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Cities Flattened By Budget Axe

1,300 fewer street cops in Michigan, and other tales of rising costs, shrinking revenue

March 22, 2006 | By Charlene Crowell
Great Lakes Bulletin News Service


Dan Gilmartin says that state policy harms Michigan’s cities and villages more than the poor economy.

LANSING — These days, officials from Michigan’s cities and villages may be feeling like Sisyphus, the mythical character doomed to forever push a boulder up a hill, only to watch it roll back down again. Like that ancient figure, municipal officials again this year, as they have so often in the recent past, are trying to push back several big, budget-crunching boulders that threaten to flatten their communities.

The threats come from both the state and federal governments, which have long supported municipalities with, respectively, state revenue sharing and federal block grants. The new cuts, like the earlier ones, are both worrying and uniting local leaders across the state. Despite the fact that they live in very different worlds, Michigan’s big city mayors and small town managers display a similar exasperation: They say they are bearing the lion’s share of the state’s and the nation’s budget woes and cannot afford any more reductions.

That will be one of the strong messages emerging from this week’s 40th annual Michigan Municipal League Legislative Conference. And because the conference, entitled “Hot Issues, Bold Strategies,” will feature a keynote address today by Michigan Governor Jennifer M. Granholm, a Democrat, their message will have added urgency: The governor, like Republican President George W. Bush, proposes still more cuts for urban areas large and small.

Helping to craft a message of resistance is Dan P. Gilmartin, the executive director of the Michigan Municipal League, the non-profit advocacy group that represents 533 Michigan cities and villages. Just back from Washington, where he took part in last week’s Lobbying Day during the annual Congressional Cities Conference — and where the Bush administration’s proposed cuts to the federal Community Development Block Grants (CDBG) were a prime subject — Mr. Gilmartin and his statewide constituency will assemble at the Lansing Center and figure out a strategy to push the state Legislature to roll back Michigan’s revenue sharing cuts. Municipal officials say that the reductions, along with the ones the federal government is considering, would crush still more life out of Michigan’s many struggling communities.

When he’s not busy trying to prevent state and federal funding reductions or leading statewide conferences, Mr. Gilmartin directs the League’s programming, policy development, member services, and 40-member staff, which is split between offices in Lansing and Ann Arbor. Before he joined MML in 1996, Mr. Gilmartin served seven years as executive director of the Conference of Western Wayne, an intergovernmental colloquium of 18 communities which regularly discusses a wide range of mutual policy concerns, including environmental, public safety, economic development, and employment issues. He joined MML in 1996; served as its lead lobbyist in Lansing and Washington on transportation, land use, and urban redevelopment policies; and became its deputy director in 2000.

But long before he became executive director last March, Mr. Gilmartin had a reputation as a leader in urban revitalization, local government reform, and transportation policy.

So it was not surprising when, in 2003, Governor Granholm appointed him as a voting member of the Michigan Land Use Leadership Council — the bipartisan panel that the governor charged with finding ways to solve the state’s raging sprawl problem. In that position, Mr. Gilmartin pushed hard for adopting Smart Growth tenets in place of the state’s many fiscal policies that subsidize sprawl and, with it, the abandonment of cities, towns, villages, and their publicly financed infrastructure.

What is surprising, however, is that he now finds himself pushing the governor to withdraw proposed budget cuts that Mr. Gilmartin says will accelerate sprawl by hastening the decline of cities, towns, and villages—the very same trend that the council was most concerned with reversing.

Since she became governor, Ms. Granholm’s budgets have continued to reduce the state’s revenue sharing with its municipalities. This year she is proposing the largest cut yet—$600 million or approximately half of that annual line item’s remaining budget. Over the past five years, including the three that she has been governor, state revenue sharing has dropped by more than $1.5 billion. Combined with recent federal cuts — which have reduced Michigan’s CDBG program from $155.7 million annually to $133.2 million between 2004 and 2006 and could well chop that amount by another 25 percent in the next fiscal year — cash-starved municipalities are struggling to maintain essential services.

In all, Michigan has 48 so-called “entitlement communities” that automatically receive those federal dollars. The strikingly diverse list includes Detroit, Grand Rapids, Clinton and Waterford Townships, Kent and Washtenaw Counties, and smaller communities like Holland, St. Clair Shores, Port Huron, Midland, and Niles.

Amid the hustle and bustle of final preparation for his organization’s statewide conference, Mr. Gilmartin reflected on what lies ahead in this legislative session, as well as on the future of Michigan’s cities, towns, and villages.

Question: How would you describe the current conditions of Michigan’s cities? 
Mr. Gilmartin: I think they are struggling, I don’t think there’s any question. And not for the reasons the general public might think. It’s not just the economy.  The struggles have more to do with the fiscal and economic environment created by the state. That is much more of a problem — even more so than the economy. 

The 2000 Census marked the first time that the number of people living in Michigan’s suburbs and townships exceeded the number of people living in the state’s cities. How does that kind of population shift affect the work of the Michigan Municipal League — particularly on the issues your organization advocates?
Certainly some population growth is good for areas and the state. But when unsustainable growth patterns are spurred by state policy and those policies make it easier to invest in greenfield areas instead of cities, that becomes a problem. You wind up with landlocked cities whose revenues are capped in a state financial structure that does not allow them sustainability.

