from cuts.5 As a result, even in the depths of the fiscal crisis in 2010, only 29% of local jurisdictions statewide planned cuts in their overall level of services (although the percentages were much higher among larger jurisdictions, including 63% of the largest places). Since then, the number of jurisdictions planning service increases has climbed slowly, with 21% of local leaders now saying they plan to increase services overall in the coming year (see Figure 8).

The MPPS also asks local officials about the service demands they face, as well as their plans for spending on particular service areas. For example, 32% say their jurisdictions have faced increased demands to provide public safety services over the past year, while 35% predict they will increase spending on public safety services in the coming year (see Figure 9). Last year, predicted spending lagged increased demands. In general, the larger the jurisdiction, the greater is the demand for services, and the greater is the likelihood for increased spending. Thus among the state’s largest jurisdictions, 55% face somewhat (44%) or significant (11%) increased public safety needs, while 62% predict they will somewhat (54%) or significantly (8%) increase their public safety spending to meet those needs.

Last year, local leaders in communities of all sizes also reported that increased infrastructure needs would likely outpace increases in their jurisdiction’s infrastructure spending. However, in 2018, predicted infrastructure spending is more in line with the expected pace of demands (although there is still significant ground to make up given extended delays in infrastructure investment in recent years). Statewide, 48% of local officials now note their infrastructure needs increased over the past year, while 49% predict their jurisdictions will increase infrastructure spending in the coming year (see Figure 10). However, 14% overall say they have significantly increased infrastructure needs, while only 9% predicted significantly increased spending. Among mid-sized jurisdictions, there is a particularly large gap between assessed need and predicted spending—for example, almost a quarter (23%)

Figure 8Percentage of jurisdictions reporting planned changes in overall service provision in the coming year, 2009-2018

Figure 9Percentage of jurisdictions reporting increases in public safety needs and planned increases in actual public safety spending in the coming year, 2018, by population size

Figure 10Percentage of jurisdictions reporting increases in infrastructure needs and planned increases in actual infrastructure spending in the coming year, 2018, by population size

15%Decrease

Increase

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

6%

6%

24%

9%

29%21%

10% 12%

12% 7%

13% 15% 15% 19%

5% 5%4%

7%

21%

Population5,001-10,000


Population>30,000

TotalPopulation1,500-5,000

Population<1,500

19% 20%

47%

25%2%6%

3%

3%

3%

4%

1% 31%

51%

35%

62%

44%

54%

27%32%

11%8%

5%

7%

7%

Public safety needs somewhat increased vs. previous FY

Public safety needs signficantly increased vs. previous FY

Plans for public safety spending somewhat increase in coming FY

Plans for public safety spending significantly increase in coming FY



Population>30,000


Population<1,500

29%34%

49%

10%

33%9%

15% 9% 9%6% 39%

46%48%

12%

52%

39%

51%

34%40%

28% 13%

14%

17%23%

Infrastructure needs somewhat increased vs. previous FY

Infrastructure needs signficantly increased vs. previous FY

Plans for infrastructure spending somewhat increase in coming FY

Plans for infrastructure spending significantly increase in coming FY




of jurisdictions with between 10,001-30,000 residents say they will have significantly increased needs, but only 12% say they will significantly increase spending.

Looking at other areas of service expenditures, even though 23% of jurisdictions report human service needs have increased in the last year, only 11% say they plan to increase spending on human services in the coming year (see Figure 11). Among the state’s largest jurisdictions, this rises to 50% reporting increased human services needs, yet less than a third (31%) are planning increases in spending. Meanwhile, 39% of local governments statewide expect to increase spending on general government operations. This includes 59% of jurisdictions with 10,001-30,000 residents and 53% of those with over 30,000 residents, compared to just 5% overall that expect to decrease such spending.

Figure 11Percentage of jurisdictions reporting increases in human service needs and planned increases in actual human services spending in the coming year, 2018, by population size



Population>30,000


Population<1,500

14% 4%15%19%

1%3%

1%

10%

29%29% 1%1%19%

42%

27%20%

10%

8%

4%3%

5%5%

Human service needs somewhat increased vs. previous FY

Human service needs signficantly increased vs. previous FY

Plans for human services spending somewhat increase in coming FY

Plans for human services spending significantly increase in coming FY

15


Plans for the coming year: Many of the largest local governments will seek more intergovernmental cooperation, but most others plan no increasesIn terms of how those services will be provided, statewide plans to increase privatization, outsourcing, or service sharing in collaboration with other jurisdictions are generally holding steady compared with last year. Overall, just 13% of jurisdictions expect to increase service privatization efforts in the coming year (essentially the same as the percentage each year since 2014), while just 2% expect to decrease these efforts.

