U-M Ford School poll: Most local leaders in Michigan report ongoing financial woes

Oct. 19, 2011

U-M Ford School poll: Most local leaders in Michigan report ongoing financial woes

ANN ARBOR, Mich.—Nearly half of Michigan’s local governments say they are somewhat or significantly less able to meet their financial needs in 2011, though some negative trends eased this year, a new University of Michigan survey reports.

Although 48 percent of the local leaders reported having fiscal struggles, the percentage was lower than those reported during the past two years, the survey from the Gerald R. Ford School of Public Policy says.

Last year, 61 percent of the jurisdictions reported declining fiscal health, while 52 percent did so in 2009, according to the polls in the Michigan Public Policy Survey series.

The easing trend can be interpreted in different ways. Optimistically, it may mean the fiscal crisis that has been hitting local governments peaked in 2010. Another interpretation is that local governments are better able to meet their financial needs because of cuts in employees and services.

Despite the easing trend, local leaders are still worried, with 50 percent predicting their jurisdictions will be less able to meet their fiscal needs in the coming year compared to their ability this year.

Although the large percentage is a significant concern, it is smaller than those reported in the two previous fiscal surveys. Last year, 65 percent of the jurisdictions predicted declining fiscal health, while 62 percent did so in 2009.

The ongoing pessimism is being fed by a variety of financial challenges. This year’s survey says:

o 74 percent of the jurisdictions reported continued declines in revenue from property taxes.
o 61 percent of the local governments reported declines in state aid.
o 56 percent reported an increasing number of home foreclosures.
o 47 percent said tax delinquencies were a growing problem.

As revenue declines, many local governments reported facing more pressure to spend on infrastructure, human service and public safety. The cost of health care benefits continues to climb, though only 50 percent of the jurisdictions reported in 2011 that they offer any kind of fringe benefits to their current employees.

Local governments are dealing with the financial challenges by cutting back on services and staffing; raising charges for fees, licenses and permits; collaborating more with other jurisdictions; and having employees pay more of their medical costs.

The poll was done by the Ford School’s Center for Local, State, and Urban Policy. It was conducted from April 18 to June 10 and involved online and hardcopy surveys sent to the top elected and appointed officials in all counties, cities, villages and townships in Michigan. A total of 1,272 jurisdictions returned valid surveys, resulting in a 69 percent response rate. The margin of error was plus or minus 1.5 percentage points.

The report is available online at http://closup.umich.edu