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Budget battles tougher in 2011

Local governments face difficult times

October 19, 2011
Associated Press

LANSING (AP) - Leaders of nearly half of Michigan's local governments are having a harder time balancing their budgets this year than last, and even more are worried that they will be worse off in 2012, according to a survey being released Wednesday by the University of Michigan.

The report found that 48 percent reported being less able this year than in 2010 to meet the financial needs of their cities, towns, counties, villages and townships. The results are better than last year, when 61 percent reported such difficulties, but the financial stresses continue.

Many of the mayors, county managers and other local leaders said balancing their budgets is being hindered by falling revenue from property taxes, shrinking state aid and a rising number of home foreclosures and tax delinquencies, according to an advance copy of the survey obtained by The Associated Press.

Their budget duties could become even more difficult under a Republican-backed plan to eliminate or phase out a tax that generates more than $1 billion, mostly for local governments and schools, each year. Businesses pay the personal property tax on computers and other equipment, and some local governments get half their annual revenue from the tax.

"For those places, there probably is a great deal of anxiety about the future," said Thomas Ivacko, administrator of the university's Center for Local, State and Urban Policy, which conducted the survey.

But many jurisdictions are already struggling to pay for public services such as police departments and infrastructure projects. A handful are being run by state-appointed financial managers.

To cope, 23 percent of local governments have cut staff since last year, while 21 percent decreased services. A third are reducing or eliminating training for workers, a quarter are paying less to new hires and a fifth are charging higher fees, according to the report. Eight percent plan more layoffs.

About 18 percent are making public employees pay more toward their health care costs and 14 percent are requiring workers to chip in more toward their retirement funds. However, half of the jurisdictions - mainly small townships and villages - don't offer pensions or health care benefits, so they can't trim such costs.

In addition, 40 percent have plans to increase cooperative efforts with their neighbors this fiscal year, a move being pushed by Republican Gov. Rick Snyder.



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