Local governments that have been fiscally sound over the past few years could end up paying for their penny-pinching ways if state lawmakers have their way.
Legislators may consider significant cuts to local governments with general fund balances exceeding 15 percent of the annual expenditures. The cuts would come in the form of less state shared revenues as Lansing grapples with a $900 million deficit.
Last month Sen. Shirley Johnson, (R- Royal Oak), Senate Appropriations Committee chair, requested fund balances from schools, governments, higher education, and public transportation authorities, in an effort to determine what impact state cuts would have on their budget.
“The state currently does not have a rainy day fund,” said Brian O’Connell, chief of staff for Sen. Johnson. “The state needs to know where they stand for up coming cuts.”
In Brandon Township, which keeps about a 20 percent surplus balance, news of the pending cuts to the $170,000 in state revenues they receive was not taken lightly.
“We don’t need the government to tell us how to budget our money,” said Ronald Lapp, Brandon Township supervisor. “I’m not going to let them raid that money, it belongs to the taxpayers of this community.”
The fund balances are necessary, says Lapp, for emergencies, cash flow and general operation of the township. Often cash is carried forward from the prior year for projects. For example, next year about $1 million has been earmarked for the East-West Glass Road alignment project and about $400,000 for the Hurd Road drainage project.
“If the township was sued or a big sinkhole opened up in some road then we’d have money to cover it,” added Lapp.
Rep. Ruth Johnson (R-Groveland Township) applauds those communities, like Brandon Township that planned for the future.
“I’m glad to see so many communities have prepared,” said Johnson, who would vote against such a measure.
“However, I don’t think it’s fair to punish those communities who have been fiscally responsible. There’s a fairness issue here and I find the idea objectionable.”
Michigan has its ups and downs, said Johnson, a few years ago we had a reserve of more than $1 billion; now we’re in the red. “Some lawmakers try to find creative ways to tap money that belongs to the taxpayers—it’s a matter of fairness.”
Groveland Township Supervisor Bob DePalma was outraged at lawmakers consideration of tapping the surplus.
“Without setting aside the surplus, we’ll never have a capital improvement program for the township,” said DePalma.
“We need time to build a cash surplus for big projects.”
For example, several thousand dollars are currently set aside for a paving project on Groveland Road between Jossman and Barron roads. In addition, Groveland Township officials are considering replacement of the current 60 year old Station One for the Groveland Township Fire Department. The facility, which is also home to the Michigan State Police is located on Dixie Highway and Grange Hall Road.
“It’s going to cost us $1 million to replace that building,” added DePalma. “We need the cash reserve to accomplish that.”
In Atlas Township, where 10 percent of the budget is surplus township official’s concerns over keeping sufficient funds for emergencies is at issue.
“Since we’re in the flight path for Bishop Airport, if a plane crashes in the township, we’ll need to pay for the clean up,” said Paul Amman, Atlas Township supervisor.
“Why should we exercise financial responsibility when the state can’t? Those from Lansing should take some financial lessons from us.”