The Fiscal Health of Michigan Local Governments 2024
This report provides an overview of Michigan local government fiscal health using financial data reported to the State of Michigan from 2022 to 2024. This analysis evaluates cash, budgetary, long-term, and service solvency indicators for counties, cities, villages, and townships in Michigan.
The report finds that Michigan local governments remain fiscally stable, though signs of emerging strain are becoming more evident. While fund balances and operating performance remain solid overall, cash reserves are declining as pandemic-era federal aid winds down. Indicators of long-term solvency show modest improvement, but rising debt per capita and persistently underfunded pension and retiree health obligations continue to weigh on many jurisdictions. Fiscal conditions remain uneven across government types and sizes, underscoring the importance of continued monitoring as revenue constraints and expenditure pressures evolve.
Key findings
- Michigan local governments generally show strong short-term financial health. However, declining cash reserves, narrowing operating margins, and a growing share of jurisdictions with deficits signal emerging pressures as pandemic-era federal aid winds down.
- Overall, long-term solvency shows modest improvement in the last two years, including declines in debt-to-revenue ratios. However, there are significant disparities by jurisdiction size, with the smallest jurisdictions facing the highest long-term liability burden.
- Long-term liabilities continue to exert pressure on local budgets. Pension-funded ratios have improved slightly over the past year, but OPEB liabilities, particularly among cities and villages, remain significantly underfunded.
- Growing capital assets and stable property taxes suggest that most jurisdictions continue to have the capacity to deliver core services, but the state's system of funding local governments creates vulnerabilities for those smaller jurisdictions with a heavy reliance on revenue sharing.