For Immediate Release
October 22, 2020
Contact:
Alex Rossman
arossman@mlpp.org
Cell: 517-775-9053
New report shows state funding for local governments has declined by up to one-third over 22 years, forcing budget cuts, diminished services and bad policies
LANSING—As local governments seek to address the COVID-19 crisis and address calls to reevaluate local spending and its impact on racial equity, a new report, Building Equitable Communities: More Funding Needed for Local Governments, looks at the role that revenue sharing declines are playing in these decisions.
The research from the Michigan League for Public Policy shows that local revenue sharing payments—state funding that’s distributed to local governments—have declined 35.4% for cities, villages and townships and 25.4% for counties between 1997 and 2019. In addition to the report, related fact sheets offer an overview of the decline in state revenue sharing and a timeline of important policy decisions that have affected local government funding.
“I have served on the Huntington Woods City Commission and in the Michigan Legislature, so I have seen both sides of the revenue sharing equation and know how vital a fair deal from the state is to our local governments,” said Gilda Z. Jacobs, President and CEO of the Michigan League for Public Policy. “Local government spending touches our daily lives just as much as state spending, from the local health departments making important decisions right now, the emergency services we depend on in a crisis, the roads we drive on, the parks our kids play in and more, and for the past two decades, our state government’s commitment to our counties, cities, villages and townships has dwindled. COVID-19 has amplified the importance of our local governments and their funding needs, but equitable revenue sharing should be a part of every single state budget.”
The report reveals that local governments have been getting hit on both sides as far as their budget funding goes. In addition to state revenue sharing declines, property tax collections have also diminished. When adjusted for inflation, property tax collections in 2019 were 8.7% below collections in 2007 and only 11% above the trough in property tax collections brought on by the 2008-2009 foreclosure crisis. In 2019, real Michigan property tax collections were on par with collections in 2004.
These trends in property tax collections are the product of two intertwined constitutional limitations: the Headlee Amendment and Proposal A. The passage of Proposal A had some unintended consequences when combined with the Headlee Amendment, and the report explores those policy changes and their impact in greater detail.
Increasing local revenues is a racial justice issue. To achieve the vision of racial equity, economic prosperity, and social justice, the people, organizations, and governments that support those goals need resources. With more flexible spending power, local units of government can target resources to programs and services as needed.
“Racial equity is an important concern in every policy decision, as they have both intended and unintended consequences, and revenue sharing is no different,” Jacobs said. “The continued fight against police brutality toward Black and Brown people has also raised important questions about local government spending, and with more resources from the state in revenue sharing, greater investments can be made in the areas that promote racial equity and economic security for all. And as state lawmakers tackle a variety of criminal justice reforms, including revisiting court fines and fees, they must also acknowledge that revenue sharing declines have pushed local governments to rely more on court fines and fees.”
The League’s analysis points out that local units of government are seeking to recoup declining revenues in increasingly inequitable and unpopular ways, including a growing reliance on fine and fee collection to pay for city services. The white supremacist system on which modern policing is built and longstanding racially biased policing in Michigan have created a system where Black and Brown people in Michigan are systematically targeted by police. As such, a heavy reliance on fines and fees is disproportionately affecting Black and Brown communities.
In addition, the movement to defund police is pushing for the reinvestment of revenues from policing into racially equitable systems that target and preempt the root causes of crime. To do this, local units of government are going to need funding to reinvigorate opportunities in communities of color to reduce income and wealth inequality. Funding a completely new vision of public safety will require injections of money from the state to help fund the mental health services, youth programs and social safety net that will achieve that vision.
The League’s report outlines the following recommendations to address local governments’ funding needs, improving racial equity in the process:
- Significantly increasing statutory revenue sharing to counties and cities, villages and townships to at least match what is called for under the statutory formula from Public Act 532 of 1998;
- Creating new formulas for the distribution of statutory revenue sharing to send more resources to communities with low housing wealth;
- Expanding the Homestead Property Tax Credit; and
- Authorizing more tax options for local units of government, including motor vehicle taxes and registration fees, and alcohol, tobacco and cannabis taxes, and taxes on entertainment and amusement.
