Want to improve city finances? Give counties more to do.

As Bridge identified in a recent article on Michigan’s lost property values, the financial condition of many of Michigan’s local governments remains precarious as a result of the Great Recession. Compounding the problem are the structural problems inherent in Michigan’s local government finance system.  

In a previous guest commentary, I  suggested that the options available to local officials are limited: increase tax rates, cut services, or find new methods of delivering services at a reduced cost.

While some local governments are now levying taxes at higher rates and many governments have reduced or eliminated services, efforts to change the service delivery model have been limited. It is now the time to rethink Michigan’s local government service delivery model.

Two commonly heard criticisms of Michigan local government (other than their inability to prevent or fix potholes) are 1) that Michigan has too many independent local governments and 2) local government should operate more like a business.

I hold out little hope for reducing the number of governments. Individual attempts to merge local governments have gained little traction as evidenced by recent efforts in Grand Blanc, Onekama, and Saugatuck and Douglas. All resulted in the residents of those communities voting to maintain their independent local governments despite the potential for operational efficiencies and savings. People want there to be less government, but they do not want to give up their own.  

A different approach is needed.

With a new report out this week, the Citizens Research Council of Michigan has conceptualized a path that will focus on obtaining efficiencies in service delivery and emulate the franchise model common in business. The concept expands the role of counties to perform back office functions for the cities, villages, and townships within them just as a corporate headquarters would do for its franchise stores.  

It also seeks opportunities for counties to assume responsibility for the delivery of services currently provided by cities and townships, thus freeing scarce city and township resources to be concentrated on developing the identity and place making that will attract people and businesses. And it seeks opportunities for counties to partner with cities and townships in service provision to achieve efficiencies without threatening the identity or uniqueness of the local governments.

This approach would not reduce the number of independent local governments in Michigan, but it would reduce the number of service providers. Think of this as a service consolidation/regionalization as opposed to government consolidation. 

Taking a more regional approach to local government would improve the efficiency and economics of local government service delivery and provide both service and revenue side benefits to counties and their local governments. 

Opportunities for Change

For most of Michigan’s history, counties were tied in their governance to the cities and townships within them. County governance started out as a regional exercise in intergovernmental cooperation, but has now evolved into more of a stand-alone government. It is recommended that new ties between the counties and their local governments be created. These would be based more on the economics of service delivery than on inserting local government officials into the county governance structure as was done previously. 

Counties, as a regional form of governance, are well suited to provide services to residents of smaller municipalities and to partner with larger municipalities to maximize the economies of scale so services can best be provided to benefit residents. It is recommended that counties be positioned as the support system capable of providing services, performing functions, and facilitating cooperation.

The Research Council, through years of research into local government service delivery, has identified a number of services that counties could play a bigger role in providing. 

The first step is to build up the foundation for this new model.  

Improvements in information technology infrastructure are needed to better connect county governments with the cities, villages, and townships within them. Greater connectedness would position the counties to offer file sharing and the development of resources to capitalize on advances in communication. This would allow counties to perform many back office functions on behalf of cities, villages, and townships (e.g., human resources, fiscal services, and document functions, among others). 

Beyond those back office functions not usually visible to the residents of a community, the counties could play stronger roles in such things as tax collection, conducting elections, assessing property, maintaining roads currently under city and village jurisdiction, and aspects of planning and land use.  

County sheriffs can assume responsibilities for policing communities or provide services to support municipal police departments. They also could provide support services to local fire departments. Public works and sanitation services and public transportation services are some of the service areas for which local governments most often collaborate. The expensive nature of infrastructure for these services makes regional bodies and county-to-county collaboration well suited to their provision.

Prerequisites for Change

Conceptualizing change in the local service delivery model cannot occur in a vacuum.  For such changes in service delivery provision to become widespread among Michigan counties, some issues need to be addressed.

First, counties would benefit from modernizing their governance structures by adopting the charter or optional unified models of county governance. Although these models of county governance have long been available, Michigan still has 79 of the 83 counties organized with an archaic structure designed for the 1800s. This organizational model disperses executive branch authority and decision-making, which in turn handicaps service system reform.  

Without governance changes in these counties, officials do not have full latitude to undertake activities and services without state legislative authorization. Like a business, county government needs strong, centralized direction to be an effective regional leader and unifier.

Second, county government officials need to change the culture of county government. Much could be gained by changing the thinking of counties from stand-alone entities to multi-purpose function providers for their local units. Strong county leadership will be needed to gear county services to benefit the local governments and to let their local units know that the county is amenable to working with them to achieve savings.

Finally, counties will require more funding to carry out these service delivery changes.  Those funds could come from new local-option taxes, which are best levied on a regional basis, or by directing new state revenue sharing to counties. Additional revenue sharing dollars sent to counties and distributed in a fashion that recognizes variances in fiscal capacity among the counties would help to enhance the roles counties play.

Any approach at regional governance has to understand and appreciate the population and community variance among counties. Counties in Michigan are not uniform and have many differences in size and population, urban versus rural makeup, revenue levels and sources, and expenditure levels and needs.

The population characteristics and the demand for local government services in Keweenaw or Alpena Counties are very different from that of Kent or Oakland Counties.  

County government will not be better utilized by crafting a uniform plan to be carried out by every county; it will require allowing counties to tailor the assumption of service responsibilities and collaboration to meet their residents’ and local municipalities’ needs, as well as the counties’ abilities.