MPPS finds fiscal health continues to decline across the state, though some negative trends eased in 2011

October 2011

Fiscal stress continues to be a widespread and significant problem for local governments across Michigan, although the number of jurisdictions reporting further declines in fiscal health now is lower than it was in 2010. Overall, nearly half (48%) of Michigan jurisdictions report in 2011 that they are somewhat or significantly less able to meet their financial needs now, compared to their previous fiscal year. This is lower than the 61% of jurisdictions that responded the same way in last year's survey. Meanwhile, looking ahead, 50% of local governments predict they will be less able to meet their fiscal needs next year, compared to their ability this year. Common fiscal challenges include declining property tax revenues and state aid, as well as increasing home foreclosures, tax delinquencies, health care costs, and service demands. Common strategies pursued by local governments to respond to these challenges include plans to increase intergovernmental cooperative approaches, increasing reliance on rainy day funds, increasing the portion of health care costs paid by employees, and cutting staffing and service levels.