Conservative Tropes against Cities rebutted- Financial element
Almost every day, I see some repeated trope about “Democrat run cities” usually referencing crime & guns (more on that in a future article) or finances.
First, we MUST acknowledge that cities, especially central cities such as the ones I grew up in or lived (Muskegon Hts., Muskegon, Grand Rapids, Kalamazoo) are infrastructure heavy. These core urban centers were the heartbeat of their areas for decades if not even a couple hundred years. Cities developed when transportation was walking or horses. Mass transit was street cars. During that time, unless one was wealthy or a farmer and lived in rural areas outside of a city environment, Americans flocked to cities.
Cities are dynamic. Cities host the symphonies and opera companies, movie theaters and urban shopping centers. Even now, cities are still the dynamic engines of the economy.[1]
But cities have been hit hard in the last 50 years financially by the expansion of suburbs, automobile transportation and pirating of the industrial base.
When I ran for Congress in 2016, I held a town hall in Muskegon Hts. mostly attended by the local NAACP and other activists who asked about jobs and China.
I said that jobs have been migrating for decades. I remember some huge industries in Muskegon and Muskegon Hts! Norge refrigerator plant, CWC casting, Misco, etc. My dad and my wife’s dad worked in these (mostly union) shops and industry (and its tax base) were vital to the economics of the cities.
In the 1960s and 1970s, job migration began was not to China, but to suburbs and townships. These outlying municipalities decided to cannibalize the cities they surrounded. They offered large tax breaks to industries for several years and free land if the factories would relocate to their municipality. You can see this in places like Muskegon Township, Grand Haven Township, and cities like the spread out Norton Shores, with industrial parks.
As the factories got older and required maintenance, companies jumped on the industrial park bandwagon and moved out of the city. What they left behind was often a workforce without ready transportation to the new factories located 15–30 miles away. With the factory now an empty shell, the tax base of the city got decimated.
These rural and suburban industrial parks eventually pay taxes, but the infrastructure that needs to be maintained now is far more minimal than the infrastructure of a city with its miles of roads and large central school system
Eventually, jobs began to migrate overseas and politically, the anger over migrating jobs to China, etc. is only because the population now affected are the largely white suburban & rural voters. These voters had no issue with jobs moving to their rural areas out of the cities. But now that it affects them, they are aggrieved.
Along with the industrial tax base movement, you also see a housing shift. White flight in the 1960s & 1970s also exacerbated the issue. The townships exploded in population. When I was in high school in the 1970s Muskegon was the largest school district in the area by population and ranked a Class-A school for sports purposes. Rural Reeths-Puffer was a C-rank school. Now, forty years later, RP is a Class-A school, so much population growth has taken place in that school system!
These outlying school systems had two benefits:
1. They could build and add schools as they needed to expand and didn’t suffer the burden of unused schools
2. They benefited from low infrastructure and a tax system which benefits them, but burdens urban schools and cities.
(As an aside, let’s consider law enforcement. Most of these outlying areas do not support their own police departments. Cities have their own police departments to fund. Outlying areas rely on the county sheriff system to which the city residents ALSO pay taxes to support).
Regarding funding, while cities have been able to supplement funding with income taxes the last forty years, the primary funding mechanism for decades was the millage system. The state of Michigan defines it as such:
“A millage rate is the rate at which property taxes are levied on property. A mill is 1/1000 of a dollar. Property taxes are computed by multiplying the taxable value of the property by the number of mills levied.”
For example, let’s say a municipality has a 15 mil levy. Using a $100,000 property value we take 100,000 times 15 divided by 1000. The result is $1500 tax on a $100,000 house. (Note — this is only for illustration-assessed values are lower).
The Constitution also provides that if additional millage for a jurisdiction is approved by the voters, the 15- and 18-mill limits may be exceeded up to a limit of 50 mills. Individual local governments may ask local voters to approve millage subject to the 50-mill limit for up to 20 years.[2]
In cities, more so than in townships or suburbs, additional assessments may be made by other “taxing authorities” as authorized by the state government or Constitution. Grand Rapids’ tax bill has SEVENTEEN different assessments all encompassed within that overall 50 mil limit. Example of one home’s summer tax bill is shown below:
You can see that Grand Rapids has now almost reached the 50mil limit with the various assessments. So on this $115,000 home taxes are approximately $2000 each year. Now take a similar sized (1480 sq ft) home in the suburbs and the value of the house literally triples (or more)! Suburbs and outlying areas with lower infrastructure and more expensive homes can rake in far higher dollars with LOWER millage rates!
Caledonia Village is at 34.3 mils and Caledonia Village is lower at 27.9. [3] Yet, per Zillow, “The typical home value of homes in Caledonia MI is $433,722” [4] So with home values FOUR times that of the urban core, these outlying areas can have the nicest, most modern schools and public buildings, low maintenance on county roads largely maintained by both rural AND urban residents via taxes. The $115,000 home in Grand Rapids generates $2000 per year to the city. The $400,000+ home in Caledonia generates over $20K in tax revenue! [5]
Suburban and outlying areas also have little infrastructure which is why the homeless congregate in the cities and urban core. That’s where the services are. Where is a homeless person going to get aid in a place like Caledonia? (Not necessarily picking on Caledonia).
So the suburbs and surrounding areas get the benefits of the core city and get to avoid the issues and burdens of the core city even as conservatives bash these cities for problems caused largely by society at large. The funding issues are exacerbated by conservative control of the Michigan legislature which was supposed to manage revenue sharing but reneged on this responsibility.
Revenue sharing, per Michigan Constitution says [6]:
In accordance with the State Constitution of 1963, Article IX, Section 10, as amended, constitutional revenue sharing payments are based on 15% of the 4% portion of Michigan’s 6% sales tax collections. Distributions are made to all Michigan cities, villages, and townships on a population basis on the last business day of the even numbered months (October, December, February, April, June, and August).
The revenue sharing population is defined by the Glenn Steil State Revenue Sharing Act of 1971, 1971 Public Act 140, as amended (MCL 141.903(1)). For purposes of distributing revenue, population is based on the most recent census adjusted by 50% for any institutional population.
Per law, the state is supposed to send money to municipalities, but the Republicans, who have controlled the state legislature effectively since 1990 [7] cut revenue sharing so they could cut state taxes and claim credit for it. They literally funded tax cuts with money supposed to go to cities! One can easily say the state legislature BROKE THE LAW by not distributing revenues as required by Public Act 532 of 1998 [8] [9].
Incidentally, this is another example of how skewed our politics and economics really are-where the urban populations are second fiddle to the largely suburban and rural voters- much like in the US Senate and the Electoral College.
[2] https://www.senate.michigan.gov/SFA/Publications/Notes/2016Notes/NotesSpr16lp.pdf
[3] https://www.caledoniatownship.org/DocumentCenter/View/313/Property-Taxes-Explained-PDF
[4]
https://www.zillow.com/home-values/395992/caledonia-mi/
[2] https://cdispatch.com/news/2019-08-27/caledonia-board-tentatively-approves-property-tax-increase/
[6]
https://www.michigan.gov/treasury/local/share/evip/constitutional
[7]
https://ballotpedia.org/Party_control_of_Michigan_state_government
[8]
[9]
