LANSING (WKZO-AM) — Michigan’s state treasurer is telling state lawmakers that they need to take a closer look at how municipal governments are funded or there will be another crisis if the economy bottoms out again.
For the first time in 15 years, no city in the state is operating under an emergency manager, but that’s only because of the economic recovery.
Nick Khouri said lawmakers need to look at the issue because they are partially to blame. Since 1998, the legislature has cut $5.5 billion out of state statutory revenue sharing payments, more by far than any other state in the nation.
At the same time, the state has adopted restrictions like the Headlee Amendment and other measures that prevent cities from replacing that lost revenue.
To add injury to insult, the governor’s proposed budget for 2017 cuts another $5.8 million out of revenue sharing.
Despite the recovery, home prices have failed to bounce back from the Great Recession. That means property tax revenue is down, leaving cities like Kalamazoo facing deficits as far ahead as they can project.
