Survey of Michigan local leaders finds major short-term boost in financial aid doesn't change fundamentals of fiscal stress

January 23, 2024

This report presents Michigan local government leaders’ assessments of their jurisdictions’ fiscal conditions and the actions they plan to take in the coming year given their financial situations. The findings are based on responses from 15 statewide survey waves of the Michigan Public Policy Survey (MPPS) conducted annually each spring from 2009 through 2023. The Spring 2023 wave of the Michigan Public Policy Survey (MPPS) was conducted between February 6 – April 17, 2023.

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Key findings

  • Despite significant infusions of pandemic-related federal and state aid, Michigan local leaders report their governments’ fundamental levels of fiscal stress have not improved. Statewide, 63% of local leaders rate their fiscal stress as relatively low (a score of 4 or lower on the MPPS 10-point Fiscal Stress Index), while 8% say it is high (at 7 or higher), both percentages essentially unchanged from last year.

    » The 8% of jurisdictions statewide with high fiscal stress represent approximately 148 Michigan local governments.

    » By population size, fewer mid-sized jurisdictions (with between 5,001-10,000 residents) report low fiscal stress compared to 2022, while both smaller and larger jurisdictions report little change. However, a significant drop among the smallest jurisdictions reporting low stress between 2021-2022 has persisted, with just 57% currently reporting low fiscal stress.
  • Looking at short-term year-over-year change in local governments’ ability to meet fiscal needs shows fewer jurisdictions reporting fiscal improvement this year. Statewide, 36% say they are better able to meet their fiscal needs in 2023, a drop from the record high 41% last year. In addition, local officials say the improvements are relatively small shifts, not significant changes. Meanwhile, 18% say they are currently less able to meet their needs than they were last year and 44% statewide report no change.

    » Improvements in this measure among jurisdictions of all population sizes have dropped from the record highs of 2022 (which were likely linked to infusions of ARPA funding, particularly in the state’s largest communities), but are still currently higher than in 2021 among all population categories.

• As with these overall measures of fiscal health, some assessments of individual fiscal conditions, such as increased revenues from property taxes and the stability of general fund balances, are slightly improved, but most are simply holding steady.

• Looking ahead to next year, 42% expect no change in their ability to meet fiscal needs, while 30% expect improvement, and 22% expect further decline.

• In the longer term, 52% of jurisdictions expect low fiscal stress five years from now (down from 63% who have low-stress today), while 13% predict high fiscal stress (up from 8% who have high-stress today). Concerns about long-term fiscal stress have increased over the past two years.