State Takes Minnow-Bite From City’s Budget, Lobbyist Cries 'Shark'

Bloomberg News recently ran a story about the city of Kalamazoo asking for private donations from wealthy residents for, as the news outlet called it, a “bailout” to shore up city finances. The individuals responded with the idea of creating a $500 million endowment that would, as Bloomberg said, keep the “city afloat indefinitely.”

The story then repeated claims from a taxpayer-funded lobbying group for cities, including Kalamazoo, that the city’s budget woes are the fault of the state.

It stated: “Kalamazoo’s budget woes are, in fact, the creation of the state. In recent decades, Michigan has kept an increased share of the revenue it receives from municipal taxes while prohibiting cities from raising property-tax assessments faster than the rate of inflation, according to Richard Murphy, a program coordinator with the Michigan Municipal League, a nonprofit advocacy group.”

ForTheRecord says: Media stories about local government finance rarely look at the total picture of a city’s overall income and expenses. That failure makes it easy to unintentionally paint an overly simplistic or false picture.

In the case of Kalamazoo, total city revenue rose from $102.57 million in 2007 to $108.03 million in 2015. It was an increase, but when adjusted for inflation it’s actually a $9.2 million cut in 2015 dollars.

Kalamazoo’s portion of state revenue sharing money also decreased, but by a much smaller amount. The city went from getting $9.97 million in 2007 to getting $8.55 million in 2015. Most of this money is allocated on a per capita basis, as required by the Michigan Constitution.

That wasn’t in the Bloomberg story. The story also didn’t tell readers that Kalamazoo has various revenue sources, some of which were going up, not down.

For example, what the city calls “charges for services” — which includes fees for sewer, water, golfing, a city market and cemeteries — went up from $5.86 million in 2007 to $13.83 million in 2015.

That increase of nearly $8 million in annual revenue from fees occurred during the same period that Kalamazoo’s share of state revenue sharing was down $1.42 million. The point is, cities have multiple revenue sources, some big and some smaller.

In this case, the lobbyist organization funded by Michigan city governments is shifting the blame for Kalamazoo’s current budget challenges to one of the smaller changes in the city’s income — but money that happens to come from the state.