Page 4 - Clinton Currents Fall 2018
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Page 4
Fall 2018
From Treasurer Paul Gieleghem
Funding local government services in the Michigan spiral
Since becoming your Treasurer in 2016, my goal is to maintain communication with you, the residents of our community. My first article, Where Do Your Tax Dollars Go, became an insert in the tax bill to provide you with a better understanding of the services you pay for. My second article did a deeper dive on how property values and the limits imposed by Proposal A impacts services. Both are available on my website,
In this edition, we explore local government funding from a wider perspective. Many in Lansing are touting the ‘Michigan Recovery.’ While the story of a prosperous Michigan spurring economic opportunity is inspiring, the story is far more complicated than many want you to believe.
Treasurer Paul Gieleghem
Too many residents have seen their incomes stagnate or decrease. Almost all local governments in Michigan (at least those without big population growth) are struggling. To understand why: all local communities are political subdivisions of the State of Michigan. We derive our responsibility, authority and much of our revenue from the State of Michigan. Local governments now shoulder exponentially more responsibilities with less authority and fewer and fewer dollars.
State Shared Revenue
As a whole, local governments are funded as depicted in Figure 1. The orange wedge reflects State Shared Revenue from sales tax. Prior to 1963, local communities imposed a myriad of local taxes on things like general sales, gas, alcohol and
tobacco. That year, the Michigan
Constitution changed, eliminating almost all local taxing authority and restricting property taxes. In return, the State of Michigan wrote into its Constitution that state sales taxes would be shared with local communities, to help make up the difference.
Despite this requirement, according to a 2016 report by Great Lakes Economic Consulting, between 1998 and 2016 the State of Michigan shorted local communities and counties more than $7.5 billion dollars. Clinton Township, according to the Michigan Municipal League, was shorted $31,005,999.69 between 2003 and 2016.
The charts depict Michigan as an outlier on the issue of funding local communities. In Figure 2, we see that while every state saw increased general revenue from 2002 to 2012, Michigan is one of only four states in the nation that decreased how much of that revenue they provided to their local communities. Among the four, Michigan’s reduction in local revenue is severe.
In our upper Midwest region, from 2002 to 2012, Michigan was the only state that saw a decline in overall growth of local government revenue (Figure 3).
Figure 1: State General Revenue Sources 2015. Source: US Census Bureau 2015 State & Local Government Summary Tables by Level of Government

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