For years, communities in Michigan have been receiving fewer state dollars. How each one deals with that shortfall has been the challenge.

"We have had hiring freezes, we have had small layoffs," City Manager Ted Staton said.

The East Lansing City Manager said they've done their best to lessen the impact, but soon something's got to give.

"The problem is at such a magnitude now that it's bigger than what we can manage through incremental action," he said.

Staton said the best case scenario for this year and next, puts the city $3 million in the red. So, he's proposing a property tax increase of a half millage.

"The changes might affect the average home in East Lansing about $4-5 a month," Staton said. "We feel it's modest, most houses after these adjustments will still pay less than they did a year of two ago."

Some say this is bound to happen in communities across Michigan. In the last 8 years, local municipalities have lost out in $3 billion in state revenue sharing funds.

"East Lansing is not alone in terms of making these decisions," Arnold Wenfeld said.

Wenfeld, of the Michigan Municipal League wouldn't be surprised if other communities followed suit. He said very soon, a lot of Michiganders might have to decide between higher taxes and essential services.

"They're going to have to decide what services and what quality of life do they want from their communities moving forward," he said.

In EL, residents seemed to be on board, because they say the alternative would be a lot worse.

"I'm in favor of increasing the taxes philosophically for the right reasons," Gordon Taylor, an EL homeowner, said.

"Speaking for the residents of this community, I think [the property tax increase] would be OK," EL homeowner Ed Szpiech said.

According to the City Charter, a half-mill increase would not need to go on the ballot, the council could make the change.

The city will have a survey about the property tax hike on its web site starting Monday.