News Story

Cities Increase Fees, Spend More While Complaining About State Shared Revenue

Fire inspection fees in Ann Arbor have increased 590 percent since 2003, and inspections are happening more often now.

The reason, said Ann Arbor Fire Marshal Reka Farrackand, is in "the interest of public safety as well as to comply with city ordinance."

Commercial property inspections cost business owners $690 in 2013, up from $100 in 2003.

The increase in cost made news when one business property owner refused to let the city inspect his buildings, according to MLive

Ann Arbor, like many cities in Michigan, has seen its state shared revenue decrease, and while that has been widely reported, what has been under-reported is how cities have done overall financially.

The Michigan Municipal League released an analysis of how much optional municipal revenue sharing has been diverted to other parts of the state budget. From 2003 to 2013, Ann Arbor got $36 million less in state shared revenue than it thought it would get. The Michigan Municipal League has referred to situations like that as a "heist' and a "raid."

Nonetheless, Ann Arbor still found ways to increase its overall spending.

For example, charges for services in Ann Arbor have increased $20.2 million in the past 10 years, from $64.4 million in 2003 to $84.6 million in 2013. That's due in part to the increase in some fees.

Ann Arbor has seen increases in other major sources of revenue, too. Property taxes jumped from $61.3 million in 2003 to $66.7 million in 2013. Total revenue for the city increased from $166 million to $190.4 million from 2003 to 2013.

Other cities have also seen their total revenue increase despite the reduction of state shared revenue.

For example, the city of Grand Rapids did not get $72.9 million from optional state shared revenue, according to the MML analysis. However, its total revenue still increased from $118.6 million in 2003 to $126.1 million in 2013.

Flint did not get $54.9 million, but still saw total revenue increase to about $107.5 million in 2013 from $102.2 million in 2003.

Ann Arbor City Councilman Stephen Kunselman said some of the increases in funding for the Washtenaw County city are restricted funds, such as the water utility revenue.

"So it appears the city's general fund increased slightly in 10 years, but not enough to maintain our basic services like public safety and crumbling roads," Kunselman said in an email. "It's time the governor and state Legislature [to] either honor the commitment of their law or change it to reflect their bias against cities."

The state collects money from the sales tax and then redistributes some of it to local municipalities. A certain amount of money, based on population, is mandated by the state constitution. The rest is done by statute. In the past decade, the amount the state redistributes to municipalities has gone down, though the most recent budget proposals reverse this trend.

"Municipal governments have been protected from the recession and yet complain about money supposedly owed by the state," said James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy. "If the state really was obliged to pay up, these officials would be complaining to the courts, not to the state newspapers."

Matt Bach, director of media relations for the Michigan Municipal League, didn't respond to a request for comment.


See also:

State Spending: Up, Up and Away

Reforming State Government a Tedious Task

Looking For Savings In the Corrections Budget