Local Governments Not Starved For Cash

Capitol Confidential ^ | 4/15/2014 | Tom Gantert

[MichCapCon]

Local municipalities saw an increase of $1.4 billion in property taxes from 2000 to 2013 with that revenue increasing to $5.3 billion in 2013 from $3.9 billion in 2000, according to the state tax commission.

The municipalities received about $1 billion more in property tax in 2008 compared to 2000 with inflation factored in. By 2009, the property taxes collected had reduced to the point they were relatively the same as 2000 with inflation.

Communities across Michigan have complained about revenue problems with some elected officials saying they don't have enough money to provide basic services. But a look at the numbers shows that the money flow may have slowed, but it has not significantly declined.

There are 533 cities, townships and villages in the state of Michigan. There were 12 cities and townships in financial emergencies, but Ecorse, Benton Harbor and Pontiac have recently emerged from their emergency status and the state has turned over the finances back to the local municipalities with some state monitoring.

Property taxes since 2000 peaked in 2008 and then slightly declined. Property taxes seem to have reached a plateau in 2013.

For example, Washtenaw County collected $426.6 million in property taxes in 2000 and saw that increase to $685.6 million in 2008. In 2013, Washtenaw County collected $631.8 million in property taxes, about $54 million more than the amount it collected in 2000 when it is adjusted for inflation.

Washtenaw County was aware of the downward projections of property tax in 2008. The county used conservative estimates when budgeting and reported that the actual revenue that came in was above budgeted projections.

"We gradually reduced our expenditures over that period utilizing various strategies until we evened our revenues and expenditures," said Washtenaw County Administrator Verna McDaniel. "I am proud to say that we now have a four-year balanced budget for 2014 through 2017. … It is important not to minimize the challenges we all faced and dealt with to balance our budget and bring our expenditures in alignment with our revenues."

James Hohman, assistant director of fiscal policy for the Mackinac Center for Public Policy, said there's a narrative that municipal finance is broken and that there will be ever-more emergencies.

"But the facts are speaking differently," Hohman said.

[Daveinyork]

My city York, PA, had a budget crisis in the 2002 budget that necessitated a 17% increase in property tax, and some creative accounting. That budget was $50million. The latest budget is $96million, and property taxes have increased dramatically. I still can’t figure out how the budget almost doubled in just over ten years. Inflation would only account for a small part of it. Well, I actually figure it out. Liberal Dems hold every elected post including mayor and city council.

[Opinionated Blowhard]

Same thing happened in my town. Spending expanded dramatically in the boom years. The library was turned into a palace. The police force was expanded and they all got expensive new vehicles. People were added to the bureaucracy. Then when the boom times ended, the town was “strapped for cash.” What a shock. If they wouldn’t have reset spending at such a high level when the times were booming, they would not be strapped when the economy slows down. But God Forbid that the answer be to cut spending back. We got a bunch of articles in the local paper talking about a “crisis” and property taxes went up.

[Daveinyork]

We never had boom times, except for the municipal spending, of which I have seen no evidence. We still can’t afford an adequate police force, and the streets are still disgracefully rough.

[Buckeye McFrog]

Whatever their revenue, they owe three to four times that much to retirees.