Broken Municipal Finance

[O3H]

Michigan's municipal finance model is broken
- tough to attract and retain talent.

[Wesley Mouch]

Michigan's municipal finance model is broken
- tough to attract and retain talent.

Broken, or poorly designed.

Who is it not attracting? I don't usually think of municipal finance as an area attraction.

[O3H]

First and foremost - No one , and nothing - shut down a site I own.

I do not hate Detroit. I went to school at Wayne State in the 80's.
Registration on CASS AVENUE with paper cards, mud lots, etc., etc.
I kayak downtown on the Detroit River, Cycle on Belle Isle.
Basically shut the f up, unless you really know ME.

I do NOT read the newspaper - then post exactly what the news posted.
Actually I think for myself, create my own observations, and post them.

Some of us actually read, yes read, a LOT of stuff.
Its a skill many were supposed to learn in kindergarten and evolve.

http://www.mml.org/resources/information/finance.htm

How exactly does a CITY grow when the revenue is not there ?
That is the lack of attraction to anyone who might want to live there
If the Feds don't contribute, and the States don't contribute, who pays ??

What do you think will happen when the next big Rain Storm hits ?
We'll have exactly the same mess we had in 2011, and in 2014.
LARGE cities like Warren will again, be ruined, asking for ""aid""
Don't forget all those piddly little cities in 12TownDrain either

http://www.govtech.com/em/emergency-...ydistrict.html

Infrastructure - As an emergency disaster scenario - Exactly !!!!!

Want the roads fixed, fix the sewers at the same time the road bed is plowed up and exposed to the sky ---or wait till it fails, pay twice !!
There just ""might"" be a an extra 10,000 people/businesses in that city since anyone considered looking at the size of the pipes, capacity, etc.
from the 1950's until now.
Traffic flow - oh shit why bother, LBrooksP screwed everyone with the I-75 selfishness debacle for all taxpayers of the State [[if they use the road or not)

[masterblaster]

Michigan's municipal finance model is broken
- tough to attract and retain talent.

Do you have any realistic solutions to solve the state's municipal finance model?

[MikeyinBrooklyn]

I think the first and largest problem with government finances [[and this includes local and state finances, but really affects every level or government) is the spending not the taxing. Regardless of level of spending [[specific programs and their relative cost/benefits are not the point of this reply), spending needs to be kept in check: taking into account inflation & changes in taxable population. Plus, of course, programs need to be regularly reassessed. Honestly: is Detroit's budget [[adjusted for inflation) only 40% of what it was in 1950? Programs become about the employees and the spending of money, not the service of citizens. Keep spending to a minimum, and require efficient, transparent use of existing funds before raising any more.

When spending is responsible, with increases held to inflation increases- if that much- public officials might have a moral base from which to ask for more money.

Oh, and the public employee elephant in the room: if elected officials desired to be responsible [[and I am not accusing any of them of trying to be that!), all taxpayer contributions to retirement and retirement healthcare would be made at the present, into 401k-style savings plans. No future taxpayers should have to pay for the workers who are long since retired when they are paying taxes. We should pay this year for the salary, benefits and retirement earned this year. Let's not pass the buck. We have no way of knowing what the population or the economy will be like in the future. Irresponsible delay of such things was a huge factor in Detroit and Wayne County financial distress, as it is for localities and states all over the country. Doing this is very easy, except that it requires biting a bullet today, instead of passing financial injury onto the future [[or not; bankruptcies can take away a good chunk of those benefits; potentially all of them).

[Hermod]

Bingo! Political entities grant elaborate retirement and medical benefits today without funding them in current budgets. The basis is that the elected officials will be long gone before they have to pay the piper. FDR was right that gummint employee unipns were a bad thing.

[MikeyinBrooklyn]

Political entities grant elaborate retirement and medical benefits today without funding them in current budgets.

There should be both state and federal constitutional amendments prohibiting this.

[ABetterDetroit]

I think the first and largest problem with government finances [[and this includes local and state finances, but really affects every level or government) is the spending not the taxing. Regardless of level of spending [[specific programs and their relative cost/benefits are not the point of this reply), spending needs to be kept in check: taking into account inflation & changes in taxable population. Plus, of course, programs need to be regularly reassessed. Honestly: is Detroit's budget [[adjusted for inflation) only 40% of what it was in 1950? Programs become about the employees and the spending of money, not the service of citizens. Keep spending to a minimum, and require efficient, transparent use of existing funds before raising any more.

When spending is responsible, with increases held to inflation increases- if that much- public officials might have a moral base from which to ask for more money.

Oh, and the public employee elephant in the room: if elected officials desired to be responsible [[and I am not accusing any of them of trying to be that!), all taxpayer contributions to retirement and retirement healthcare would be made at the present, into 401k-style savings plans. No future taxpayers should have to pay for the workers who are long since retired when they are paying taxes. We should pay this year for the salary, benefits and retirement earned this year. Let's not pass the buck. We have no way of knowing what the population or the economy will be like in the future. Irresponsible delay of such things was a huge factor in Detroit and Wayne County financial distress, as it is for localities and states all over the country. Doing this is very easy, except that it requires biting a bullet today, instead of passing financial injury onto the future [[or not; bankruptcies can take away a good chunk of those benefits; potentially all of them).

