News Story

Municipal Governments Blame State For Their Property Tax Hikes

A presumption that state assistance should only go up

A lobbyist for municipal governments in Michigan said the reason so many local property tax increases were approved by voters on Aug. 7 was that the state has disinvested in cities, townships and villages.

The Michigan Municipal League focused on “state shared revenue,” which is money collected from the state sales tax and distributed to local governments.

“The trend of local millage requests is increasing because the state has repeatedly dis-invested in its own communities and refuses to help raise revenue and change policy and laws to give local communities more revenue-generating options,” the Michigan Municipal League stated on its blog.

However, the state government has sent municipalities more money in recent years, increasing its revenue sharing from $1.0 billion in 2012 to $1.3 billion budgeted for 2018-19, a 10 percent increase when adjusted for inflation.

So local governments have been getting more money in revenue sharing. Nevertheless, they placed 299 tax hike requests on the August ballot, of which 89 percent were approved, according to MIRS News.

The claim of declining state support was also used in the city of East Lansing’s successful campaign to get a local income tax proposal passed in the recent election. The tax will take effect Jan. 1, 2019. The city is projected to get $5.5 million in state-shared revenue in 2018-19. That’s up from $4.8 million it received in 2012-13. When adjusted for inflation, the $4.8 million increases to $5.1 million, which means East Lansing is projected to get an extra $400,000 above inflation over that six-year period.

Michigan Municipal League Director of Communications Matt Bach said municipalities are getting less money if the time frame goes back 17 years.

“While our members appreciate the modest increases they’ve seen in revenue sharing, lawmakers still have yet to fully fund statutory revenue sharing payments to cities and villages since 2001-2002 fiscal year,” Bach said in an email. “We’ve taken a long-term look at the state’s disinvestment in communities. We found that since 2002 the state has diverted from its communities and counties more than $8.5 billion in revenue sharing. And it’s just not us saying this – the House Fiscal Agency has also found that the state has fallen short of fully funding revenue sharing for years.

“The fiscal agency’s June 2018 report on this topic shows Michigan municipalities are getting $400 million less in total revenue sharing in 2017 than they did in 2001-02. The amount includes a constitutionally mandated portion and an additional amount subject to legislative discretion. Looking at just the latter, Michigan’s cities and villages are $650 million below full funding, according to statute. This represents a net cut for local governments.”

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.

News Story

94 Hours A Week: Presumed Load For This Financial Manager Of Three Michigan Cities

He’s collecting six-figure salaries from two of those metro-area municipalities

When the village of Lake Orion hired Carl Johnson to be its finance director/treasurer, it made his status as a municipal employee exceptional.

Johnson is now the finance director for three separate municipal governments in southeastern Michigan. He is also listed as the finance director and chief financial officer for the city of Novi and finance director for the city of River Rouge.

Johnson’s hiring for the Lake Orion position was approved June 25 by the village council. According to the village’s website, Johnson gets $23.34 per hour as the finance director and can put in up to 29 hours a week.

According to public records obtained through a Freedom of Information Act request, between the time Johnson started in June and the end of July, he collected $1,752 from Lake Orion. Novi paid Johnson an annual salary of $120,100 in 2017. In that same year, he collected an annual salary of $150,000 from the city of River Rouge, according to city records.

In 2017, while already getting paid to be the finance director at Novi and River Rouge, Johnson applied for but did not get the controller position at Northfield Township.

This is not the first time Johnson has held jobs at three local governments. Before taking the River Rouge position in 2017, he was the finance director for the city of Oak Park. There was an overlap of a few weeks when he began the River Rouge job and quit the Oak Park job.

Based on his hourly rate for Lake Orion and his total pay there for the months of June and July, Johnson appears to have actually put in about 14 hours per week for that village. At that rate, and assuming that a six-figure municipal salary is based on working 40 hours a week, Johnson would be expected to put in a total of 94 hours per week in all three jobs. The figure could go as high as 109 hours per week if he routinely put in the 29-hour maximum for Lake Orion.

Johnson worked as an accountant for 15 years at Plante Moran, where, among other things, he provided financial services for municipalities that had contracts with the accountancy firm. In the past, Johnson’s municipal employers have said he was a high-quality employee and they were very satisfied with his performance.

Johnson didn't respond to an email seeking comment.

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.