Short-term changing local governments in Michigan have led to the deterioration of water systems and other services
Michigan has had its fair share of disasters. Dams collapsed after heavy rains, flooding Midland. A hole the size of a football field was caused by a sewer collapse in Macomb County. And in Flint, children were exposed to lead-contaminated water.
“Flint was a financial crisis long before it was a water crisis, and those two things are closely related,” said Stephanie Leiser, an associate professor in the Ford School of Public Policy at the University of Michigan.
She said cities and towns across Michigan face increasingly desperate choices as they struggle to keep their infrastructure running — many of them with a shrinking number of taxpayers to foot the bill.
Many of Michigan’s 1,773 towns, villages and communities are reaching a crisis point as federal dollars for water and sanitation infrastructure are declining, aggravated by the state’s centralized tax system.
Even small disasters can be devastating. Many rural Michigan communities have to truck water in to help fight fires. That’s because they can’t put too much strain on the water system by tapping the hydrants.
This is also the case in the small village of Akron in Tuscola County.
“I know if we start using too much water we end up not having to use the hydrants because we can’t let the pressure get too low and get everyone boiling so let’s stop using the hydrants.” said Marvin Hasso Jr. of the village’s public works department, a one-man operation.
As we explained earlier in this series, Akron’s water tower has reached its life expectancy and is not able to accommodate the state recommended amount of water. Hauling water to the scene of the fire is the only alternative.
“There has been significant divestment in our communities over the last several decades. And you couple that with a restrictive property tax system, and it absolutely expresses local government at its core, which is service delivery,” said John LaMacchia, director of state and federal affairs for the Michigan Municipal League.
He’s one of many people working closely with Michigan’s cities and towns, asking the state government to stop neglecting the communities responsible for providing critical services like safety and water.
We used to build in America
Much of Michigan’s water and sewage infrastructure began with a major move by the federal government to fund the construction of water and sewer systems beginning in the late 19th century. The federal government passed the Clean Water Act in 1972, and spending on drinking water and sanitation systems skyrocketed. In the late 1970s the issued by the federal government more than $20 billion (in 2022 dollars) per year for water and sanitation infrastructure.
This federal investment dropped dramatically after 1980 and continued to decline in 2008, to just $2 billion. The American Recovery and Reinvestment Act of 2009 caused spending on water infrastructure to spike, but quickly fell back to about $3 billion a year.
“Compared to what they’re doing now, the amount of money that the federal government used to put into these systems has changed drastically,” said LaMacchia of the Municipal League.
Don’t share fairly
The state of Michigan has also indirectly slashed the money municipalities can spend on water and sewage infrastructure through a series of changes in how Michigan distributes taxes.
The 1978 Headlee Amendment to the Michigan Constitution established complicated limits on state and local taxes. Then Proposal A, approved by voters in 1994, provided further restrictions on how property taxes could be increased. With soaring property values and tax hikes, that seemed like a great idea at the time. But with the Great Recession, real estate values fell significantly. They’ve recovered and more, but the taxes they generate can’t catch up at the same pace because of Proposal A’s limitations.
The other tax change also came because of the Great Recession. Sales taxes are paid to the state and part is redistributed to towns, villages and communities. Some of this is mandated by the Constitution. A second formula, called the statutory share, ended when the state budget ran tight. Instead of splitting up that part of the sales tax, lawmakers now simply distribute what they want every year.
“And that’s really about $600 million down from any year where it should be, and that’s topped the billions and billions and billions of dollars over the last decade plus,” LaMacchia noted.
In fact, that deficit has increased to $800 million over the past year because the state has been getting a lot more money but not sharing much of it.
LaMacchia said that the municipalities must now also take into account the significant increase in inflation, which is currently over eight percent.
“You really have this almost perfect storm of things that take the already limited supply of revenue streams and then add these extra burdens and cost increases.”
Higher local taxes and fees
Because the cities rely more on the inhabitants.
“The problem is that they have to turn to more regressive forms of property taxes, fines, fees and other levies that are really disproportionately hurting low-income families and our black and brown communities,” said Rachel Richards, fiscal policy director at the Michigan League public order.
Families still pay the same rate of sales tax that goes to the state government, but their communities get less of it back. This has led to municipalities relying more on Millages. Citizens pay more property taxes, which also leads to higher rents. Local governments introduce more charges or increase charges for utilities such as water and sewage. It’s all an attempt by the local government to keep something close to the same level of service.
Richards said lawmakers could give cities more money from its general fund to invest in water infrastructure. The idea is that the money would keep water rates affordable for families and avoid water and sanitation crises.
Part of the water infrastructure crisis is the lack of political will to pay for it. When an elected official votes to spend money to improve a park or make a city visibly nicer, it deserves voters’ respect. If you vote to spend money on pipes underground when there is no obvious problem, you are less likely to win votes. But waiting until there is an obvious problem often creates a crisis, either for a neighborhood or sometimes for an entire city.
Get a loan (if you can)
Instead of direct aid, the state government points to the revolving credit funds available for both drinking water and sewage systems. Larger cities are often staffed with engineers and people who know how to complete the complex applications. But for smaller towns and villages, that’s just not the reality.
“We’ve spoken to several communities who said it’s just a really difficult application process … So just filling out the forms and paperwork to actually get to the door and see if you can get that help is prohibitive for many communities.” said Stephanie Leiser, who works with a regular survey of community leaders by the Center for Local, State, and Urban Policy.
Small cities would have to spend a lot of money hiring consultants to see if they even qualify for a loan from the revolving fund. The Michigan Department of Environment, Great Lakes, and Energy (EGLE) said it will help small towns determine if it’s worth the effort.
The other problems are, although some loans can be made through the federally funded program, when they are not, these small towns may not be able to afford the debt. Even if they find they can afford the loan, interest rates on the revolving loan fund are sometimes higher than market rates on municipal bonds for some cities. This is something EGLE says it is working to improve.
John LaMacchia confirms that the application process is a major hurdle for many municipalities.
“You know, when we think about communities and their ability to apply for things like grants or loans that are out there, sometimes they look at it and they’re like, ‘I don’t understand the process,'” LaMacchia said. “And if they don’t understand the process, it’s a lot harder for them to get into the process.”
The Michigan Municipal League Foundation created a program to give these small towns free access to experts through grants from the Joyce Foundation and CS Mott Foundation. That should help
The really bright light in Michigan’s infrastructure needs is a bunch of federal money coming.
“More resources are being made available with America’s bailout plan and the resources our local entities are getting with the new Infrastructure Investment and Jobs Act,” LaMacchia said.
But this help is a one-time solution. And with deteriorating water infrastructure in cities big and small, it will take decades of new investment to recover.
“The backlog is so big, the maintenance deferred is so big, I doubt it’s going to make much of a difference,” Stephanie Leiser said, adding, “If you don’t maintain your infrastructure assets, you’re at greater risk of disaster.”
CLARIFICATION: An earlier version of this story said that children in Flint were poisoned by leaded water. While no blood lead level is safe and lead is a poison, “lead intoxication” requires a diagnosis of blood lead levels greater than 40 µg/dL. No kid in Flint has had blood counts that high.
Copyright 2022 Michigan Radio. To see more visit Michigan radio.