Michigan Cities Under Financial Stress

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"The financial health of Detroit is critical, not only to southeast Michigan, and Wayne County but the state as a whole," said Terry Stanton, a spokesperson for the Department of Treasury.

Governor Rick Snyder is not blaming anyone for Detroit's financial issues, instead he points to systemic errors: declining population, borrowing and over estimating revenue combined with over spending.

"This is a case where there needs to be a much better system if these problems are really to be solved," said Governor Snyder.

Shrinking budgets in cities across the state has had real impact on services. Fire station number seven in Lansing was closed a year and a half ago because of cuts.

"It's sad," said Pat Leik who lives in Lansing. She literally lives across the street from fire station number seven, and hates to see Lansing wallow in financial troubles. "The firemen were all always friendly. They were friends. It's just like part of a family and they are gone," said Leik.

Despite closing parks and reducing costs, Lansing faces a $9 million deficit.

David Hollister, who is the Chair of Lansing's Financial Health Team, said if the state doesn't share more money with the population centers, more and more cities will have financial problems like the ones in Detroit. "The costs of government has gone up, the cost of retirement, the cost of healthcare, the infrustructure is old, some of our infrastructure is 100 years old, and the costs of maintaining that keep going up," said Hollister.

Further compounding the issue, state law restricts cities from increasing certian revenue. Cities can't add a local sales tax. They are also only able to raise property taxes at or below the cost of inflation.

"Communities gave up sales tax a number of years ago in return for an agreement that there would be revenue sharing [from the state with the cities,]" said. Hollister. "Well, they gave up the local tax, and the revenue sharing was good for the first several years and then it has been going down continuously [since]."

The Governor said he wants Detroit to find solutions in three areas: the city's short term cash crisis, its long term liability expenses, and the structural issues that prevent the city from managing and balancing a budget.

"The citizens of Detroit deserve better police protection. There's too much crime in the city. They deserve better fire protection, EMS, transit, trash, street lights, the list goes on," said Governor Snyder.

Hollister predicts if the state legislature does not restructure revenue sharing with cities, within five to seven years what is happening in Detroit will happen "statewide in virtually every city."

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