Michigan earns a ‘D’ grade for finances
Truth In Accounting ranks state 35th out of 50 for financial health
If Michigan needed to pay all its bills, every taxpayer would have to pay $7,600.
That’s according to a new analysis from Chicago-based Truth In Accounting, a think tank that analyzes government financial reports. Truth in Accounting gives the Wolverine State a “D” grade in its 15th annual Financial State of the States report.
According to the report’s A-through-F grading scale, any government with a ”taxpayer burden” between $5,000 and $20,000 earns a D. The report uses the term "taxpayer burden” to include the amount required to pay off all a state’s debt.
In 2023, Michigan’s finances improved by $12.5 billion when reported revenues exceeded expenses, and liabilities for pension and retiree health care decreased due to changes in actuarial assumptions. Michigan had $46.9 billion available to pay $75.1 billion worth of bills, leaving a shortfall of $28.2 billion. If that amount is divided by every Michigan taxpayer, each would pay $7,600. Most of that debt stems from unfunded pensions and other post-retirement benefits to public workers.
The largest improvement in the state’s financial condition related to decreases in unfunded pension and retiree health liabilities for the Michigan Public Schools Employees’ Retirement System. Those decreases occurred thanks to changes in the economic, demographic and other assumptions used to estimate future benefit payments. That good news evaporated this year after a drastic cut by the Legislature in funding for pension liabilities.
Michigan ranked 35th out of 50. The state isn’t alone. TIA says 27 states don’t have enough money to pay their bills.
For most states, this report is based on the audited Annual Comprehensive Financial Reports for fiscal year 2023, showing the most recent information available.
State fiscal mismanagement harms taxpayers, as well as public employees such as teachers, firefighters, and police officers, who count on pension and health care benefits for their retirement.
“Most states’ financial conditions improved in fiscal year 2023,” Sheila Weinberg, founder and CEO of Truth in Accounting, said in a statement. “But the states should focus on bolstering their retirement systems so they can weather market downturns and other economic uncertainties in the future.”
The report features a broad range of state spending approaches, which yield a variety of results. Connecticut moved into last place because it needed more than $64.9 billion to pay its bills. If you were to divide that figure by the number of Connecticut taxpayers, the taxpayer burden is $44,300. Conversely, North Dakota had more than enough money to pay its bills, with a taxpayer surplus of $55,600.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
There’s something wrong with Union Township: Part 2
Township wanted residents to build a road and water line to sell land
Last week, we highlighted problems with the Union Charter Township government, including a pervasive anti-growth attitude toward new developments. One family’s struggle with local leaders illustrates the extent of the township’s overreach.
The brothers William, Richard, Ronald and Robert Ervin own land in the township. These local developers have twice been kept from developing their property by local government. In two separate instances, the township effectively regulated away the value of property the Ervin brothers wanted to sell.
In 2023, the brothers wanted to divide their 40-acre parcel into two parts so they could sell one part to a younger relative. The township, however, refused to grant the requested land division. Employees claimed that the intended development (the construction of a home) was contrary to both the township’s zoning ordinance and its master plan.
Local governments frequently use zoning ordinances and master plans to manage and control development. A zoning ordinance restricts how a property can be used, while a master plan is a long-term guide.
According to the Ervin brothers, the township would grant permission to divide the land, but only if their prospective buyer would build a road, ending with a cul-de-sac, on his property. Township employees also wanted the buyer to build out a public water line, at his expense, that could be tapped if future growth occurred on the remaining, adjacent 30–acre parcel.
According to the prospective buyer, extending the current road and adding the cul-de-sac would have cost approximately $100,000, a steep price for land valued at $60,000. Installing a water line that would serve future development by others would be an additional expense, far greater than the cost of getting a line to his own house.
Union Township officials denied the allegations.
“The Township Administration does not engage in foot-dragging or stifle or stymie land development,” the township told Michigan Capitol Confidential in an email. “The allegation of possible retribution is abhorrent and false. The Township Administration strives to ensure that all who interact with staff are treated with respect and with a focus on a successful outcome for any issue or challenge that needs resolution.”
Township employees also appear to be interested in having the Ervins build a quarter-mile road as part of the larger land division, according to a letter the township sent to William Ervin. The letter cited the township master plan, which included a street to Lincoln Road, a much larger thoroughfare.
The Ervins disagreed with the township’s decision to deny their request to divide the land, and they hired a lawyer to argue their case before the township’s Zoning Board of Appeals. The brothers won their appeal quickly, but they and their buyer chose not to proceed with the sale. Once again, the township was the issue.
The township’s master plan and its requirements made the development of the younger Ervin’s property untenable. Though the brothers won the land division they sought, they had no solution for the township’s demands for extending the public water line or building a road. For this and other reasons, the parties chose not to complete the sale.
Requiring property owners to build infrastructure for future public benefit is not the proper role of government. This is particularly true since a master plan is merely a guide for community development; it is not a holy writ to be followed without question.
After the brothers recognized that it would not be economically feasible to subdivide and sell their property, an interested potential buyer sought to acquire the entire 40-acre lot to build a nonprofit, private school. The sale would not have involved a property split or a lengthy new water line. It would, however, require the new owner to complete the same quarter-mile road the township raised with the Ervins, as well as expensive sidewalks of questionable necessity.
The private school leadership noted that the costs imposed by the township for “building the roads and sidewalks far exceeded the school’s projected budget.” It chose to consider the property no longer.
Once again, the township’s officious micromanagement effectively rendered Ervin’s property valueless. Insisting that any development on the land include excessively expensive infrastructure improvements that might someday benefit the public means that any potential buyer seeking to develop the property would have to be willing to spend more than its value.
Governments that choose to regulate land use through zoning should be aware that overregulation can quickly lead to community stagnation. Local governments must be careful to avoid overly restrictive rules that effectively prevent a parcel of land from being used or developed for a reasonable purpose. Unfortunately, the Ervins have found themselves in just such a situation in their dealings with Union Charter Township. Even worse, they are not the only ones.
(Editor's note: This article has been updated to add a comment from Union Township. Click here for part 1 of this series and here for part 3.)
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.
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