In Blog: Factually Speaking

By Charles Ballard, Michigan League for Public Policy board chair

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My name is Charles Ballard and I am an economics professor at Michigan State University. I am also the new board chair of the Michigan League for Public Policy.

In my new role, I am excited to get to communicate directly with you—the members and supporters who make the great work of the League possible. I share your passion for public policy and want to engage you in the dialogue on how we can make Michigan better, starting with this message today.

When Governor Rick Snyder outlined his 2017 budget proposal last month, many of the state’s biggest problems continued to be overlooked
. If they are not addressed, Michigan will lurch from crisis to crisis for decades to come.

The water crisis in Flint is certainly the most severe story, but it is a symptom of a larger problem of outdated infrastructure and continued state disinvestment. Lots of older cities (including Battle Creek, Lansing and Detroit) have similar stories. After the loss of so many of the manufacturing jobs that used to provide solid incomes for workers with modest skills, and after decades of flight to the suburbs, what is left behind in many cities is a low-income population with aging infrastructure, legacy costs and an inadequate tax base.

One big source of these problems is that the state relies too much on local communities to finance their public sectors, even when many low-income communities simply don’t have the resources to do what needs to be done. At the same time, the state has made drastic cuts to statutory revenue sharing to Michigan’s cities, villages and townships. Over the last 15 years, local revenue sharing has declined from over $600 million annually to approximately $250 million a year. These revenues are used to support local services, such as public safety, water and sewers, and roads, and the ongoing cuts have hurt local infrastructure. The governor’s 2017 budget recommendation includes no increase for statutory revenue sharing.

These policies have led to a mismatch between needs and resources. While it is admirable that cities like Lansing and Ann Arbor have been proactively removing their lead water pipes, not all communities have the financial capability to do that. The state should be tackling these issues statewide, instead of putting the burden on low-income communities and low-income residents.

This leads me to a second source of the infrastructure problem, which is the state government’s obsession with tax cuts. Michigan’s elected officials have severely reduced the state’s tax collections in recent decades. This includes the $1.6 billion in business tax cuts passed in 2011, as well as the state’s lengthy list of special tax breaks. As a result, the amount of money available for fixing critical infrastructure is seriously inadequate.

If we in Michigan were to raise the same percentage of our income in taxes that we raised a few decades ago, we would have billions and billions more every year to fix our roads and bridges, schools and water systems.

As a result of all of these policies, infrastructure spending in Michigan has been billions of dollars less than in neighboring states, year after year. It is no wonder that our infrastructure is crumbling. We have reaped what we have sown.

I believe that what happened in Flint would never have been allowed to happen in Bloomfield Hills or East Grand Rapids or Okemos. But a similar crisis will happen in another financially struggling community if we don’t act soon.

The League has released its first look at the governor’s 2017 budget, and while it includes some positives like funding for Flint and Detroit schools, it does not do enough to prevent such crises from happening again. After years of disinvestment, the governor’s budget recommendation of $165 million for infrastructure improvements barely scratches the surface of the revenue that is actually needed to fix the problem.

It’s time for our elected officials to step up and fix our infrastructure, at long last.

— Charles Ballard

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