Michigan Cities Suffer
Declining Health (Part 1)
October 28, 2011
There seems to be a growing consensus that healthy Michigan cities are vital to our common welfare as Michiganians. We largely understand now that successful cities and their metropolitan areas are where talent and innovation concentrate, where capital and productivity converge, fueling growth in this new economy.
We — Yoopers and Trolls, Eagles and Broncos, even Spartans and Wolverines — now agree that Michigan cannot prosper again until Detroit does, too. A 2011 EPIC-MRA poll found 72 percent of us (including 67 percent of Republicans and 82 percent of Democrats) share that common view.
Wait, what? We agree?
We do. On a big idea.
But the reality in 2011 is that many of our cities and their local governments are in a period of retrenchment and declining health. This column — the first in a two-part series — focuses on that decline.
Urban challenges abound, from persistent unemployment and homelessness to crime, pollution, inadequate public transit, and so much more. Residents depart, draining the lifeblood and slowing the urban heartbeat, while blight and failing infrastructure deposit scar tissue. Meanwhile, years of falling revenues coupled inversely to rising service demands and costs for service provision have taken their toll, widening the gap between needs and abilities.
This flagging urban health, though due to numerous factors, is worsened by disinvestment. Generally, to get more of a thing — such as healthier, more vibrant cities to boost our general welfare — one invests in it. But collectively we’ve spent a decade disinvesting from our cities, particularly in the form of revenue-sharing cuts from the state.
The Michigan Public Policy Survey (MPPS) at the Gerald R. Ford School of Public Policy has surveyed Michigan’s local government leaders for the last three years, tracking what happens in the wake of disinvestment amid these kinds of problems. No great surprise here: what happens is retrenchment and failing health. But other things happen, too, including adaptation at the local level — the focus of my next column.
The retrenchment shows up in survey findings of ongoing reductions in staffing levels, service levels, and the overall capacity of our cities to meet their local needs. The spring 2011 MPPS found that about two-thirds of city leaders say they are less able to meet their fiscal needs this year compared to last year. And 71 percent predict they’ll be even less able to meet their needs next year. This atrophy is reported by majorities of cities of every size, in every region of Michigan.
In terms of revenue problems, 88 percent of Michigan’s city leaders say they collected less property tax revenue this year compared to last year. Every single one of Michigan’s largest cities report this problem, including 57 percent who say these revenues decreased “greatly.”
Eighty-seven percent also report decreased aid from the state in 2011. Again, this includes huge majorities of cities from the smallest to the largest, in every corner of the state. And, of course, these newly decreased revenue levels are below and beyond previous cuts absorbed in recent years. In fact, the state’s statutory revenue sharing to local governments (mostly cities) has been cut by more than $600 million over the last decade. Six hundred million dollars. Almost 10 straight years of cuts. That’s a long, steep slide. It’s also a lot of potholes not filled and a lot of human service needs not met. It is a lot of disinvestment.
On the cost side, employee health care is a major burden with cost increases affecting over three-quarters of Michigan’s cities this year. And those continuing cost increases are above and beyond earlier increases reported by 78 percent of cities last year, and 80 percent the year before that. Health care costs are eating cities alive, and have been for a while.
Increasing costs for employee pensions are another major source of fiscal stress, reported this year by two-thirds of Michigan’s biggest cities. These rising health care and pension costs may have been manageable when revenues were rising, but today is different. In the zero-sum world of 2011 they come at the price of lost investment opportunities in things such as infrastructure, public services, or economic development, all areas of great need.
And the needs are growing ever greater. About two-thirds of all Michigan city leaders, including three-fourths of those from our biggest cities, say their jurisdictions’ infrastructure needs increased this year. Half say human service needs increased this year, too, again including nearly 75 percent among the state’s largest cities. In the now familiar pattern, this year’s increased needs come on top of similar increases experienced in 2010, which in turn came on top of earlier increases in 2009. Things are piling up.
Of course, our cities’ declining health results not just from macro-economic trends that have decimated their manufacturing jobs and housing markets. Nor just from state policymakers slashing aid to local governments. Flush times in the past certainly led to local government spending decisions that are no longer sustainable today. In particular, generous employee and retiree benefits awarded by local policymakers during better times are now coming back to haunt cities, like a slow-growing disease that strikes abruptly after years of quietly festering.
The bad news is abundant. Our cities are suffering, and we need them to thrive. Thankfully, there is good news, too. Michigan’s cities are also adapting to these challenges in important ways. Next time we’ll look at that hopeful side of the story.