Meanwhile, as shown in Figure 12, when it comes to intergovernmental service sharing activities, 17% expect to increase the number and/or scope of their cooperative service sharing activities with other governments, also about the same as in recent years. However, this rises to 41% among the state’s largest jurisdictions (not shown in Figure 12), where the breadth and scope of local services offered in those communities provides more opportunities for collaboration. Trends in planned intergovernmental cooperation among jurisdictions of various sizes, including the largest places, remain generally unchanged from 2017.

Again, data from 2009-2018 on local officials’ plans for the coming year on a range of topics are available in Appendix C.

Figure 12Percentage of jurisdictions reporting plans to increase number and/or scope of interlocal agreements next year, 2009-2018, by population size

22%

Decrease

Increase

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2% 1% 1% 1% 1% 1% 1% 1% 1% 1%

34%

18% 18% 17%

40% 40%32% 30%

38%




Optimism about local economies continues upward trend, while confidence in future local government fiscal health continues to lag, despite small improvementBeyond questions about the fiscal health of local governments themselves, the MPPS also asks local leaders to think about general business conditions in their area, and to predict whether their communities will have good times or bad times financially in the coming year. This measure has shown slow but steady improvement since the end of the Great Recession in 2009.

In 2018, officials’ predictions continue to mirror positive indicators in Michigan’s economy.6 This year, 55% predict their community will have good times, up from 51% in 2017 (see Figure 13). Just 6% predict bad times, down slightly from 8% in 2017. Both the positive and negative predictions reflect the most optimistic points since MPPS tracking began.

Officials from the state’s largest jurisdictions (73%) are the most likely to predict good times in their local economy compared to officials from smaller jurisdictions. And, similarly, officials who describe their communities as “mostly urban” are more likely to predict their local economies will see good times (73%), compared with those from urban (58%), mostly rural (61%), and rural (47%) communities.

However, despite optimism about the economy, just one-third (34%) of local leaders predict their jurisdictions will be better able to meet their fiscal needs in the coming year, while 18% say they will be less able to do so (see Figure 14). While this doesn’t match the optimism about the wider economy, it does represent an improvement over expectations in 2016 and 2017. Overall, 43% predict they will be in about the same fiscal shape next year as they were this year.

Michigan cities are particularly divided in outlooks on their near-term fiscal health. City officials are both the most likely to be optimistic, with 40% predicting they will be better able to meet needs, and most likely to be pessimistic, with almost a third (31%) saying they will be less able to meet their needs next year. Meanwhile, more than half (53%) of officials in the state’s largest jurisdictions believe they will be better able to meet their fiscal needs next year. Nearly half of officials from urban (49%) and mostly urban (47%) jurisdictions predict improvement next year compared to 2018, while officials from rural (47%) and mostly rural (42%) jurisdictions are more likely to predict they will stay the same, neither improving nor falling further behind next year.

Figure 13Percentage of jurisdictions overall predicting their community will have good or bad times financially, 2009-2018

Figure 14Percentage of jurisdictions predicting they will be better or less able to meet their fiscal needs in coming year, 2009-2018

46%

11%

46%51% 55%

11%

22%

Bad times

Good times

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

19%

58%

6%

50%

33%

27%

36%

18%12%

40%

13%

8% 6%

34%

34%

Less able next year

Better able next year

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

15%

62%

9%

65%

50%

22%

22% 22% 18%

28% 28% 29%

30%22%

35% 36%

19%

8%

Note: responses for “neither” and “don’t know” not shown


17


Looking even farther down the road reveals additional concerns. When asked about expected fiscal conditions five years from now, using the MPPS Fiscal Stress Index, 11% of local leaders predict their jurisdictions will have high stress (up from 8% today), and just 54% predict they will have low stress (down from 62% today, and 72% back in 2014). These concerns are most prevalent among officials from the state’s largest jurisdictions, as seen in Figure 15.

These concerns about future fiscal health match the red flags raised by the recent National League of Cities fiscal conditions report, as well as other state-level analyses that suggest that state and local governments nationwide may struggle during the next economic downturn because of limited revenue growth, mounting expenditures and service demands, and enduring legacy costs associated with pensions and retiree health care debt.7 As such, Michigan local officials’ expert predictions and insights gathered on the MPPS may be useful as a way of better understanding which local units may be at risk for future fiscal stress, supplementing the standard use of purely administrative data. CLOSUP and the Ford School are pursuing research to better understand the role of expert survey responses in identifying and predicting local government fiscal health.