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The Michigan League for Public Policy, www.mlpp.org, is a nonprofit policy institute focused on economic opportunity for all. It is the only state-level organization that addresses poverty in a comprehensive way.
Emily Jorgensen joined the Michigan League for Public Policy in July 2019. She deeply cares about the well-being of individuals and families and has a great love for Michigan. She is grateful that her position at the League enables her to combine these passions and work to help promote policies that will lead to better opportunities and security for all Michiganders.
Jacob Kaplan 
Mikell Frey is a communications professional with a passion for using the art of storytelling to positively impact lives. She strongly believes that positive social change can be inspired by the sharing of data-driven information coupled with the unique perspectives of people from all walks of life across Michigan, especially those who have faced extraordinary barriers. 
Rachel Richards rejoined the League in December 2020 as the Fiscal Policy Director working on state budget and tax policies. Prior to returning to the League, she served as the Director of Legislative Affairs for the Michigan Department of Treasury, the tax policy analyst and Legislative Director for the Michigan League for Public Policy, and a policy analyst and the Appropriations Coordinator for the Democratic Caucus of the Michigan House of Representatives. She brings with her over a decade of experience in policies focused on economic opportunity, including workforce issues, tax, and state budget.
Donald Stuckey 
Patrick Schaefer
Alexandra Stamm 
Amari Fuller
Renell Weathers, Michigan League for Public Policy (MLPP) Community Engagement Consultant. As community engagement consultant, Renell works with organizations throughout the state in connecting the impact of budget and tax policies to their communities. She is motivated by the belief that all children and adults deserve the opportunity to achieve their dreams regardless of race, ethnicity, religion or economic class.
Megan Farnsworth joined the League’s staff in December 2022 as Executive Assistant. Megan is driven by work that is personally fulfilling, and feels honored to help support the work of an organization that pushes for more robust programming and opportunities for the residents of our state. She’s excited and motivated to gain overarching knowledge of the policies and agendas that the League supports.
Yona Isaacs (she/hers) is an Early Childhood Data Analyst for the Kids Count project. After earning her Bachelor of Science in Biopsychology, Cognition, and Neuroscience at the University of Michigan, she began her career as a research coordinator in pediatric psychiatry using data to understand the impacts of brain activity and genetics on children’s behavior and mental health symptoms. This work prompted an interest in exploring social determinants of health and the role of policy in promoting equitable opportunities for all children, families, and communities. She returned to the University of Michigan to complete her Masters in Social Work focused on Social Policy and Evaluation, during which she interned with the ACLU of Michigan’s policy and legislative team and assisted local nonprofit organizations in creating data and evaluation metrics. She currently serves as a coordinator for the Michigan Center for Youth Justice on a project aiming to increase placement options and enhance cultural competency within the juvenile justice system for LGBTQIA+ youth. Yona is eager to put her data skills to work at the League in support of data-driven policies that advocate for equitable access to healthcare, education, economic security, and opportunity for 0-5 year old children. In her free time, she enjoys tackling DIY house projects and trying new outdoor activities with her dog.
Amber Bellazaire joined the Michigan League for Public Policy as a policy analyst in June of 2019. Her work primarily focuses on state policy and budgets affecting Michigan’s Medicaid programs. Previously, Amber worked at the National Conference of State Legislatures tracking legislation and research related to injury and violence prevention, adolescent health, and maternal and child health. She also brings with her two years of Americorps service. As a full time volunteer, Amber had the opportunity to tutor high school students in Chelsea, Massachusetts and address issues of healthcare access and food insecurity through in-person outreach in Seattle, Washington.
Simon Marshall-Shah joined the Michigan League for Public Policy as a State Policy Fellow in August 2019. His work focuses on state policy as it relates to the budget, immigration, health care and other League policy priorities. Before joining the League, he worked in Washington, D.C. at the Association for Community Affiliated Plans (ACAP), providing federal policy and advocacy support to nonprofit, Medicaid health plans (Safety Net Health Plans) related to the ACA Marketplaces as well as Quality & Operations.