Where exactly in the US has this fiscal belt tightening been so successful for sustained economic growth over time?

Surely there is somewhere were it has proven to be the sure-fire hit that so many claim it is because I could point out many places that large capital investment in services, infrastructure and qualified people have been highly successful. In fact, we could just look at what’s right in your handle couldn’t we Mikey?

The problem is in the antiquated tax system in this state, because just like you stated, they are doing it like it is 1950. It makes no sense.

Back on topic. I completely agree with the OP in that the waste water and storm run off problems in this metro are FUBAR because of complete neglect over decades. Unfortunately, so are many other things, but this thread would not be the right place to make that list. Where OH3 and I part ways is how to pay for the water quality issues. Somehow he thinks pointing fingers will work this time when it never ever has before in the Detroit Metro area even though it has been tried umpteen times. In fact, the model has been proven if you want something to never be done around here, do exactly that — start pointing fingers at someone else.

Capital improvements are not only good for attracting business and improving quality of life but they are damn good for the local economy.

At issue is properly funding them with tax vehicles that work successfully in 2017 and not continually trying to do it like they did it in 1950 when it has already proven to fail in the current economy and has caused economic failure.

[O3H]

It's true - I take LBrooksP to task for LACK of funding infrastructure.
He knew he would never get re-elected for a Sewage Project tax hike.
This spineless jellyfish will have 12TownsDrain hung around his neck like a dead albatross to carry into the grave.

http://bit.ly/SewageLBrooksP

When LBrooksP leaves the stage, the Evolution of Oakland can begin.

A hint for those that just don't know
https://en.wikipedia.org/wiki/Albatross_[[metaphor)

And...yes it cuts BOTH ways
in Herman Melville's Moby-Dick, there is a reference to Coleridge's albatross
which is extended to fit the narrative's focus on the symbolic connotations of whiteness.

[MikeyinBrooklyn]

ABD, I am not in this thread arguing for a specific level of spending on anything. Instead, I am just pointing out: a) government spending almost always grows faster than either inflation or population growth; b) there are few checks to make sure that money is spent efficiently, and only where it achieves the desired tasks; c) governments create obligations for future payment that are neither sustainable nor fair to future taxpayers. Keeping your spending at a sustainable, stable level, working for efficiency and honesty in spending, and paying for things as you go are responsible policies, whether you are right or left.

[Jimaz]

... Keeping your spending at a sustainable, stable level, working for efficiency and honesty in spending, and paying for things as you go are responsible policies, whether you are right or left.

That is wise.

Sometimes that's not the problem though:
Kansas Republicans raise taxes, ending their GOP governor’s ‘real live experiment’ in conservative policy.

In a decisive repudiation of conservative tax-cutting philosophy, Kansas Republicans voted this [June 7] week to reverse deep tax cuts enacted by Gov. Sam Brownback [[R), a move that lays bare the challenges of one-party control and the risks for Republicans in Washington pursuing a similar policy at the national level....

The tax reductions in Kansas had not delivered the economic growth Brownback had promised but caused massive holes in the state’s budget and led to unpopular spending cuts in areas such as education spending....

[O3H]

And just how exactly is "this" working in 2018+

The State Revenue Sharing program distributes sales tax collected by the State of Michigan to local governments as unrestricted revenues.

Talk to some Mayors, and get their viewpoint on "this" so called revenue......

http://www.mml.org/pdf/advocacy/mml-...heist-2014.pdf

Need more gasoline for the Fire, no problem, spill away pyro's

14 cities sue Michigan, say revenue-sharing math isn't right

http://www.freep.com/story/news/loca...suit/90118136/

Anyone that graduated university and can read - can figure out -
Michigan is most definitely NOT the place to be.

No attraction - No talent - we all loose

[O3H]

Few states are split with an Upper/Lower Peninsula.

I doubt folks in Sault Ste Marie, St Ignace, Seney, Munising, Marquette, Houghton, Ishpeming, Escanaba, and Calumet want to share TAX REVENUE with those in Flint or Detroit.

[ABetterDetroit]

Few states are split with an Upper/Lower Peninsula.

I doubt folks in Sault Ste Marie, St Ignace, Seney, Munising, Marquette, Houghton, Ishpeming, Escanaba, and Calumet want to share TAX REVENUE with those in Flint or Detroit.

They don't. Money flows north over the bridge. Always has, always will.

[mtburb]

Few states are split with an Upper/Lower Peninsula.

I doubt folks in Sault Ste Marie, St Ignace, Seney, Munising, Marquette, Houghton, Ishpeming, Escanaba, and Calumet want to share TAX REVENUE with those in Flint or Detroit.

And then you have another issue with another one of Detroit's outer-extent satellite cities...Toledo...which just happens to be in Ohio, which means they will never, EVER share ANY tax in ANY form with Detroit and Flint. Neither will the residents of Columbus, Cincinnati, Cleveland, Akron, Canton, Youngstown, Sandusky, Lima, Hamilton, Springfield, Athens and Zanesville.