Figure 15Officials’ predictions of their jurisdiction’s fiscal stress in five years, by jurisdiction size

27%23%

22%

52%

20%10%

25%

63%

5%1%

7%

63%

8%

68%

11%

27%

61%56%

22%

11%8%24%

67%51%

26%

11%8%

34%

55%54%62%

28%

8%

24%

11% 10%

24%

61%

1%10%11%9% 3%3%3%

Medium fiscal stress (FSI 5-6)

Low fiscal stress (FSI 1-4)

Don't know

High fiscal stress (FSI 7-10)

Current Predicted in 5 years






Total statewide <1,500 1,500-5,000 5,001-10,000 10,001-30,000 >30,000

1%5% 3%



ConclusionIn 2018 the MPPS finds evidence of both marginal improvement and marginal decline in Michigan local government fiscal health overall, using a variety of fiscal indicators tracked over time. Although local governments in 2018 report a continuation of their overall marginal improvement in ability to meet fiscal needs, few say their fiscal conditions have gotten significantly better. And when asked to rate their levels of fiscal stress, a decline in fiscal health since 2014 is now evident. After eight years of growth in Michigan’s overall economy—eighth in the nation since the end of the Great Recession8 —the lack of better gains in fiscal health appears to be a missed opportunity to build a stronger fiscal foundation to help jurisdictions compete for economic growth today and to prepare for the next economic downturn.

For this year, when considering the number of jurisdictions with improving health minus those with declining health, some of the most optimistic reports are found among the state’s larger jurisdictions. Those with more than 30,000 residents reported sharp gains, from 20% net improvement in 2017 to 45% in 2018.

Meanwhile, although most local governments (62%) self-rate their levels of fiscal stress as relatively low today, there has been a steady gradual downward slide from 72% that said the same four years ago. The more frequent reports of increases in mid-level and high stress tend to come from the smallest jurisdictions, those that consider themselves mostly rural, and those that are townships.

Looking to the near future, over half (55%) of local officials continue to forecast good economic times for their communities. At the same time, just a third (34%) of local officials predict their own government will be better able to meet its fiscal needs next year, 18% say they will be less able to do so, and 43% predict they will stay the same. And looking further down the road, a continued drop in fiscal health is predicted, with 54% expecting to have low fiscal stress (down from 62% today), while 11% expect to face high fiscal stress (up from 8% today).

The underperformance in local government fiscal health compared with Michigan’s robust economic growth since the Great Recession, along with local leaders’ fears about falling further behind in the future, correspond with the overall belief among Michigan local government leaders that the state’s system of funding local government in Michigan is broken.9

19


Notes1. National League of Cities. (2018). City fiscal conditions 2018. Washington, D.C.: National League of Cities. Retrieved from

https://www.nlc.org/resource/city-fiscal-conditions-2018

2. Mills, S., & Ivacko, T. (2016). Local officials say Michigan’s system of funding local government is broken, and seek State action to fix it. Ann Arbor, MI: Center for Local, State, and Urban Policy at the Gerald R. Ford School of Public Policy, University of Michigan. Retrieved from http://closup.umich.edu/files/mpps-sflg-2016.pdf

3. Mills & Ivacko, 2016.

4. Citizens’ Research Council of Michigan. (2015). Reforming Statutory State Revenue Sharing. Livonia, MI: Citizens’ Research Council. Retrieved from http://crcmich.org/PUBLICAT/2010s/2015/reforming_michigan_statutory_state_revenue_sharing-2015.pdf

5. Horner, D., & Ivacko, T. (2010). Local governments struggle to cope with fiscal, service, and staffing pressures. Ann Arbor, MI: Center for Local, State, and Urban Policy at the Gerald R. Ford School of Public Policy, University of Michigan. Retrieved from http://closup.umich.edu/files/mpps-fiscal-health-2010.pdf

6. Khouri, N. A., Bussis, E., Lockwood, A., Patchak-Schuster, T., Darragh, S., & Heidt, D. (2018). Economic and revenue outlook: FY 2017-18, FY 2018-19 and FY 2019-20. Lansing, MI: Michigan Department of Treasury. Retrieved from https://www.michigan.gov/documents/treasury/Administration_Michigan_Economic_and_Revenue_Outlook_May_16_2018_623291_7.pdf

7. Harrison, D. (2018, July 8). Many states are likely unprepared for next downturn. Wall Street Journal. Retrieved from https://www.wsj.com/articles/many-states-are-likely-unprepared-for-next-downturn-1531073292

8. Gallagher, J. (2018, March 30). Is Michigan back as a top 10 economic player? Depends on the metric. Detroit Free Press. Retrieved from https://www.freep.com/story/money/business/john-gallagher/2018/03/30/michigan-economic-status-top-10-player/469047002/

