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Monday, November 29, 2010

Michigan Municipal League's CEO Dan Gilmartin on Financial Challenges

Below you will find a nice summary of comments from Dan Gilmartin, the CEO for the Michigan Municipal League (MML). Dan's got a great perspective on the current financial troubles facing communities all across Michigan and how it relates to state government.  This is must reading for any Michigan resident concerned about the future of our state and for citizens seeking government reform.  The comments below are quoted from MML:

November 23, 2010 15:00 by Matt Bach

Michigan Municipal League CEO Dan Gilmartin was the focus of a recent article on the financial challenges facing Michigan cities. The article in the Michigan Report by Gongwer News Services was posted online Nov. 22, 2010 and is only available to Gongwer subscribers. If you’re a Gongwer subscriber go here to view the story. But if you’re not a Gongwer subscriber let me summarize what it says.

The news angle for the piece was about the City of Hamtramck looking to seek bankruptcy protection and Gilmartin explained that many Michigan communities are struggling financially and looking at a variety of options. He said other cities and villages throughout the state have cut emergency services, ended services and closed parks as a way to keep their budgets balanced. "There's a number of communities around state that are in difficult straits," Gilmartin explained.

Gilmartin then explained how revenue sharing to Michigan communities has been continually cut by the state further adding to the financial difficulties. "The state has basically been balancing its budget for the last decade on the backs of locals," Gilmartin said. "That exacerbated the problem from the economy."
The term “revenue sharing” is a misnomer because the funds were intended to replace taxing authority that was taken from local governments. "It's not really a sharing situation; it's a partnership," Gilmartin told Gongwer. "That was a partnership that worked for decades, but when the state ran into its own problems, it hijacked the funds that came to locals."

Also adding to the financial challenges are current state laws in place that make it difficult for communities to consolidate services and save money. "If the state would allow for local units to do more in terms of consolidating services without holdups, we would be better off," he said.

Gilmartin also talked about the new leadership coming to Lansing and how the League and Michigan communities are “cautiously optimistic that we’ve got a group that’s going to listen to us in January.” He hopes the changes will get broad support because the fiscal problems are hitting communities of all shapes and sizes. “It’s not just core cities; it’s extending to the suburbs,” Gilmartin said. “They are not able to provide the levels of services that quite frankly will make us competitive.”

Matt Bach is director of communications for the Michigan Municipal League. He can be reached at mbach@mml.org or (734) 669-6317.

Mark's "two cents:"

First cent: Rogers City is not near to bankruptcy, but we have made cuts to services.  We have lost one police officer position and two public works positions through retirees not replaced.  We have reduced operational budgets.  We are subsidizing our Marina from the general fund.  The City Council has taken proactive steps to help our community become more efficient.  Together with other local partners, Rogers City has reformed fire and ambulence services, establishing  government "Authorities."  We have also invested in the most needed infrastructure. We are operating on a very thin margin.  If there were to be new major revenue reductions (revenue sharing cuts or loss of property tax revenue), then we will have no choice but to cut the city's work force further.  From what Gilmartin says, Rogers City is better off than many other cities.

Second cent: State government has an opportunity to restructure and reform.  This must be done for the long term health of local and state government.  We had a saying in the military: "it is above my pay grade."  At this time, none of us have the luxury of passing the buck.  Each person should demand the new state legislature and governor accomplish needed reforms within a year.  Certainty is the "mother's milk" of economic growth and development.  Swiftly done reforms will estalish certainty for the market place.  We need a simple, rational, and fair method to raise revenue and allocate expenses for state and local government.  Eliminate the current state revenue sharing formula, the Headlee Amendment, and Proposal A.  These forula were based on the asumption of ever increasing sales and property value.  We know those assumptions are no longer valid.  Give each community a fixed value for every dollar of sales tax raised in that jurisdiction.  For purpose of illustration only: if sales tax is six cents per dollar, then the state gets two cents, schools get two cents, a city would get one cent, the county a half a cent, and village or township a half cent.  Real property tax would be set by local control and subject to the local voters.  Locals know what they would be able to raise and what they need to spend.        

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