The Myth of the Shrinking City Revenue Problem

[XLFD]

It's something that you will hear quite often if you go to city council meetings here in Ludington, or for that matter, anyplace else in Michigan.  The city has revenue problems, everything is going up in price, the state requires more of cities, yet gives less, property values are going down but we still have to provide services and fix crumbling streets, we're forced to do more with less money, etc.  That is so sad. 

Of course, people want to believe what their city manager and other officials say as truth and buy into the notions.  Even my opponent for Third Ward councilor, incumbent Les Johnson claims it as the biggest obstacle the city is facing.  Most of the media report it as factual, and helps the local municipality pass the hat around for the fee and tax rate increases.

But what if these were convenient fibs to tell people whose own pocketbooks are hurting in order to get money?  The kind of fibs a kid at college may tell their parents in order to get some extra money for 'school supplies' or a homeless person begging on the streets might make up in order to get some extra change.  Unlike those two examples, we are generally able to check up on the revenues of cities and what they spend it on by looking at their budget.

In the article Michigan Local Government Revenues Strong Despite Complaints, James Hohman researched the issue for cities, villages and counties throughout the state of Michigan and compiled the following graph for the last fifteen years:

Hohman notes:  "From 2001 to 2008, combined revenue sharing and local government property tax revenue increased by $1.2 billion, a 21.4 percent gain. Property taxes increased by $1.7 billion but revenue sharing dropped by $479 million.

The recession took its toll on property values in Michigan, so there were fewer dollars generated by property taxes. This decreased revenues by $579 million, an 8.3 percent decline from 2008 to 2012. Revenue sharing declined only $29 million.

Both property tax revenue and revenue sharing have recovered since then, with overall revenue increasing by $553 million from 2012 to 2015. Total property tax revenue is up $381 million and revenue sharing is up $171 million."

Hohman concludes:  "It is tough to say the revenue system is broken when revenues are up, and especially when the state still hasn’t fully recovered to its 2000 job levels. Better to look on the spending side of local finances." 

Ludington trends have mirrored the state average.  The revenues from 2001 increased from $4.3 million to $5.3 million in 2008, a 23.3% gain, a little above state average for that time.  Property taxes increased by $1.1 million, but revenue sharing dropped by $100,000. 

The recession then hit Ludington property values, but unlike the rest of Michigan, Ludington rebounded quicker, going UP to $5.5 milion in 2012 and leveling off since then, remaining at $5.5 million in 2015. 

One could say the inflation rate has outpaced the city's revenues between 2001 and 2013 (an interval where data is available) 34% to 28%, but then one has to understand that the average wages in Michigan have only risen by 24%, presumably less in Ludington.  So making a case based on that is not fully equitable, because people are paying more of their salary into the city government.

City revenues are up in Ludington, job levels are down and wages haven't risen enough to keep up with local taxes and fees, guaranteed to increase dramatically in the next few years as increased water and sewer bills go to pay the debt incurred for upgrading those systems.  This will push the revenues up dramatically, eventually surpassing the inflation rate, while wages made by the folks look only to remain mostly static.

The city's problem therefore is not a revenue problem, but purely a spending problem that needs to be addressed rather than ignored by well-meaning but ill-informed officials like Les Johnson and his ilk, who want to spend $3 million on questionable changes to the West End of Ludington that will accomplish nothing other than give them a reason to extract more money from the people in whatever way they can.

[AQUAMAN]

Oh, Les also said in order to be able to re-afford the Lifeguards, we should install parking meters at Stearns Park, that sound like a good idea? Then again, there is that "reserve funds" account on the COL books of account, at least $8 Million in "rainy day funds" that are being kept secret, and unknown to the public. My City business taxes have never decreased since 1980 to my knowledge, never! When you spend 1/2 of all your incoming tax money on the LPD, that's $2 Million or more, how can you possibly have enough to keep up with infrastructure and standard expenses? Go in a 2 mile radius in Lud. and see 4-6 LPD vehicles on patrol. Go to Muskegon in a 20 mile radius and see one or none on patrol. Big DIFFERENCE! Cut that LPD by half, and you have an extra $1 Million to start with, and the safety factor is still great, not overblown like now.

[XLFD]

The subject of parking meters-- anywhere-- have never been brought up at city council/DDA/Planning Commission meetings since 1981.  Those guys with metal detectors would sure love this, as would the Park Rangers/Meter Maids who could finally justify their existence with all the $30 parking tickets they could give out to all those tourists enjoying the water or getting a suntan.  Nothing attracts tourists more than having to bring a roll of quarters to the beach just to enjoy a couple of hours there only to find a ticket when they stay away from their car for too long.  The state park and Buttersville would love that.  Great idea, Les, maybe we could make Ludington Avenue a toll road too.

Police consolidation should be part of any reasonable talks to cut spending in Ludington, as it should in Scottville, it should never be taken off the table even if the majority decides that nothing should be done.  A great argument for such change in Ludington could be made by reviewing all that happened in September, recounted in Threatening times in Ludington.  A police force that would blatantly politicize an investigation into non-threatening speech in 2016 and intimidate two upstanding businessmen and an outsider political candidate the way they did obviously has too many resources and not enough to keep them busy doing real police work. 

[Willy]

Your correct on all points X. I don't think the Coucnil understands how economics work. As long as people like Holman and Les are involved and do as they are told by Shay, not much will change. I would love to see communities keep more of the money they send to the State.  Communities could and should meet their obligations if more of their money stayed home.  As far as Installing parking meters, that is just plain stupid.  As it stands now, Ludington has a unique situation where downtown off street parking is available behind the stores on the north side of Ludington Ave. Your right, if the police had time to spend on that idiotic situation regarding torchers then they are either over staffed or under worked. Either way there should be some personnel trimming that needs to be done. They should start by eliminating any officer that has been involved with and or charged with using unnecessary force against citizens.

[AQUAMAN]

Really, how many LPD Officers does a population of 6,000 need? Last I knew 4-5 years ago I thought the Chief told me 28-32 officers, not counting reservists. I think we had about 6 here when I was growing up, with many more people downtown and working year around. How many now, 35?