Broken Municipal Finance

[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.

[Wesley Mouch]

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.

So help me here. What percentage of revenue is now being sent to local governments? Is the above or below Headlee?

[O3H]

Significantly BELOW the last few years, breaking the constitutional law
--- more than $1-billion shortfall to municipalities.

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

http://www.detroitnews.com/story/opi...ring/98873392/

[BankruptcyGuy]

Significantly BELOW the last few years, breaking the constitutional law
--- more than $1-billion shortfall to municipalities.

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

http://www.detroitnews.com/story/opi...ring/98873392/

It is not particularly likely that this lawsuit will have any positive result for municipal governments.

Beyond that, the state is required to have a balanced budget. If more money is directed to city/village/township governments, less money will be directed somewhere else. I think people often confuse state government rules [[no budget deficits) and federal [[spend as much as you want!).

Localities have a method to raise revenue for operations--pass a new tax. It's a little disingenuous to say that the solution to THAT problem, that the residents don't want to pay more taxes, is to somehow make the money come from the state.

[O3H]

It helps to know the rules

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

In 1994, Proposal A was enacted by a statewide vote. This changed the formula for property taxcalculation. With the passage of Proposal A, the property tax was stabilized. In fact, some of the taxburden was shifted from property to sales tax, which was raised from 4% to 6%.

Now if a city DOES NOT get its fair share from sales tax revenue
-- its basically screwed.

Proposal A capped everyone’s property tax at the 1994 rate and said that increases could only go up bythe rate of inflation or 5% whichever is less. This number, the increase in your property value for taxpurposes, would be called your Taxable Value.

[BankruptcyGuy]

Ok, some clarification, then:

Voters in a municipality can raise taxes, but only by a vote of the people. They can vote such an increase in one of two ways:

a. a new tax for a particular purpose or general purposes; or
b. a "Headlee override," where the rate is increased back to its previously-authorized limit, reflecting a "rollback" of the effects of the Headlee Amendment, which reduce the millage rate as property values increase.

Are you suggesting that this is incorrect? The internet is always awful in conveying tone.

[Ray1936]

I'm amused at some of the posts expressing horror at the wonderful health care benefits public employees receive.

Better do your homework.

When the C of D went bankrupt, I completely lost my health care benefits. Fortunately, after retirement, I went to work in a private sector area and got in my 40 quarters of SS, so I qualify for Medicare. Many other retired police and fire retirees do not. I also pay 300+ for a medicare supplement for myself; wife has to pay 250 [[a month) for her supplement.
The only health care benefit I receive from the C of D after 29 years in the DPD is $85 a month for both of us; which barely offsets what we pay for Medicare supplement. And I'm in the more fortunate area; most other DPD and DFD retirees are really hurting.

Take your shots. What I get is sure not what I was promised in 1955, but who cares about old people anyway?

[erikd]

I'm amused at some of the posts expressing horror at the wonderful health care benefits public employees receive.

Better do your homework.

When the C of D went bankrupt, I completely lost my health care benefits. Fortunately, after retirement, I went to work in a private sector area and got in my 40 quarters of SS, so I qualify for Medicare. Many other retired police and fire retirees do not. I also pay 300+ for a medicare supplement for myself; wife has to pay 250 [[a month) for her supplement.
The only health care benefit I receive from the C of D after 29 years in the DPD is $85 a month for both of us; which barely offsets what we pay for Medicare supplement. And I'm in the more fortunate area; most other DPD and DFD retirees are really hurting.

Take your shots. What I get is sure not what I was promised in 1955, but who cares about old people anyway?

You are certainly correct that you do not get what you were promised in 1955, and you are not wrong to be upset about that broken promise. However, you might be placing the blame on the wrong group of people.

In 1955, the city of Detroit had around 50% of the entire metro population living within the city proper. At that time, your fellow city residents were most likely not considering the fact that most of them would flee the city over the next few decades.

By 1980, only 27% of metro Detroit's lived in the city proper, and by 2010, it was down to 17%.

This massive migration out of the city was largely a movement of people who are of the older generations. In recent years, the population loss has slowed dramatically as the younger generations have slowed the movement out of the city, and even reversed the trend, and are repopulating the city that their parents and grandparents generation fled in droves.

It is not the young people that are to blame for the population losses and the resulting destabilization of the city finances that led to the slashing of your benefits. This is the result of the choices and actions of your fellow senior citizens that caused this to happen.

"Who cares about old people" you ask? Well it certainly wasn't your fellow senior citizens, because they never gave a second thought to your retirement benefits on their way out of the city, as they moved in droves to new low-tax suburbs that didn't have to spend a bunch of money on pensions and retiree benefits.

[O3H]

BankruptcyGuy - votes first, for his city tax increase - we'll all watch the experiment

One ramification of the Headlee Amendment
is the differentiation of state and local taxes.

Section 26, of Article IX, of the 1963 Constitution
placed a limit on the growth of total state revenues.

http://crcmich.org/tax-outline/

Little cities get little infrastructure .....no funding = no flushing toilets
Ask who pays for MIDD and OMIDD upgrades, etc.

No flush , no problem - get a 5 gallon plastic bucket
http://www.nthconsultants.com/omid.html

Okay, everyone pays right....errr, not exactly
http://www.freep.com/story/news/loca...irs/101444502/

http://www.mlive.com/news/index.ssf/...ure_needs.html

Who has money, who wants to pay, step UP be brave...............

http://image.mlive.com/home/mlive-me...12710d41cc.png

[O3H]

Michigan is one of the Premier water states in America.......

Water is life. It nourishes us. It cleans us and sustains us.

• The average American uses 176 gallons of water per day—that’s 64,240 gallons a year !
• 40% of water in America is used to produce the food we eat and the beverages we drink.
• How is water used in your home? On average, 17% goes toward showering, 27% is used by the toilet, your faucet drains 15%, your clothes washer another 22%, miscellaneous needs take up 5%, and those pesky leaks steal another 14%.
• If drinking water and soda pop cost equally, your water bill would skyrocket more than 10,000%.

Are you, __ yes you__, paying taxes for you - or everyone in, near, around you ?