State revenue sharing has been a program repeatedly cut in recent years.  How have these funding reductions affected your members?
The obvious and glaring example of state revenue sharing cuts is in the area of public safety. We have 1,300 fewer police officers on the street in Michigan today than we did on 9/11. During that same time, we have created the third largest department in the federal government (Homeland Security).  It takes three hours to get through an airport, and you can’t watch the evening news without a homeland security story.

But the first responders, local police, aren’t there in Michigan anymore because our financial structure for local governments is broken. People are shocked when I tell them that number. It’s counterintuitive to everything they hear.

So as these state budget decisions are negotiated, what does MML need for both the governor and Legislature to understand?
Short-term, they need to fund revenue sharing at a higher level. We’ve suffered $1.5 billion in cuts over the last five years. The governor’s recent budget proposal calls for another $600 million from full funding levels. Communities won’t survive this trend much longer.

Long-term, they’ve got to change the municipal finance system because of the cuts to revenue sharing and the caps on property taxes revenues — the Headlee Amendment.

When you put all of that together, it means you have little or no revenue growth in communities that are already built out. It’s crazy, but the only way for a local unit of government in Michigan to be assured of new revenues is to build new. The system doesn’t adjust much for the level of services demanded by residents and businesses or for the cost it takes to provide them. 

Michigan’s system is bad for all communities. Detroit, Grand Rapids and the older suburbs are facing the budget issues now. Livonia and Farmington will face them in five years. Today’s high growth communities will face this dilemma in 10 to 15 years. But everyone is eventually going to get there.

Bottom line: The system is simply not built to last and until it’s fixed we will continue to see lots of communities struggling to get by.   

What about reauthorization? How soon will the Legislature revisit revenue sharing funding formulas?
The formula expires next year for cities, villages, counties, and townships.  The issue of formula will be with us over the next 18 months or so. For now, though, the problem isn’t the formula. It’s the money in it.

At the same time that state revenue sharing has been cut, a federal program serving much of Michigan HUD’s Community Development Block Grants has also facing severe cuts.  How do community development block grants help local communities?
Immensely.  They are jobs creators; they do that all over the state. Whether you’re a large or small community the CDBG grants help with infrastructure and redevelopment that makes Michigan’s whole economy better. The grants jumpstart redevelopment and leverage additional private investment. We worked with our Washington contacts last year to restore funding to the programs when it looked like they would surely be cut. We’ll have to work even harder this year. And we will.  

What are the financial consequences for the 48 cities and suburbs that suffer simultaneous reductions in these programs? And if more cuts are in store, what are the choices local communities will be left with? 
The financial consequences are many. That’s one of the reasons you see 1,300 fewer cops on the street, delays in updating older infrastructure, slower progress on redevelopment activities, and community programs closing.

People need to understand that the services that are most important to citizens and businesses — safe streets, the roads that we drive on, the water that we drink, the parks that our children play in — are all provided at the local level. Lessening a community’s ability to provide these services in a quality manner is a huge negative for our economy and a big step backwards for our quality of life. People need to understand the choices that are being made and demand change.

Let’s shift from budgets to economic development tools. Last year, the U.S. Supreme Court upheld governmental authority to use eminent domain for economic development. Michigan’s November ballot will include an initiative on eminent domain. What is eminent domain? How is it used in Michigan?  And did last year’s Supreme Court decision have any impact on Michigan’s statutes?   
Eminent domain is basically used as a last resort to assemble property in an urban environment. It’s a tool that needs to be used very judiciously by government and is rarely used in the state of Michigan. But it has been used for redevelopment. The Court’s decision got a huge over-reaction in Michigan and across the nation. It did not grant new powers. It did not affect the statutes; but it did jump-start a campaign to put the issue on the ballot.

Unfortunately the quick property rights argument is easier to grasp than the long-term urban economic development strategy.  

As a member of the Land Use Leadership Council, how would you rate the results Michigan has seen, both in executive and legislative actions? In your view, what remains to be done?
In terms of results, my grade would be an incomplete, but I think that is to be expected. The council was the first major, statewide attempt to look at the problem and identify solutions. It’s still an ongoing project. That in itself is good. But to date, much of what was talked about has not been debated around the Legislature in any meaningful way.  

One important recommendation that needs to be taken up is the concept of “commerce centers.”  Commerce centers would direct very precious state resources and state development tools to those areas that can sustain development over the long run. That’s about sustaining job creation and our economy; but also about preserving our open spaces. Sooner or later, its time will come with the Legislature.

How can citizens and local communities help?
They can be informed. With term limits in the Legislature, many races that were formerly foregone conclusions are very much in play. It is incumbent upon local officials and citizens in general to understand these issues and know why they’re good for Michigan.  Then they can put policy makers in place who will act on them.

What lies ahead for Michigan’s cities? 
Well, I’m quite optimistic about a lot of the work that’s happening in communities right now, in spite of the financial problems. There are a lot of talented people working in local government. And we’re seeing groups like Detroit Renaissance providing excellent private-sector regional leadership, too.

The state would do well to partner with cities on important issues like drawing young people to our state, attracting members of the creative class and certain high technology industries.

From a jobs standpoint, there’s a national trend back towards cities that we in Michigan would be wise to embrace. When businesses look to locate their operations, more and more they are looking for quality infrastructure, a talented workforce, and a vast array of top-notch public services. Cities, if allowed, can provide all of that. 

When you see other cities and regions around the nation that are thriving, it’s because they offer that kind of quality environment. And that type of environment required thoughtful initial investment from local, state, and federal sources.

Charlene Crowell is the Michigan Land Use Institute’s state policy director.

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