Why you are getting less from local government

Sep 19, 2016

If you’ve been living in Michigan for a while, chances are that you have noticed a drop in the quality of services you are getting from local government. I’m not just talking about distressed cities like Detroit or Pontiac, I’m talking about everywhere.

Well, guess what. You think you are getting less because you are. Some of that has to do with the mentality that all taxes are bad, even when not levying them costs us more than the tax would, as is the case with the roads.

But it also has to do with a flawed financing system and a now-dead insurance executive who sponsored a measure that has played havoc with government funding.

I got the exact dimensions of the problem this weekend from Bill Anderson, a government and finance operations specialist for SEMCOG, otherwise known as the Southeast Michigan Council of Governments.

He posted an article on SEMCOG’s blog with the shocking details.

Spending by all units of government has declined dramatically over the last quarter-century, and especially the last ten years, compared to the rest of the nation. We are definitely paying public servants comparatively less. We were the 13th best state for public salary levels in 1992; twenty years later, 37th.

There may well have been some fat in the system, but it is clear that for a talented young administrator, government service is a lot less attractive than it was.

But not all governments have suffered equally. State payrolls, for example, have increased only about half as much as the national average, but they have kept pace with inflation.

However, the bottom fell out for Michigan cities, towns and villages. They saw their total payrolls cut by one-third over a single decade, from 2002 to 2012. We’re not talking about inflation-adjusted dollars either. They’ve been providing less in the way of services because they haven’t had the money to do it. Much of this was due to the great recession.

But here’s the insurmountable problem they face. To quote SEMCOG’s Anderson: “The concern of Michigan’s local governments in that the state’s financing mechanisms … do not allow a recovery from the impact of the recession.” This is largely because of something called the Headlee Amendment, the brainchild of the late insurance executive Richard Headlee.

Headlee was a flamboyant conservative who lost a race for governor in 1982. But four years earlier, he was far more successful at getting voters to adopt something called the Headlee Amendment, which puts severe limits on the property tax revenue collected by local governments.

Some limits were, in fact, probably needed at the time. But the problem is this: Revenues fell like a rock when property values plunged during the Great Recession. But Headlee puts huge restraints on the ability of government to recover those revenues once values start increasing again. What goes down doesn’t go all the way back up.

The result has been a disaster when it comes to services we want government to provide. The prognosis, as Anderson notes, is that unless we change the state constitution: “(Our) ability to provide basic services … are likely to continue on a path of decline compared to the rest of the nation.” Good luck attracting new jobs to our state.

Jack Lessenberry is Michigan Radio's political analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.