Michigan cities and school districts at risk of insolvency

[renf]

http://www.detroitnews.com/article/2...cities-trouble

This is an excellent essay describing the financial crisis that exists now in many Michigan cities and school districts. Note the emphasis on the drastic fall in the tax base.

[mwilbert]

Post-Headlee and Proposal A, Michigan's method of financing municipalities is structured to more or less make it impossible for revenues to rise as fast as expenses over time. Only entities which have new development can possibly keep up, and of course eventually places get built out.

Since this is a recipe for endless municipal bankruptcies in Michigan [[over the long term), eventually this system will have to be changed, but I don't expect the problem to be dealt with until we get some typically suburban towns falling into a death spiral of inadequate revenue, reduced services, population outflow, and low property values.

[Steve203]

And Prop 1 will speed the process by replacing the business property tax with a slice of the use tax, as use tax revenue has been falling in inflation adjusted dollars, since about 2000