Cities looking to Lansing for fix to loss of millions in revenue sharing

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Howell City Manager Shea Charles makes no bones about it. He’s frustrated, big time.

How big?

About a quarter of a million dollars’ worth annually for the last dozen or so years.

That’s the amount of state shared revenue that Howell has been missing out on, on average, each year since its “peak” year, 2001, Shea said, when Lansing handed down $1.2 million to the city.

Howell City Manager Shea Charles

“Since then, it’s been almost $250,000 less per year than where we should be — and the world isn’t getting any cheaper,” he explained, noting the projection for 2016-2017 for Howell is some $846,000. Last year, the city got approximately $803,000 from Lansing, when a fully-funded amount would be approximately $1.2-$1.3 million, Shea said.

Sales tax is the source of state shared revenue, channeled down as “constitutional” — from a formula based on population and that can’t be adjusted without amending the state constitution, and “statutory” -— an amount that legislators can, and do, change.

Those statutory dollars are what Lansing is using to satisfy its balanced budget requirement, while local governments are left bearing the burden, Shea said.

“The state has been balancing its budget on the backs of local municipalities … and scolding us, saying we are inefficient,” he said. “(Legislators) are reallocating funds to plug budgetary holes and telling us we’re not being efficient.”

The revenue declines have resulted in staff cuts — including police officers and public works employees — and deferred capital projects such as infrastructure improvements that will only get more expensive, Charles said. And it’s an economic situation that’s unsustainable — not only for Howell, but for municipalities throughout the state.

“At some point, a heavy bill is going to come due,” he said. “At some point, it’s going to break.”

Brighton City Manager Nate Geinzer

The City of Brighton is similarly strained by the state shared revenue totals. A near $2.3 million difference in payments received and what would have been handed down if statutory payments were fully funded accumulated between 2003 and 2015. Statutory shared revenue totaled $235,317 in 2003, compared to just $53,507 in 2015. Totals for those years — constitutional plus statutory — were $682,026 and $620,691, respectively, meaning fewer dollars than what the state shared a dozen years earlier.

“The biggest impact I have seen is the degradation of our roads, municipal buildings and equipment in an effort to try and hold other priorities harmless,” said Nate Geinzer, city manager. “We have not made any major investments in capital improvements in nearly a decade, and it shows.”

Compounding the problem are the constraints of Proposal A, which caps property taxes at the rate of inflation or 5 percent, whichever is less, and the Headlee Amendment, which limits tax revenue growth to the inflation rate. Both cause an ongoing drag in recovery from the recession of the early 2000s, when the housing bubble burst and property values plummeted, Charles said.

“No one envisioned the free-falling, cascading values,” he said. “Because of Proposal A and Headlee, it’s going to take 20 years before our taxable values come back. They say it’s our new reality, to reset — but that defies logic.”

The solution, however, lands on state legislators’ shoulders, Charles said.

Jordan Genso

“It’s time to revisit and modify Proposal A and Headlee — we have to get back to where we were before the recessions,” he said. “And that’s going to take legislative initiative, legislative fix. Right now, we have both hands tied behind our backs, and they just hit us more.”

Forward Action Michigan’s Jordan Genso, community activist and Brighton resident, also believes the onus is on state lawmakers to address the financial challenges communities are facing.

Speaking before the Brighton City Council at a recent meeting, he said he’s “kind of fed up with our elected officials in Lansing … the state needs to step up and do a better job making sure our communities are (fiscally) healthy.”

State Rep. Hank Vaupel

Yet state Rep. Hank Vaupel, R-Fowlerville, has a different take on the issue.

While explaining that his role is “on the policy side, rather than appropriations” — where the budget is hammered out — Vaupel said that, overall, shared revenue is gradually creeping up.

“Some has been reinstated (in recent years), but not rapidly,” he said, adding that the intent is to continue that trend.

“The goal on everybody’s part is to restore shared revenue as best as possible to local units of government,” Vaupel said.

“Everybody understands budgets are tight, and one way of increasing revenue is to raise taxes. But that’s not on anybody’s radar.”

Calls to state Sen. Joe Hune, R-Hamburg Township, and state Rep. Lana Theis, R-Brighton Township, were not returned prior to publication.