MML The Review MarchApr 2021 Magazine

“What we have learned is that our system of municipal finance is fundamentally broken,” Ivacko said. “The gradual recovery in local government financial health plateaued in 2015, while Michigan’s economy continued to grow for many more years. What we should have seen was that local government’s recovery was continuing, but we took a step back in 2016. And there was a sharp decline in 2020.

“We missed our opportunity to fix Michigan’s (municipal finance system) when we would have been financially able to do it,” he said. “I feel like we’ve missed that opportunity for a long time.” Ivacko and other experts cite the long-term real decline in revenue sharing, revenue limitations by the Headlee Amendment and the Proposal A school finance law, and legal restrictions on the ability of local governments to diversify their funding base. Ivacko said Michigan is “one of the most restrictive states” in that regard. Local governments are likely to be financially pinched over the next several years, according to state economic forecasts. While state tax revenues have been coming in higher than anticipated, the state’s general fund is still expected to finish the current fiscal year 4.9% lower than a year ago, according to a January consensus revenue estimate. “The outlook remains very difficult” for this year, U-M economist Gabe Ehrlich said. General fund revenue is expected to rise 5.1% in fiscal 2022 to $10.2 billion, but that’s still nearly $1 billion less than the state collected in fiscal 2019. State and local aid was left out of the $900 billion economic stimulus package Congress passed in December. But at the time of this writing, President Joe Biden had proposed a $1.9 trillion economic rescue plan that included $350 billion for state and local governments. “It’s a challenging time to forecast what is going to happen,” Ivacko said. “A lot depends on what happens at the federal level. The absolute key question is whether there will be more financial aid.” The full CLOSUP report can be found at http://closup.umich.edu/.

“They’re always available to provide advice on most planning or zoning issues and their advice is based on 35 years of experience in numerous communities throughout Michigan.” R. Brent Savidant, planning director, City of Troy 63 Michigan communities have a 22-person planning department. You can, too.

Rick Haglund is a freelance writer. You may contact him at 248.761.4594 or haglund.rick@gmail.com.

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THE REVIEW