Just who is that annoying guy in the backseat yelling “merge, merge, merge”?
It’s Governor Rick Snyder.
Michigan’s smallest units of government don’t want him looking over their shoulders telling them how to run their townships, especially since his unwelcome directions are of little or no value. But Snyder can’t seem to keep his eyes off their dashboards and his hands off their controls.
Michigan townships are model units of government. They are as fiscally sound now as they have ever been, carrying healthy general funds, and doing an excellent job of allocating resources to provide for the specific services needed in their individual communities.
Recently, some big city politicians discovered that townships were being run so well that they pushed for the state to tap into those township rainy-day funds. Luckily, those politicians are having trouble finding a sneaky way to get their paws on all that local cash — and, as yet, townships remain unmolested. The only way these general funds can be put at risk is through some legislative shenanigans. Don’t count that possibility out.
So, why aren’t townships in the same trouble that many Michigan cities and towns find themselves? What’s made the difference is township budgets are not significantly reliant on state revenue sharing — it’s a very small part of their budgets, if they get any at all. Only 34 of Michigan’s 1242 townships receive any significant revenue sharing from the state.
There are two types of revenue sharing, constitutional and statutory. Shy of amending the constitution, the first may not be tampered with, however the latter can be leveraged by the governor to hobble and shove smaller units of government down a state-mandated policy path.
Governor Snyder, seizing the opportunity like a true business tycoon, designed a policy plan he calls the Economic Vitality Incentive Program (EVIP). Much like his failing one-size-fits-all scheme cooked-up for schools , this policy boondoggle is designed to force all local units of government to adopt policies that are wrongfully presumed to be somehow advantageous.
Snyder, the classic school yard bully, understood that he first had to strip these cities, towns, and schools of their funding, then he dangled it just beyond their reach demanding they do his bidding before he agreed to return their money, and then at mere pennies on the dollar, kept the lion’s share to pay for his $1.8 billion dollar corporate tax give-away.
It’s doubtful that upon implementation of EVIP Snyder’s appointed fiscal policy goons had the slightest inkling that they weren’t ensnaring townships in their clever financial drag-net, as they had successfully snagged larger governmental bodies and school districts. Their grasp of fiscal budgeting is just that weak. And since, first and foremost, the real impetus behind EVIP is a blatant money-grab designed to pay for those corporate tax cuts, it behoves townships to keep a wary eye on the Governor’s office.
Luckily, Snyder can’t sieze control of the steering wheel, yet.
But, Snyder’s ill-conceived policies may yet have a deleterious ripple effect on Michigan’s smallest units of government. First, there are real-life Hunger Games going-on between counties and townships — a fiscal fight to the death. Counties feel the need to tap those township general funds to make-up for the shortfalls they face under Snyder’s budgetary tomfoolery. Additionally, townships are always vulnerable to the legislative whims of state lawmakers.
In EVIP, we find provisions that are considerably less than the nuggets of economic wisdom the Snyder administration imagines them to be. In particular, a mandate to “collaborate” with other units of government on services to save taxpayer dollars, through consolidation and mergers of departments.
Sounds reasonable, right?
Yup, you can’t swing a dead cat by its tail without smacking a dozen or so well-intentioned people who believe that bit of economic rubbish. (Apologies to those who have just been dead-cat-smacked — kindly read on).
Backseat Driver Rant #1 — Local Units of Government Don’t Understand the Value of Collaboration
Governor Snyder was the keynote speaker at the recent Michigan Township Association (MTA) Confernece held late last January. While generally praising the hard work and dedication of local elected officials he slipped this little dagger between the ribs in his address: “One thing I’m happy about is a program we created with $5 million to encourage innovation, collaboration and services sharing between jurisdictions.” He did not go on to explain why this would be of any real value to the effected communities — no, instead he continued with the theme that local units of government have grown too negative and are unwilling to work cooperatively.
The MTA isn’t buying that load of crap. In the March issue of Michigan Township News, their Executive Director, Larry Merrill, had plenty to say about the consolidation myth:
“Not so long ago, a conservative legislature agenda would have supported strong local control. Limiting state government meant empowering counties, cities, villages, and townships to prevent the state from intruding on matters that are purely local or personal. Nonetheless, the current policy environment includes an unprecedented scrutiny of local government — what they do, how they do it, how many there are, and who decides what. All of this is driven by the assumption that Michigan local government is antiquated and unnecessarily costly — just like state government……Advocates of centralizing government power argue we need to ration local democracy through local government consolidation or eliminating public officials accountable to voters…..Lansing lawmakers have varying degrees of understanding of local government. What some lawmakers see as redundancy and duplication is actually cooperation or a system of checks and balances.”
In the MTA report on Reforming Michigan’s Local Government it is clearly stated that the implementation of policies forcing townships to merge services would “consume more time, attention and resources than the small benefits such programs would produce.” They go on to make a strong case for why forced consolidation would actually drive costs up, citing an MSU study in which it was found that transfering township services to operate collaboratively under their respective county’s umbrella actually increased costs by 10 percent.
