PERSPECTIVES OF THE MICHIGAN

TOWNSHIPS ASSOCIATION

What’s Happening to Michigan Local Governments?

The Michigan Economy

Domestic auto industry market share dropped from 75% to 40%;

State Personal Income Rank 40th out of 50 states

Revenues $8 billion below constitutional revenue limit

The general state of the state

Inflation adjusted GF/GP revenue down 43.4% since FY 2000; SAF down 15.7%

FY 2010-11 Federal bailout ending State tax policy

GF/GP shortfall approximately $1.3 billionSAF shortfall approximately $415 million FY 2011-12 GF/GP shortfall approximately

$500 million

The general state of the state

Health care 22.4% of Michigan GF/GP revenue is Medicaid; 1 of six residents eligible; 42% of birth, 70% of nursing home expenditures are

Medicaid; total $9.9 billion

Corrections 23% of GF/GP

Tax exemptions $6.3 billion revenue shortfall

Revenue Sharing

millio

ns

Property Values Growth SlowingInflation Rate Multiplier

Total Growth SEV Total Growth Taxable Value

1996 2.8 7.5 5.1

1997 2.8 8.2 5.7

1998 2.7 9.5 6.1

1999 1.6 9.9 6.0

2000 1.9 9.0 5.5

2001 3.2 10.0 7.1

2002 3.2 9.8 6.7

2003 1.5 7.5 4.8

2004 2.3 6.3 5.7

2005 2.3 5.9 5.6

2006 3.3 5.0 5.8

2007 3.7 3.8 5.2

2008 2.3 -1.3 1.4

2009 4.4 -5.4 -0.8

Fire Service Personnel Per Capita

Fire Service ExpendituresPer Capita

EXPENDITURE CUTSREVENUE ENHANCEMENTS

REFORMS

State Driven Reforms

Governor Granholm Proposals

New state employees pay 20% of health care premiums

Retirement incentives for 7,000 eligible state employees; 39,000 public school employees

Rescind non-union increase

Eliminate retired legislator health care

Reinstate good time credits for inmates

Medicaid fraudCompetitive bids over

$50kUrban cooperation

act, collective bargaining

2- year budgetEliminate ineffective

tax credits

Governor Granholm Proposals

Reduce Sales and Use Tax from 6% to 5.5%;Extended to ServicesExclude, health, education, construction, real estate and insurance commissions

Would generate $728 m

Cut MBT surcharge 50% in 2011; eliminate in 2012.

Savings to businesses: $171 m 2010; $456 m

in 2011Reduce MBT gross

receipts rateLevy 3% tax on

physicians gross receipts

Speaker Dillon Proposals

Require all public employees with health coverage to enroll in new state sponsored program Projected savings $900 m

2 Year BudgetState PurchasesTax Expenditures Examined

Senate Republicans

Cut pay 5% for all public employees, freeze for three years

Savings: $1.2 billionRequire all public

employees to pay 20% of health care premiums; HSA coverage would pay 15%

Limit school district administration to 28% of budget

All non-instructional contracts bid out

Limit Medicaid to basics

Eliminate health care for retirees after 2011

Reduce number of state departments

Senate Republicans

Change laws to allow more intergovernmental sharing of services

All state business permits and licenses issued by a single office

Business Leaders for Michigan

Reduce state workforce by 5%-10%

Cancel 3% pay increase for state unionized workers

Require public employees to pay 17.8 % of health insurance costs

Mandate 2 year budget

Change laws to allow more service sharing

Reduce prison terms by one year

Remove state limit on charter schools

Reduce number of state universities and funding

Public/private council to set budget spending targets

Business Leaders for Michigan

Require disclosure of business cost impact resulting from new legislation

Lower sales tax to 5.5% expanded to services; exempt B to B; education, housing

Eliminate personal property taxes on businesses

Eliminate MBT surchargeCut MBT gross receipts rate

A Better Michigan Future

Change current 4.35% flat rate income tax to graduated rate (3.9%, 4.35%, 6.9%)

Expand sales tax to servicesEliminate some tax exemptionsAudit state contracts, eliminate waste