Local News

    Michigan cities warn of ‘dire’ financial consequences from pandemic

    Several community leaders sounded the alarm Monday about the long-term harm the COVID-19 pandemic could wreak on local budgets in Michigan, warning of shortfalls, cuts and increasing service demands that could outstrip those that followed the Great Recession.

    The officials urged lawmakers to pass legislation during lame duck that would allow them to continue essential services and stabilize their budgets, which are expected to take a hit next year and further into the future with expected dips in income tax and property tax revenues.

    “Unless the Michigan Legislature acts quickly to pass a community stabilization plan, local government will soon be unable to conduct business and revenue losses will result in drastic cuts to public safety, infrastructure, parks and other vital services,” Westland Mayor Bill Wild said.

    Westland Mayor Bill Wild

    Wild was among three mayors and a municipal finance expert who took part in a Michigan Municipal League press conference on Monday that warned of “dire” consequences if the state doesn’t act to stabilize local budgets.

    The press conference occurred days after Democratic Gov. Gretchen Whitmer asked the Republican-controlled Legislature for a state-based stimulus plan of up to $100 million. The state faces an up to $1 billion shortfall next year, but higher-than-expected state revenue could narrow that financial gap in the coming months.

    Besides the tax and meeting changes requested by communities Monday, Democratic officials also have called for the consideration of expanded unemployment aid legislation during a pandemic-themed lame duck, the session days between Election Day and Jan. 1 when the Legislature passes the last of its bills before new lawmakers are sworn in.

    Cities entered the pandemic in less than ideal shape after the Great Recession but were able to make it through 2020 in large part due to federal aid. Communities tend to suffer long-tail effects from economic strains and the worst of the pandemic’s impacts likely won’t materialize until 2021 or 2022, said Michigan State University Professor Eric Scorsone, a municipal finance expert who has worked closely with Flint, Detroit and Lansing.

    For example, he said, many communities didn’t start wrestling with the effects of the 2008 recession until 2010 or later. Detroit didn’t declare bankruptcy until 2013.

    “I think 2021 and 2022 are going to be some of the toughest times facing municipal governments certainly since the Great Recession, perhaps even worse, because there are long-term implications from this pandemic that we’re only now beginning to understand,” Scorsone said.