9. Mills & Ivacko, 2016.

https://www.nlc.org/resource/city-fiscal-conditions-2018

http://closup.umich.edu/files/mpps-sflg-2016.pdf

http://closup.umich.edu/files/mpps-fiscal-health-2010.pdf

https://www.michigan.gov/documents/treasury/Administration_Michigan_Economic_and_Revenue_Outlook_May_16_2018_623291_7.pdf



https://www.wsj.com/articles/many-states-are-likely-unprepared-for-next-downturn-1531073292

https://www.freep.com/story/money/business/john-gallagher/2018/03/30/michigan-economic-status-top-10-player/469047002/

https://www.freep.com/story/money/business/john-gallagher/2018/03/30/michigan-economic-status-top-10-player/469047002/



Survey Background and MethodologyThe MPPS is an ongoing survey program, interviewing the leaders of Michigan’s 1,856 units of general purpose local government. Surveys are conducted each spring (and prior to 2018, were also conducted each fall). The program has covered a wide range of policy topics, and includes longitudinal tracking data on “core” fiscal, budgetary and operational policy questions and designed to build-up a multi-year time-series.

In the Spring 2018 iteration, surveys were sent by the Center for Local, State, and Urban Policy (CLOSUP) via the internet and hardcopy to top elected and appointed officials (including county administrators and board chairs; city mayors and managers; village presidents, clerks, and managers; and township supervisors, clerks, and managers) from all 83 counties, 280 cities, 253 villages, and 1,240 townships in the state of Michigan.

The Spring 2018 wave was conducted from April 9 – June 8, 2018. A total of 1,372 jurisdictions in the Spring 2018 wave returned valid surveys (65 counties, 237 cities, 177 villages, and 893 townships), resulting in a 74% response rate by unit. The margin of error for the survey for the survey as a whole is +/- 1.35%. The key relationships discussed in the above report are statistically significant at the p<.05 level or below, unless otherwise specified. Missing responses are not included in the tabulations, unless otherwise specified. Some report figures may not add to 100% due to rounding within response categories. Quantitative data are weighted to account for non-response. “Voices Across Michigan” verbatim responses, when included, may have been edited for clarity and brevity. Contact CLOSUP staff for more information.

Detailed tables of the data analyzed in this report broken down three ways—by jurisdiction type (county, city, township, or village); by population size of the respondent’s community, and by the region of the respondent’s jurisdiction—are available online at the MPPS homepage: http://closup.umich.edu/mpps.php.

The survey responses presented here are those of local Michigan officials, while further analysis represents the views of the authors. Neither necessarily reflects the views of the University of Michigan, or of other partners in the MPPS.

http://closup.umich.edu/mpps.php

21


AppendicesAppendix ANet fiscal health yearly change: percentage of jurisdictions reporting improving fiscal health minus percentage reporting declining health, 2017 – 2018, by county

