MPPS

Smaller and more rural Michigan local governments are struggling with increased fiscal stress

December 2025

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. These findings are based on statewide surveys of local government leaders in the spring 2025 wave of the Michigan Public Policy Survey (MPPS) with comparisons to survey waves from 2009-2023.

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Key findings

  • Overall fiscal health slipping: This year, 56% of Michigan local governments statewide report relatively good fiscal health (a score of 4 or lower on the MPPS 10-point Fiscal Stress Index), down from 63% in 2023. This is the lowest percentage since the MPPS began tracking this measure in 2014.
  • Concerns for small and rural communities: Assessments of several individual indicators of fiscal conditions (such as concerns about general fund balance and changes in revenues from property taxes) also signal concerns from smaller and more rural jurisdictions.
  • Easing service demands: Compared to prior years, a smaller percentage of local governments report increasing service demands in public safety and infrastructure, and more report planning to increase spending to meet needs in the coming fiscal year, with the exception of spending on human services.
  • Mixed expectations for next year: Looking ahead to next year, just one-quarter (24%) statewide predict their jurisdiction will be better able to meet its fiscal needs in 2026. This is down from 33% in 2022 and 30% in 2023. Meanwhile, 25% of local leaders predict their jurisdictions will be less able to meet fiscal needs in 2026, and 46% expect no change.
  • Pessimism about the future: In the longer term, just under half (49%) of jurisdictions expect relatively good fiscal health five years from now (compared to 56% who have good health today), while 14% predict high fiscal stress (compared to 8% who have high stress today). Concerns about long-term fiscal stress have consistently increased since 2021, despite the infusion of state and federal funding during that period.

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