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Editorial

Michigan cities’ future: Doing less with less

   Michigan cities are in crisis, staggered by a one-two punch of declining property values and dwindling state revenue. Nearly 30 of them are close to bankruptcy.

   Unfortunately, it will take more than shared services, best practices and lower legacy costs to make them and other troubled municipalities solvent. Barring a new way to finance local government, cities must start examining — now — what services they can afford to provide and eliminate those they can’t.

   “Fundamentally, we’re going to have smaller government,” said Paul Tait, executive director of the Southeast Michigan Council of Governments. “Efficiencies alone won’t do it in this economic climate.”

   Libraries, property inspection, parks and recreation, and activities for youths and seniors are among the many services that local governments might have to drop — or maintain only with volunteers or special millages.

   Even core services like public safety will increasingly face cuts. Municipal leaders should prepare themselves for the worst with multi-year budgets that set priorities as governments continue to starve and shrink.

   With a new government efficiency team, SEMCOG is urging local governments to poll citizens on what municipal services they most value. It is an exercise all government leaders should undertake, even as they fight for better ways to finance local government.

   Gov. Rick Snyder’s call to reduce aid to local government not mandated by the constitution from $300 million to $200 million a year — doled out of a competitive fund — is just the latest in series of blows to cities. The proposal could cost the city of Detroit up to $176 million.

   State government has already cut revenue sharing to Michigan’s municipalities by more than $3 billion during the last decade, and property values have dropped by 30% or more. Cities must now also prepare for big cuts in federal assistance, such as Community Development Block Grants.

   Michigan’s big and middle-size cities have been hurt most. Sterling Heights, for example, has lost $25 million in property taxes and $26 million in revenue sharing since 2002. Residential assessments have dropped more than a third. The city of 130,000 has had to eliminate 75 positions, cut benefits, reduce library hours, eliminate recreation programs, negotiate shared-service agreements and labor concessions, and approve user fees.

   “Our last resort is to reduce services,” said City Manager Mark Vanderpool.

   If Snyder wants Michigan to become economically competitive, he must understand that the health of its cities is even more important than its tax structure. Long-term, the state must find ways to adequately assist cities, while continuing to push them to pursue shared-service agreements, mutual aid pacts, consolidations and other efficiencies.

   “If we want to create a prosperous state, we can’t cripple our communities,” said Dan Gilmartin, CEO and executive director of the Michigan Municipal League.

   City managers and mayors should not expect relief soon, however. Working with their constituents, they should start planning now for government that provides only those services people are willing to pay for.