County Name % Less Able to Meet Fiscal Needs

% Neither Better nor Less Able

% Better Able to Meet Fiscal Needs % Don't Know Net Yearly Change

for 2018ALCONA 28.2 51.29 10.26 10.26 -17.94%

ALGER 13.11 73.78 13.11 0 0.00%

ALLEGAN 7.44 53.68 35.16 3.72 27.72%

ALPENA 16.59 53.55 29.86 0 13.27%

ANTRIM 6.66 45.35 47.99 0 41.33%

ARENAC 23.78 38.45 37.76 0 13.98%

BARAGA 41.09 40.23 18.67 0 -22.42%

BARRY 0 29.44 70.56 0 70.56%

BAY 22.52 35.17 42.32 0 19.80%

BENZIE 14.29 42.36 43.34 0 29.05%

BERRIEN 15.89 34.32 49.79 0 33.90%

BRANCH 37.16 24.38 32.19 6.27 -4.97%

CALHOUN 10.06 39.68 50.25 0 40.19%

CASS 14.87 55.73 29.4 0 14.53%

CHARLEVOIX 8.4 66.3 25.3 0 16.90%

CHEBOYGAN 13.78 40.14 46.08 0 32.30%

CHIPPEWA 17.89 51.64 30.47 0 12.58%

CLARE 14.29 38.35 40.21 7.15 25.92%

CLINTON 15.51 60.91 23.57 0 8.06%

CRAWFORD 18.81 20.24 60.95 0 42.14%

DELTA 21.23 24.94 53.83 0 32.60%

DICKINSON 27.62 29.69 42.7 0 15.08%

EATON 13.44 52.69 33.86 0 20.42%

EMMET 13.7 78.75 7.55 0 -6.15%

GENESEE 20.89 37.76 41.35 0 20.46%

GLADWIN 27.25 43.75 29 0 1.75%

GOGEBIC 36.71 43.11 20.18 0 -16.53%

GRAND TRAVERSE 7.72 56.73 35.55 0 27.83%

GRATIOT 44.22 31.13 24.65 0 -19.57%

HILLSDALE 24.52 47.83 21.73 5.92 -2.79%

HOUGHTON 33.99 48.14 17.87 0 -16.12%

HURON 15.85 46.72 37.43 0 21.58%

INGHAM 14.52 35.42 50.06 0 35.54%

IONIA 18.94 48.07 28.26 4.74 9.32%

IOSCO 23.96 51.1 24.95 0 0.99%

IRON 26.04 52.37 21.59 0 -4.45%

ISABELLA 29.08 62.46 8.46 0 -20.62%

JACKSON 11.82 40.55 47.62 0 35.80%

KALAMAZOO 13.48 26.72 59.79 0 46.31%



KALKASKA 12 75.2 12.8 0 0.80%

KENT 3.3 63.98 32.72 0 29.42%

KEWEENAW 0 62.43 37.57 0 37.57%

LAKE 27.29 54.42 18.29 0 -9.00%

LAPEER 6.56 60.25 33.19 0 26.63%

LEELANAU 0 64.58 35.42 0 35.42%

LENAWEE 12.27 43.4 39.78 4.55 27.51%

LIVINGSTON 12.92 40.04 47.03 0 34.11%

LUCE 0 40.75 59.25 0 59.25%

MACKINAC 8.38 23.73 67.89 0 59.51%

MACOMB 11.61 32.88 55.5 0 43.89%

MANISTEE 23.48 51.25 18.88 6.39 -4.60%

MARQUETTE 24.79 33.63 41.58 0 16.79%

MASON 17.4 42 40.59 0 23.19%

MECOSTA 6.89 61.12 31.99 0 25.10%

MENOMINEE 37.45 9.49 53.06 0 15.61%

MIDLAND 21.05 46.4 32.55 0 11.50%

MISSAUKEE 6.34 71.84 14.55 7.27 8.21%

MONROE 22.85 57.31 19.84 0 -3.01%

MONTCALM 18.32 56.41 25.27 0 6.95%

MONTMORENCY 23.55 38.23 38.23 0 14.68%

MUSKEGON 15.31 50.05 34.63 0 19.32%

NEWAYGO 26.25 42.15 31.6 0 5.35%

OAKLAND 11.74 34.17 54.09 0 42.35%

OCEANA 0 40.08 59.92 0 59.92%

OGEMAW 30.76 43.84 25.39 0 -5.37%

ONTONAGON 47.43 19.55 22.01 11.01 -25.42%

OSCEOLA 23.64 63.61 12.76 0 -10.88%

OSCODA 51.71 25.03 23.26 0 -28.45%

OTSEGO 28.64 51.68 19.68 0 -8.96%

OTTAWA 9.12 31.34 59.54 0 50.42%

PRESQUE ISLE 0 65.99 34.01 0 34.01%

ROSCOMMON 9.24 60.26 30.5 0 21.26%

SAGINAW 17.7 45.3 37 0 19.30%

SANILAC 11.89 50.52 37.59 0 25.70%

SCHOOLCRAFT 20.69 58.62 20.69 0 0.00%

SHIAWASSEE 6.34 38.75 54.91 0 48.57%

ST CLAIR 0 39.88 56.32 3.79 56.32%

ST JOSEPH 5.39 35.74 52.7 6.17 47.31%

TUSCOLA 19.05 59.06 21.89 0 2.84%

VAN BUREN 21.99 44.08 33.93 0 11.94%

WASHTENAW 4.99 53.32 41.69 0 36.70%

WAYNE 19.04 33.69 44.76 2.51 25.72%

WEXFORD 13.4 59.86 26.74 0 13.34%

23


Appendix BConditions in the current fiscal year compared to the previous fiscal year, 2009-2018

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Revenue from property tax

Increased 27% 8% 12% 16% 27% 36% 45% 42% 45% 52%

Decreased 48% 78% 74% 64% 48% 38% 26% 25% 19% 15%

Revenue from fees for services, licenses, transfers, etc.

