- Rural leaders share unprecedented financial pessimism in recent survey
- Tax restraints, inflation and cumbersome grant applications are causing service cuts in some communities
- The state offers grants and training, but local officials say they need more help
WATERSMEET — It’s not the frigid winters of the western Upper Peninsula that scares New Jersey native Yvonne Clark. It’s not even the black bears searching for snacks outside her remote lake home. What keeps the 62-year-old up at night is the balance sheet of Watersmeet Township, where the supervisor tries to stretch too few dollars over too many priorities.
“It will take several lifetimes to get our roads up to par,” Clark said, shuffling through papers that cover her office desk. Police cars are parked outside all winter because the township has no garage space. Ceiling tiles in the public safety building have collapsed from a roof so leaky that large plastic tubs are scattered around each spring to collect melting snow.
“We’re all under financial stress,” Clark said, “and it grows every year.”
The majority of Michigan’s 1,240 townships and 252 villages are considered rural, and fewer than half of the rural communities report good fiscal health, according to a recent statewide survey of local officials by the University of Michigan. That’s the lowest it’s been in a decade of tracking.
“We’re especially concerned about smaller communities because, prior to the pandemic, they were typically among the healthiest,” said Stephanie Leiser, one of the report’s co-authors. “But now across a few different indicators, we’ve seen a reversal, and more small communities are raising red flags about their fiscal health.”
Leaders of villages and townships in rural Michigan say tax revenue is not keeping up with rising costs. Many, especially in northern Michigan, face a scarcity of people with financial skills willing to work for the typically low-paid, part-time positions.
The financial health of townships matters in Michigan, which gives more responsibilities to a greater number of local governments than most states. Townships run elections, assess property values and collect property tax. Townships are responsible for many of the roads within their borders, and some like Watersmeet have their own public safety departments.
Unlike school districts, however, Michigan does not track the financial health of local governments. That’s not required by law, Treasury spokesperson Danelle Gittus told Bridge.
Even so, money problems among rural communities appear to be worsening, said Charly Loper, a western UP resident and community liaison for the Michigan Department of Labor and Economic Opportunity’s Office of Rural Prosperity.
“A common thread we hear from municipal leaders is a lack of funding,” Loper told Bridge in an emailed statement. One UP community that Loper is familiar with still uses a snowplow built in the 1970s, and another “figures they receive enough funds to replace roads every 80 years even though the lifespan of a road is 30 years,” she said.
“Buildings leak, unsafe equipment continues to be used, roads fail, residents become frustrated with the issues, and municipalities cannot hire staff to tackle these challenges,” Loper said.
Michigan law caps growth
The money problems are exacerbated because townships rely heavily on property taxes to pay bills, and revenue sharing has dropped by half since 2002 and Michigan caps the growth of property taxes.
“In rural Michigan, there hasn’t been growth, and with a static tax base, the limitations (on revenue) are squeezing tighter,” said Eric Lupher, president of Citizens Research Council of Michigan. “And they’re hit with inflation like consumers. They’re feeling it from both sides”
Michigan’s Office of Rural Prosperity provides training and assistance to local government leaders. Clark said that office is “worth its weight in gold,” providing guidance on how to apply for state and federal grants. But the paperwork associated with grants can overwhelm the small staffs of rural governments, leading some to choose not to apply.
On her desk, Clark leafed through a 25-page grant agreement from the state Department of Labor and Economic Opportunity, which will provide $100,000 for new water meters.
“We have to (file) financial status reports monthly,” she said. “We have to do a detailed budget. We have to do progress reports quarterly.
“A lot of it is understandable, but it’s a lot,” Clark said. “When you’re a small township with not a big staff who can do this easily, it hinders people from even applying for the grant.”
Those types of struggles hit rural communities hard because “a significant portion of municipal revenue comes from property taxes,” Loper explained. “Rural municipalities are more likely to have tax exempt land (such as state or federal forests) that is less developed, and a lower population density which typically results in less property tax per square mile.”
Taxes do not provide enough money for infrastructure repairs, let alone improvements, in the Village of Marcellus, in Cass County in southwest Michigan, said Village Manager Jacqueline Terrill.
“The people in this town, they want to know why we don’t have police anymore,” Terrill said. “We can’t afford it.’
“We had kids come to the (village) council meeting wanting a playground. They volunteered to help clean up (the park area) but we don’t have money for (playground) equipment. It’s very frustrating.”
Lansing ‘doesn’t know we exist’
About 330 miles to the north, Watersmeet Township officials are facing similar problems. There, the Ottawa National Forest that surrounds the township hobbles development. Money to make up for the non-taxable national forest land, called payment in lieu of taxes, go to the county, not townships.
Gogebic County passed along $33,000 of that money to Watersmeet this year, but that distribution isn’t required and doesn’t happen every year, township supervisor Clark said.
While a reporter was in her office recently, Clark pleaded with a county official by phone to maintain the funding. “Please, please, please include that in the next county budget for us,” Clark said. “Thirty-three thousand might not sound like a lot, but for us, that’s half an officer. It’s real money for us.”
It was an example of the constant scramble for dollars that rural communities face, and the balancing act officials perform between financial wants and needs.
For example, in the 1,400-person township, there are 36 miles of paved roads that township is responsible for. Repaving one mile costs $450,000. Watersmeet’s entire annual road budget is less than $200,000.
“And we have another 42 miles of gravel roads that need to be maintained,” Clark said.
Clark and Marcellus manager Terrill say they worry that small communities get short-changed in the distribution of state grants, because they don’t have professional staff to write grant applications.
“We do gymnastics to get the grant money we get,” Terrill told Bridge “But I go to training sessions (hosted by the state), and they’re talking about grants that are for Lansing and Detroit and they don’t apply to me.
“They really need to pay more attention to us,” Terrill said. “If we don’t get grants, we don’t have a town.”
Clark agreed. “I wish they would understand that small communities don’t have the capacity for the paperwork (required by grants),” Clark said. “But I’m not sure they even know we exist in Lansing.”
Loper said she and her colleagues at the Office of Rural Prosperity can “help point them towards resources and make sure they have support as they tackle these challenges.”
While Clark praised that office, she wishes she could tell Gov. Gretchen Whitmer that Michigan’s rural communities need even more support — and more money.
“I know they have their own problems down there (in Lansing,” she said. “But we’re affected more in the rural areas because we don’t have enough (financial) cushion. We’re bare bones.”
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