And going back to within Michigan, people in the west side of the Lower Peninsula are seemingly trying hard to not share taxes with Detroit and Flint, to the point that some folks in the far southwest corner of the state will often associate themselves more with Chicago, yet folks there won't ever, again, share any taxes with Michigan.

[O3H]

The fact remains, Michigan is broken - economically.

Paul Egan, Detroit Free Press - Published 10:51 p.m. ET Aug. 28, 2016

The $1.2 billion in revenue-sharing payments the state
will distribute to local governments in 2016
is down from nearly $1.6 billion in 2001,
without even accounting for the effects of inflation.

An April report by Robert Kleine, a former state treasurer,
and Mitch Bean, a former head of the House Fiscal Agency,
pegged total cuts in revenue sharing to local governments,
not including counties, at $5.5 billion since 1988.

...While property values are increasing, municipalities can only increase the taxable value of any given property in any given year by the rate of inflation, which has been running well below 3%.

[O3H]

MtBurb - How the didly poo did OHIO suddenly enter into Michigan 2018 +

The Northwest Ordinance of 1787 established the northern boundary of Ohio as "an east west line drawn through the southerly bend of extreme of LakeMichigan."

Why the bizzarre whacked tangent ???????????????????????????

[O3H]

The State of Michigan is in HUGE trouble regarding pensions.
Michigan has a massive amount of different pension systems to begin with.

They have about $ 28 Billion in assets to cover - $ 35 Billion in liability.
Direct debt, that cannot be overlooked.

Michigan Municipal revenue is in big trouble.

The USA has a large national problem with the estimated
unfunded liability of all public pensions is $ 3 Trillion dollars.

[Gistok]

The State of Michigan is in HUGE trouble regarding pensions.
Michigan has a massive amount of different pension systems to begin with.

They have about $ 28 Billion in assets to cover - $ 35 Billion in liability.
Direct debt, that cannot be overlooked.

Michigan Municipal revenue is in big trouble.

The USA has a large national problem with the estimated
unfunded liability of all public pensions is $ 3 Trillion dollars.

OK... what you say is true.... but it is a very weak analogy to compare pension debt to retaining or getting talent to come here. If your analogy were true... then NO ONE would go for jobs in the Chicago area... and as we all know that is not the case.

https://www.illinoispolicy.org/moody...ties-top-250b/

Apples and oranges....

[O3H]

It's extremely connected - revenue has to come from somewhere.
Obviously the taxes should fund services and pensions.
Debt is something that needs to be paid, in real dollars, at some point

[MikeyinBrooklyn]

The long term key is management of spending, including pensions. New York & California, and of course Illinois, have egregiously huge debt. Service payments on debt are a larger share of spending every year. Taxes at the state and local level go up in some way almost every year, rarely ever going down*. SPENDING is the first thing that needs to be addressed for good long-term fiscal management.

*New York's [[both city and state) income tax revenue swings wildly with Wall Street. When Wall Street makes a lot of money, the revenue spikes. In a bad year or years, it plummets. Irresponsible politicians that run NY don't stash away money in the strong years, they use it as an excuse to spend more, making the tight years worse [[when they hike taxes and borrow more). This is why NYC & NY State have very high income, property, and sales taxes. All three much higher than here. And, if history is any guide, they will be higher 5 years from now than they are today. The amount of their own money the people get to keep declines almost annually. It is NOT a tax issue. You can never tax enough to keep up with irresponsible spending. NEVER.

[O3H]

People seem to forget that cities cannot raise taxes that easily in Michigan.

In 2014,
69 percent of property taxes paid statewide came from residential owners,
14 percent from owners of commercial property,
6 percent from industrial property,
and less than 3 percent from agricultural.

Michigan has a limit imposed on the amount property taxes
- can increase in any given year.

Combine that with the LACK of revenue sharing, and cities are hurting.

[Wesley Mouch]

People seem to forget that cities cannot raise taxes that easily in Michigan.

In 2014,
69 percent of property taxes paid statewide came from residential owners,
14 percent from owners of commercial property,
6 percent from industrial property,
and less than 3 percent from agricultural.

Michigan has a limit imposed on the amount property taxes
- can increase in any given year.

Combine that with the LACK of revenue sharing, and cities are hurting.

Not all cities are hurting. The cities that are hurting have spending problems, IMO.

My poster child for inappropriate spending is the City of Detroit's Human Rights Department. Human Rights is not a city function. Human Rights are important, but they are not achieved by municipal action. Policing is a city function. Dissolve Human Rights Department, and either put all the cash into police wages, or reduce the tax rate. But stop spending on things that are not city responsibilities, and do what you are responsible for well.

[O3H]

The issue of revenue sharing can not be dismissed so easily.

Cities attempted to sue The State of Michigan over the dollars $

The Headlee Amendment to the Michigan Constitution,
mandates Michigan pay 48.97 percent of revenues
--- to local units of government.

[O3H]

Municipalities across Michigan have experienced a
decline in Revenue Sharing funds in recent years as monies
have been diverted toward the State’s General Fund.