Increased 7% 4% 7% 10% 13% 17% 18% 19% 21%

Decreased 54% 59% 47% 34% 26% 18% 13% 12% 10%

Amount of debtIncreased 12% 12% 14% 12% 15% 14% 16%

Decreased 18% 21% 22% 21% 20% 21% 19%

Ability of jurisdiction to repay its debt

Increased 7% 12% 14% 15% 18% 13% 14% 14%

Decreased 7% 7% 6% 4% 4% 6% 3% 2%

Amount of federal aid to jurisdiction

Increased 9% 8% 3% 5% 4% 5% 6% 4% 6%

Decreased 38% 39% 29% 22% 21% 14% 11% 13% 14%

Amount of state aid to jurisdiction

Increased 3% 1% 9% 15% 17% 27% 28% 18% 17% 30%

Decreased 69% 86% 61% 45% 34% 21% 14% 20% 19% 15%

Number of tax delinquencies

Increased 46% 47% 40% 30% 23% 20% 19% 16% 15%

Decreased 20% 12% 12% 13% 15% 16% 17% 15% 15%

Number of home foreclosures

Increased 60% 56% 41% 29% 18% 15% 13% 10%

Decreased 16% 10% 17% 25% 31% 33% 29% 26%

Public safety needsIncreased 36% 29% 28% 29% 29% 28% 29% 33% 35% 32%

Decreased 9% 6% 3% 3% 3% 2% 1% 2% 2% 5%

Infrastructure needsIncreased 55% 47% 43% 45% 50% 54% 52% 56% 56% 48%

Decreased 12% 7% 5% 5% 3% 2% 2% 2% 4% 7%

Human service needsIncreased 45% 43% 35% 35% 29% 30% 28% 27% 28% 23%

Decreased 8% 6% 3% 1% 1% 1% 1% 1% 1% 2%

General government operations needs

Increased 34% 34% 34% 36% 37%

Decreased 1% 1% 2% 3% 3%

Number of employeesIncreased 2% 2% 3% 4% 8% 10% 10% 13% 14%

Decreased 27% 23% 19% 16% 9% 7% 6% 5% 5%

Pay rates for employee wages and salaries

Increased 36% 20% 21% 27% 39% 46% 53% 51% 57%

Decreased 15% 13% 10% 7% 5% 3% 1% 1% 2%

Cost of employee pensions

Increased 40% 30% 22% 21% 24% 25% 26% 28% 30% 25%

Decreased 4% 4% 3% 4% 3% 3% 2% 2% 2% 2%

Cost of current employee health benefits

Increased 51% 47% 35% 32% 31% 34% 34% 33% 36% 35%

Decreased 6% 8% 7% 8% 8% 4% 5% 4% 2% 2%

Cost of retired employee health benefits

Increased 31% 24% 17% 16% 16% 17% 15% 16% 18% 15%

Decreased 4% 4% 3% 3% 4% 2% 3% 2% 1% 2%

Notes: Responses for “no change,” “don’t know,” and “not applicable” not shown. Percentages are based on all responding jurisdictions (not just those that selected an option other than “not applicable”). The “not applicable” response option was added in 2011, so direct comparisons with earlier waves may be compromised. Question text for “pay rates for employee wage & salaries” changed slightly between 2010 and 2011. See web tables for exact question text.



Appendix CPredicted actions for the coming fiscal year compared to the current fiscal year, 2009-2018

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Property tax ratesIncrease 18% 10% 15% 15% 22% 23% 27% 22% 26% 25%

Decrease 17% 32% 19% 15% 12% 7% 5% 6% 5% 4%

Charges for fees for services, licenses, etc.

Increase 23% 22% 20% 19% 21% 18% 18% 18% 23%

Decrease 7% 7% 3% 2% 2% 2% 1% 1% 1%

Reliance on general fund balanceIncrease 49% 36% 34% 30% 27% 26% 30% 28% 30%

Decrease 8% 8% 5% 6% 5% 6% 5% 5% 4%

Reliance on “rainy day” fundsIncrease 38% 25% 21% 19% 17% 17% 17% 17%

Decrease 7% 4% 4% 5% 5% 5% 5% 6%

Amount of services providedIncrease 9% 7% 6% 10% 12% 13% 15% 15% 19% 21%

Decrease 24% 29% 21% 15% 12% 7% 5% 6% 4% 5%

Actual public safety spendingIncrease 26% 22% 20% 22% 27% 33% 34% 34% 33% 35%

Decrease 18% 22% 16% 9% 7% 4% 3% 4% 4% 3%

Actual infrastructure spendingIncrease 28% 25% 23% 32% 34% 42% 43% 42% 45% 49%

Decrease 30% 34% 21% 10% 10% 7% 5% 6% 5% 5%

Actual human services spendingIncrease 6% 5% 6% 8% 9% 9% 8% 10% 11%

Decrease 17% 10% 6% 4% 2% 1% 2% 2% 2%

Actual general government operations spending

Increase 39% 40% 39% 38% 39%

Decrease 6% 6% 5% 5% 5%

Funding for economic development programs

Increase 14% 12% 8% 11% 13% 12% 13% 12% 14%

Decrease 17% 20% 12% 9% 8% 5% 5% 4% 4%

Amount of debtIncrease 21% 18% 11% 14% 15% 13% 15% 15% 17%

Decrease 12% 13% 15% 16% 17% 18% 17% 15% 16%

Sale of public assets(i.e., parks, buildings, etc.)