The only case in which local units can save money through collaboration is where they are joining together to seek bids on an already privatized service, but this is no reason to jump on the “let’s save money by privatizing” bandwagon. Private companies enjoy a cushy profit margin, and that is where the savings are squeezed from. Public bodies operate “at cost”, so they remain the better bargain from the get-go.
These townships have healthy budgets because they have known when to, and when not to collaborate. They have already been engaged in service-sharing arrangements for decades — but only where actual savings can be realized.
Backseat Driver Rant #2 — Michigan Townships are Hoarding Cash
Tim Dolehanty, an Isabella County Administrator, was recently quoted in the on-line magazine Bridge saying “I started looking at [township] fund balances and was astounded at what I was seeing”. He, among other county officials throughout the state, are simply panting to get their hands on what they erroneously percieve to be a pot of gold at the end of the township rainbow.
Not so fast — there are no leprechauns.
What Tim saw was only a snapshot of the the real picture. He looked at township general funds immediately after the collection of taxes, but before the allocation of those funds, as if looking at your bank account balance on pay day before you pay the bills. It is true that townships generally carry a higher balance in their general funds than counties, but unlike larger units of government, they operate on a cash basis — capital expenditures are nearly all “out-of-pocket” — so they must maintain a bigger piggy bank relative to revenues than a county or city.
Backseat Driver Rant #3 — Consolidation Saves Money
Michigan has just recently started flirting with the idea of consolidation, but other states have long ago forced various municipalities into shotgun weddings — and if saving money was their goal, they’re all in failed marriages.
Back in the 1950’s, the city of Philadelphia merged with it’s surrounding county. They eliminated all smaller units of government within their new boundary, yet the city still found itself in the same fiscal difficulties as other public bodies.
And after Louisville merged with Jefferson County, an extensive evaluation was conducted two years later finding the grand total savings turned-out to be one-half of one percent…..numerically expressed…. 0.05%. Economists would call that amount so meaningless that it’s just statistical noise — a variation so minor that it is to be ignored.
Why aren’t they saving money?
Merging public bodies means negotiating pay scales from two, or more, existing units of government. The newer and larger government must default to paying its workers at the highest prevailing wage, and with good reason. It’s simply an economy of scale — a model as prevalent in the private sector as in the public. Employees of a larger institution generally earn more, and enjoy better compensation, than those working for a smaller body.
Another key reason for lack of savings is that proponents of consolidation have a weak understanding of the economics of FTEs (Full Time Equivalencies: number of 40 hour employees, or part-time equivalents needed to accomplish the work). Merger advocates tend to grossly over-estimate the savings to be had through cutting personnel — FTEs. A single large consolidated government requires roughly the same number of FTEs as smaller units do, and any minor savings found there are cancelled-out by the higher pay scales.
Backseat Drive Rant #4 — Money Issues Aside, Consolidation Just Makes Good Sense
The Michigan Truth Squad’s analysis on governmental consolidation among the state’s cities found that about half of their budgets are consumed by police and fire protection costs. A whole lotta scratch to be sure.
Are there benefits to collaboration? Faster response time, better equipment or training….?
Consolidation of those departments is hampered by Public Act 312 which requires the governmental units to engage in binding arbitration in lieu of allowing a strike so as to protect public safety during negotiations. But, in his continued union-busting spirit, Governor Snyder moved to amend PA 312 so local units of government may shred the existing contracts of public safety workers, thus allowing the newly consolidated body to hire fire fighters and police officers at the lowest prevailing rate with virtually no benefits.
Who wants underpaid public servants charged with saving their lives? Not this writer.
A University of Michigan study found that 72 percent of Michigan’s local units of government are already acting collaboratively, but only through mutual consent and for measurably meaningful reasons — primarily related to quality of service.
Fire departments in rural areas have embraced the collaborative spirit to the tune of 57 percent statewide. But they know that forcing a merger where it just doesn’t make sense remains a very real danger –to lives.
Case Study: The Citizens for Township Consolidation, Roscommon County
A citizens group in Roscommon County has taken-up Snyder’s call for consolidation in the name of fiscal prudence. They are currently working on a petition drive to consolidate Denton, Lake, Markey, and Roscommon townships into one big happy and efficient family to be named Houghton Lake Township. These residents envision a rosey future of streamlined services and tax savings through their plan. Local services will surely improve when all are put under one roof, right?
Problem is, the future Houghton Lake Township seems to have a great-big-fat-round lake smack-dab-center in the middle of their imagined utopia — the largest inland body of water in Michigan.
So, on what side of the lake do they propose to place the fire hall and police department? (Ouch, splat! One can actually feel and hear the dead-cat impact among Houghton Lake residents).
It seems Michigan must learn her lessons the hard way, so heed these warnings….
Michigan residents, don’t get hit by a dead cat — it’s not pretty or productive.
Michigan townships, ignore that guy in the backseat, he doesn’t know what he’s ranting about .
Amy Kerr Hardin