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Former state treasurer blames "hostility" toward Michigan cities for financial struggles

Feb 5, 2016

Credit Matthileo / Flickr - http://j.mp/1SPGCl0

Former Michigan Teasurer Robert Kleine added another layer to the debate about what caused the Flint water crisis. Decisions made by Flint’s emergency manager led to the water crisis, but Kleine says the EMs aren't given enough tools to fix the problems in these struggling cities.

In his op-ed in The Washington Post, entitled "Rick Snyder isn’t the only Michigan leader who abandoned Flint," he says the state government’s “hostility” toward cities and revenue sharing cuts is making the job of an emergency manager that much harder.

“When a city has no tax base, an emergency manager is not going to be successful,” said Kleine during an interview with Stateside. “We’ve had emergency managers in the same cities several times. They can maybe make a short-term difference but then a couple years later, the city is back in the same financial mess.”

Kleine, who was the state treasurer for four years under Gov. Jennifer Granholm, cited a study conducted by Michigan State University that said the state of Michigan has some of the most severe restrictions on the revenue-raising ability of local governments of any state in the nation. In addition, the state government has cut revenue sharing payments to local governments over the last 15 years. A law was passed in 1998 that gave local governments 21.3% of the sales tax (4% at the time), but since then, he said, that revenue stream has been cut by $585 million.

With cities like Flint losing money as a result of revenue sharing cuts and a shrinking tax base, emergency managers have swooped in try to fix what, Kleine says, might not be a fixable problem in the current political and financial climate.

Needing to cut costs, former Flint emergency manager Darnell Earley made the decision to switch the city’s water source to the Flint River, which set in motion a chain of events that ultimately led to the current water crisis.

“They were looking to save money any way they could, which they probably wouldn’t have had to do if we would have given our cities the ability to raise their own revenues or kept revenue sharing funded at the level that it should be funded at,” said Kleine.

Listen to the full interview to hear Kleine explain more about his views on the financial challenges facing Michigan’s cities and what steps he would take to begin fixing them.