Increase 5% 5% 6% 6% 7% 7% 7% 9%

Decrease 1% 1% 1% 1% 0% 1% 1% 1%

Privatizing or contracting out of servicesIncrease 16% 18% 15% 12% 12% 10% 10% 10% 11% 13%

Decrease 4% 2% 1% 1% 1% 1% 1% 1% 1% 2%

Number and/or scope of interlocal agreements or cost-sharing plans

Increase 32% 38% 40% 40% 34% 30% 22% 18% 18% 17%

Decrease 2% 1% 1% 1% 1% 1% 1% 1% 1% 1%

Jurisdiction’s workforce hiringIncrease 3% 1% 2% 2% 4% 8% 8%

Decrease 20% 22% 14% 8% 8% 3% 3%

Jurisdiction not filling vacant positionsIncrease 22% 23% 16% 10% 9% 7% 5%

Decrease 3% 3% 2% 2% 1% 1% 1%

Number of employeesIncrease 9% 11% 11%

Decrease 4% 5% 4%

Employee pay ratesIncrease 21% 30% 40% 47% 53% 48% 56% 61%

Decrease 6% 4% 3% 2% 1% 1% 1% 0%

Employees’ share of premiums, deductibles, and/or co-pays on health insurance

Increase 33% 30% 30% 27% 26% 22% 17% 17% 17%

Decrease 2% 1% 0% 1% 1% 1% 0% 0% 0%

Employees’ share of contributions to retirement funds

Increase 15% 14% 13% 13% 11% 11% 11% 12% 10%

Decrease 1% 0% 0% 0% 0% 1% 1% 0% 0%

Retirees’ share of premiums, deductibles, and/or co-pays on health insurance

Increase 22% 18% 15% 15% 14% 13% 11% 10% 8%

Decrease 1% 0% 0% 0% 0% 0% 0% 0% 0%

Notes: Responses for “no change,” “don’t know,” and “not applicable” not shown. Percentages are based on all responding jurisdictions (not just those that selected an option other than “not applicable”). The “not applicable” response option was added in 2011, so direct comparisons with earlier waves may be compromised.

25


Previous MPPS reportsMichigan local government leaders’ views on medical and recreational marijuana (September 2018)

Rising confidence in Michigan’s direction among local leaders, but partisan differences remain (July 2018)

Michigan local government officials weigh in on housing shortages and related issues (June 2018)

Approaches to land use planning and zoning among Michigan’s local governments (May 2018)

Workforce issues and challenges for Michigan’s local governments (January 2018)

Local leaders’ views on elections in Michigan: accuracy, problems, and reform options (November 2017)

Michigan local government officials report complex mix of improvement and decline in fiscal health, but with overall trend moving slowly upward (October 2017)

Michigan local leaders want their citizens to play a larger role in policymaking, but report declining engagement (August 2017)

Michigan local leaders’ views on state preemption and how to share policy authority (June 2017)

Improving communication, building trust are seen as keys to fixing relationships between local jurisdictions and the State government (May 2017)

Local leaders more likely to support than oppose Michigan’s Emergency Manager law, but strongly favor reforms (February 2017)

Local government leaders’ views on drinking water and water supply infrastructure in Michigan communities (November 2016)

Michigan local leaders say property tax appeals are common, disagree with ‘dark stores’ assessing (October 2016)

Local officials say Michigan’s system of funding local government is broken, and seek State action to fix it (September 2016)

Michigan local governments report first declines in fiscal health trend since 2010 (August 2016)

Michigan local leaders’ doubts continue regarding the state’s direction (July 2016)

Hospital access primary emergency medical concern among many Michigan local officials (July 2016)

Firefighting services in Michigan: challenges and approaches among local governments (June 2016)

Most local officials are satisfied with law enforcement services, but almost half from largest jurisdictions say their funding is insufficient (April 2016)

Local leaders say police-community relations are good throughout Michigan, but those in large cities are concerned about potential civil unrest over police use-of-force (February 2016)

Report: Responding to budget surplus vs. deficit: the preferences of Michigan’s local leaders and citizens (December 2015)

Michigan’s local leaders concerned about retiree health care costs and their governments’ ability to meet future obligations (October 2015)

Fiscal health rated relatively good for most jurisdictions, but improvement slows and decline continues for many (September 2015)

Confidence in Michigan’s direction declines among state’s local leaders (August 2015)

Michigan local government leaders’ views on private roads (July 2015)

Few Michigan jurisdictions have adopted Complete Streets policies, though many see potential benefits (June 2015)

Michigan local leaders have positive views on relationships with county road agencies, despite some concerns (May 2015)

