Michigan local government officials report complex mix of improvement and decline in fiscal health, but with overall trend moving slowly upward

October 2017

This report presents Michigan local government leaders’ assessments of their jurisdictions’ fiscal conditions and the actions they plan to take in the coming year given their financial situations. The findings are based on responses from nine statewide survey waves of the Michigan Public Policy Survey (MPPS) conducted annually each spring from 2009 through 2017.

Key findings

  • Overall, Michigan local governments’ fiscal health appears to have improved slightly this year, after last year’s reversal from prior trends of gradual improvement. Statewide, over a third (35%) of local governments say they are now better able to meet their fiscal needs than they were last year, which is up from 31% who said the same in 2016. Meanwhile, 18% say they are less able to meet their needs this year, down from 22% last year. 
    • However, when looking at the number of jurisdictions with improving health minus those with declining health, the greatest overall gains this year are found among the state’s smaller jurisdictions. Michigan’s mid-size and larger jurisdictions saw less overall improvement, or even net declines this year. 
  • Most Michigan local governments (63%) self-rate their current level of fiscal stress as relatively low, although this is down slightly from 64% last year and 66% in 2015. Meanwhile, local leaders in 9% of Michigan jurisdictions—approximately 167 local governments—say that they are currently experiencing relatively high levels of fiscal stress, up slightly from 8% last year and 7% in 2015. 
    • Around half of all Michigan county (48%), city (48%), and village (52%) officials rate their governments’ current fiscal stress as low, compared with 70% of township officials.
    • Among mid-sized jurisdictions (with between 10,001-30,000 residents), 12% of local officials currently rate their fiscal stress as high, up from 5% last year. And among counties, one out of five (20%) rate their fiscal stress as high, similar to last year (19%) and up sharply from 3% in 2015. 
  • Jurisdictions of all sizes report modest gains in property tax revenues compared with last year, although fewer report increases in state aid. Overall, local officials’ concerns regarding their current levels of general fund balances and cash flow remain relatively low. 
  • Few local officials report plans to increase overall service provision (19%), although this is up slightly from 15% last year. And while many continue to predict increased spending in particular service areas, the percentage who anticipate facing higher service needs in infrastructure (56%) and public safety (35%) outpace those who project actual spending increases (45% and 33%, respectively).
  • Looking ahead, optimism about general local economic conditions has increased (51% of local officials expect “good times” next year, compared with 46% who said the same in 2016). However, less than a third (29%) predict that their own local governments will be better able to meet fiscal needs next year, while 22% believe they will be worse off. 
  • Further down the road, jurisdictions with low fiscal stress today are confident they will also face little stress in five years (80%) but among those with high fiscal stress today, pessimism about the future appears to be growing.