Desperately Seeking Revenues in Michigan

The New York Times writes that Michigan’s municipal governments are on the hunt for revenues. Mount Clemens collects no revenue from 42 percent of the property within its borders. Mayor Demsey sent out a letter asking tax-exempt organizations to make a voluntary contribution to the general fund. In spite of disbanding its police department and contracting for safety services with Macomb County, the city projects a $1.2 million gap. If the tax-exempted organization pitch in they could cover the city’s shortfall. Interestingly, a local church is running a surplus. They gave the city $1000 a few years ago and are considering another gift this year.

Mount Clemens’ audit reveals several interesting items. First is the effect of state and local mandates. Medicaid Part D negatively affected their budget. And, the municipality must also now pay for a bond issued to satisfy a mandate from the Michigan Department of Environmental Quality.

Second are two large budgetary items that sound like projects best undertaken by the private sector. The city’s business activities include an ice arena and parking facilities.The ice arena costs the city $1.53 million to operate is paid for in user charges that amounted to $1.48 milllion in 2009. (See page 13 of the city’s audit) Last year the city transferred $102,000 from the General Fund to subsidize it and a further $200,000 to be put towards the $2.3 million  “Ice Arena Building Refunding Bonds” issued in 2001.