The Unsustainable Growth of Local Government

[XLFD]

The anguish appears real enough when an official gets up at the local town hall, city hall, school district administrative office, or county courthouse.  They wring their hands and explains that there just isn't enough money in the budget and that the public body they serve just keeps being expected to do more with less.  Closer to the truth is that their revenues are growing much greater than the rate of inflation and still the public has an expectation that they will do less with more of their taxes because of greed and pure inefficiency.  The standard bearer is the state government.

In a recent Detroit Freep article:  MSU economist Charley Ballard said the state is in uncharted  territory. But after decades of state general fund and other revenues not keeping pace with inflation, and cuts to certain programs, it is not like there are not billions of dollars in needs for the state to address, from "fixing the damn roads" to making sure all Michigan K-12 students can learn in modern and well-equipped classrooms.  

Ballard fails to mention a baseline date, but according to the Michigan Senate Fiscal Agency, the overall state budget (including local, state and federal dollars) has increased from $45.7 billion in 2009-10 to $67.2 billion in 2019-20. After adjusting for inflation, this is the equivalent of the state spending $13 billion more last year than it did just 10 years ago, which is around 30% of what was spent on the 2009-10 budget.  

Similarly, Michigan collected $25.2 billion from state taxes and fees in 2009-10. The amount collected in 2019-20 was $33.0 billion, which even after adjusting for inflation is a $3 billion increase over 10 years ago.  Real growth of the budget is shown below with inflation adjustments, one can see that there has been more money over the last five years than the five years prior.

Similar growth is seen in the City of Ludington.  Let's look at the overall revenue of the city for certain years in the past with recent years, noting that 2020 and 2021 are not finalized at this point, only budgeted:

Year                Tax Revenues         Overall Revenues      

2009                $3,644,000               $5,157,000

2010                $3,699,000               $5,330,000

2011                $3,718,000               $5,438,000

2012                $3,589,000               $5,416,000

2019                $4,542,000               $6,854,000

2020                $4,600,000               $6,556,000

2021                $4,807,000               $6,669,000

One notices that tax and overall revenues do not vary a lot from one year to the next, but it generally increases.  If we look at the rate of inflation via an inflation calculator up to 2019 (the last year with finalized numbers, we find the rate of inflation between the years of 2009-12 and 2019 is 19.2%, 18.7%, 15.1% and 12.7% respectively.  If we multiply those revenues by that rate, we get the amount of revenue in those four years in 2019 dollars:

Year               Tax Rev (2019 $)     Overall Rev (2019 $)

2009               $4,367,000               $6,147,000

2010               $4,381,000               $6,326,000

2011               $4,279,000               $6,259,000

2012               $4,048,000               $6,104,000

2019 (actual)  $4,542,000               $6,584,000

One can clearly see that the City of Ludington is bringing in about $500,000 more in inflation-adjusted taxes in 2019 than it did in 2012 (a real increase over 10%).   They will be receiving another unbudgeted $800,000 this year from the federal government through the last stimulus package, so when this year's statistics are available, you will see a budget much grander than any in the past.  Hopefully, they won't earmark that 'found money' towards expanding their bureaucracy, benefits, or pensions-- expenditures that will need to be covered and increased in future years.

If city tax revenues grow by double digit percentages in seven years, even when inflation is nullified, why do some city officials continue to make unsubstantiated claims like the MSU economist about not having enough money to run and maintain things as they once did?  Why do other cities, school districts, and counties do the exact same thing, continually draining the source of their income: the already overtaxed taxpayers?  America was founded and has prospered under the concept of limited government working by consent of the governed, it will suffer and eventually fall if those concepts are ignored.

[Freedom Seeker]

Just makes me mad how elected and appointed officials blow taxpayer money.

[Willy]

Good article X. I like your charts and figures, something we won't see in the LDN or MCP. Like many municipalities those that run things have their own agenda which may not coincide with what the community wants or needs. Take for instance the restrooms and fish cleaning building at the boat launch parking lot, which is being torn down. That building was perfectly OK. All it needed was some patching and painting, but instead of repair they had to tear the whole thing down. Why? So they could spend some of the "free money" that was stolen from taxpayers and given away for nonsensical spending such as this. Until people are elected who can keep their hands out of our pockets, nothing will change. From the 2 million dollar money pit park downtown to the 100 million dollar money pit school in the woods to the ??? amount being spent on the missing toilets at the boat launch, we're going broke. But who cares someone else is paying for it.

Missing toilets

[XLFD]

We definitely need more sensible people coming forth to run for office at all levels in order to get spending under control, but for some reason, those people rarely get in office.  Big government defends itself, we too often see tabula rasa candidates prevail over the swamp-drainers because the media, the existing government and all those invested in the system use their power to continue propagating the status quo.

I was at the beach earlier tonight and the one porta-john down near the temporary fish station had its door completely off, probably due to a good gust of wind taking it off even earlier.  It's a shame that we need to spend $400,000+ for new facilities here and again at Copeyon without any input from the public as to whether it would be better just to renovate what we had for a third of a million less at both places.  These aren't small bets, they're huge investments and likely built to be replaced in 30 years.