Michigan local government leaders say transit services are important, but lack of funding discourages their development (April 2015)

Michigan local leaders see need for state and local ethics reform (March 2015)

Local leaders say Michigan road funding needs major increase, but lack consensus on options that would raise the most revenue (February 2015)

Michigan local government leaders’ views on employee pay and benefits (January 2015)

Despite increasingly formal financial management, relatively few Michigan local governments have adopted recommended policies (December 2014)

Most Michigan local officials are satisfied with their privatized services, but few seek to expand further (November 2014)

Michigan local governments finally pass fiscal health tipping point overall, but one in four still report decline (October 2014)

Beyond the coast, a tenuous relationship between Michigan local governments and the Great Lakes (September 2014)

Confidence in Michigan’s direction holds steady among state’s local leaders (August 2014)



Wind power as a community issue in Michigan (July 2014)

Fracking as a community issue in Michigan (June 2014)

The impact of tax-exempt properties on Michigan local governments (March 2014)

Michigan’s local leaders generally support Detroit bankruptcy filing despite some concerns (February 2014)

Michigan local governments increasingly pursue placemaking for economic development (January 2014)

Views on right-to-work legislation among Michigan’s local government leaders (December 2013)

Michigan local governments continue seeking, and receiving, union concessions (October 2013)

Michigan local government fiscal health continues gradual improvement, but smallest jurisdictions lagging (September 2013)

Local leaders evaluate state policymaker performance and whether Michigan is on the right track (August 2013)

Trust in government among Michigan’s local leaders and citizens (July 2013)

Citizen engagement in the view of Michigan’s local government leaders (May 2013)

Beyond trust in government: government trust in citizens? (March 2013)

Local leaders support reforming Michigan’s system of funding local government (January 2013)

Local leaders support eliminating Michigan’s Personal Property Tax if funds are replaced, but distrust state follow-through (November 2012)

Michigan’s local leaders satisfied with union negotiations (October 2012)

Michigan’s local leaders are divided over the state’s emergency manager law (September 2012)

Fiscal stress continues for hundreds of Michigan jurisdictions, but conditions trend in positive direction overall (September 2012)

Michigan’s local leaders more positive about Governor Snyder’s performance, more optimistic about the state’s direction (July 2012)

Data-driven decision-making in Michigan local government (June 2012)

State funding incentives increase local collaboration, but also raise concerns (March 2012)

Local officials react to state policy innovation tying revenue sharing to dashboards and incentive funding (January 2012)

MPPS finds fiscal health continues to decline across the state, though some negative trends eased in 2011 (October 2011)

Public sector unions in Michigan: their presence and impact according to local government leaders (August 2011)

Despite increased approval of state government performance, Michigan’s local leaders are concerned about the state’s direction (August 2011)

Local government and environmental leadership: views of Michigan’s local leaders (July 2011)

Local leaders are mostly positive about intergovernmental cooperation and look to expand efforts (March 2011)

Local government leaders say most employees are not overpaid, though some benefits may be too generous (February 2011)

Local government leaders say economic gardening can help grow their economies (November 2010)

Local governments struggle to cope with fiscal, service, and staffing pressures (August 2010)

Michigan local governments actively promote U.S. Census participation (August 2010)

Fiscal stimulus package mostly ineffective for local economies (May 2010)

Fall 2009 key findings report: educational, economic, and workforce development issues at the local level (April 2010)

Local government officials give low marks to the performance of state officials and report low trust in Lansing (March 2010)

Local government fiscal and economic development issues (October 2009)

All MPPS reports are available online at: http://closup.umich.edu/mpps.php

The Center for Local, State, and Urban Policy (CLOSUP), housed at the University of Michigan’s Gerald R. Ford School of Public Policy, conducts and supports applied policy research designed to inform state, local, and urban policy issues. Through integrated research, teaching, and outreach involving academic researchers, students, policymakers and practitioners, CLOSUP seeks to foster understanding of today’s state and local policy problems, and to find effective solutions to those problems.

web: www.closup.umich.eduemail: [email protected]: @closupphone: 734-647-4091

University of Michigan

Center for Local, State, and Urban Policy

Gerald R. Ford School of Public Policy

Joan and Sanford Weill Hall

735 S. State Street, Suite 5310

Ann Arbor, MI 48109-3091

Regents of the University of Michigan

Michael J. BehmGrand BlancMark J. Bernstein Ann ArborShauna Ryder DiggsGrosse PointeDenise Ilitch Bingham FarmsAndrea Fischer NewmanAnn ArborAndrew C. RichnerGrosse Pointe ParkRon WeiserAnn ArborKatherine E. WhiteAnn ArborMark S. Schlissel(ex officio)

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