By: Bob Kittle
It was announced at the Detroit Regional Chamber’s Mackinac Policy Conference in May 2019 that a coalition of education advocates is aiming for a Wayne County millage to support after-school programs. If supported, the county-wide proposal would be on the Wayne County ballot in 2020. While this effort may be worthwhile, it is certain to be a challenge, first because it’s a county-wide vote, but also because gaining support for any millage proposal can be difficult – as almost any city or school district can attest. Having accurate and timely data can help build a strong case for millage requests and lessen the handwringing for anxious policymakers at the same time.
Munetrix understands the importance of data in community decision making. Increased demands for transparency make it clear that constituents want confidence that every penny is spent wisely. When current dollars aren’t enough to support operations or a new community initiative, a strong case can be made for additional funding by comparing how similar communities pay for equivalent services. You can also respond to naysayers with data reflecting that proposed millage rates aren’t unprecedented or out of line using relevant comparable analysis.
Citizens expect data to be accessible and will use it to better understand their community’s use of taxpayer funds. While preparing for your next city or school (or, in the case of Wayne County, after-school) millage, use data in your favor.
Munetrix makes government data easy. If you need assistance with your next millage proposal, don’t hesitate to contact us.
By: Bob Kittle
The headline of this March 21, 2019 post, Property Taxes Up $638 Million In 2018, by Michigan Capitol Confidential is eye-catching—and surely stoked the fire of those who believe they pay too much in property taxes—but let’s not let the facts get in the way.
While Michigan property tax collections may be up for the sixth consecutive year, it must be considered that the drop from 2008–2012 was so severe that the increases still haven’t caught up to pre-recession levels. That’s an important piece of information missing from the article, and is caused by the limitations of 1978’s Headlee Tax Amendment to the State’s Constitution, then followed up by 1994’s Proposal A.
To make this easier to understand, I will use an analogy with our retirement savings plans and homes. During the recession, most of us saw a 40–50% drop in the value of our retirement savings, only to see it storm back and exceed where we were initially—if we were patient. Same with housing values. Property owners saw their home values cut in half, and subsequently watched as they stormed back from 2012 to today. In most cases, our property is now worth more than it was worth pre-recession.
But local units of government in Michigan don’t see that appreciation because they are limited to a taxable value increase of CPI or 5% per year, whichever is lower. CPI didn’t exceed 2% until 2017 – so while our 401Ks and home values were rebounding at compounding double digit rates, municipalities had to watch as everybody else got well, but they were (are) handcuffed. In Auburn Hills, where I am a councilperson, our Total Taxable Value is still down $1B from its 2007 level, meaning we must operate on nearly $1M less in property tax revenue when it comes to paying our police and fire personnel, fixing roads and generally running the government.
On top of that, the State fixed their budget by pulling much needed sales tax revenue from local governments to fix their structural deficit. The last straw is that IF a community sees tax increases on certain properties exceed the constitutional limits, the rest of the city’s properties must be reduced by the corresponding value to make sure, on a city-wide basis, the total taxable value doesn’t exceed the allowable limit. The laws never considered a market crash!
Look, Munetrix is in the municipal data business, so we understand the role of data, especially in communicating to constituents. What we don’t like is half-truths, and appreciate when journalists provide balanced stories.
At the end of the day, many communities are cash-strapped and starving, but mostly not by their own actions.
People in the private sector like to opine that government should operate like a business, but that’s just not practical. The goal of the public sector is to provide the best possible services at the lowest possible cost, with a focus on the health, safety and welfare of the community. The goal of the private sector is to make a profit. These competing interests make it impossible for governments to run like a business; plus, there are some poorly run businesses no one should ever emulate.
But that’s not to say local units of government (LUGs) can’t learn a thing or two from the private sector. There are elements of successful businesses that can be incorporated into the business of government; particularly, certain procurement practices.
LUGs with decentralized or no formal procurement practice can benefit more than others, especially those that look at purchasing goods and services as only a task. The sooner the “done” box can be checked, the sooner they can get to the next issue du-jour.
LUGs often use bid networks and place orders with the, “lowest qualified bidder” no matter how many bidders participate. They also see over-specified bigger ticket items, many times prepared with the help of a vendor who then becomes the only person capable of meeting the requirements. Other potential providers can usually read between the lines in these cases and don’t bother submitting a bid.
A 2014 study by Stanford University School of Business found 46 percent of companies surveyed had a succession plan in place, but only 25 percent had a ready pool of successor candidates.
And, it’s even worse in the public sector, where 30-40 percent of the workforce is predicted to retire in the next decade and only 2 percent of recent graduates plan to enter the public sector. Despite the dismal future employee outlook, most studies of public sector succession planning have found that only 25 to 30 percent of organizations have a formal plan in place.
In organizations that do have a plan in place, there is a lack of consensus between managers and the workforce about the knowledge and skills it takes to fill top-level positions in the organization.
Failing to establish a succession plan could lead to catastrophic failures of service, failure to collect taxes or other fees, and organizational dysfunction that might take months or years to fix. With tight budgets, a dwindling workforce and more urgent matters at hand, most managers are hard pressed to find the time to do something that seems so far down the road. It doesn’t have to take extensive time, energy or funding to plan for the future and safeguard institutional knowledge.
Have we been looking at succession planning the wrong way?
Most organizations look at succession planning as a vertical ladder, where managers identify and train employees who will eventually fill their spot when they retire. While it is still important to identify and mentor promising employees, this method of succession planning usually is focused on the C-suite and any number of unforeseen circumstances can turn the entire plan on its head in an instant.
Maybe it’s time to approach succession planning on the horizontal plane.
Horizontal succession planning is the element that protects institutional knowledge across the organization, provides cover if a plan fails — for example if the heir apparent takes a last-minute position with another organization — and allows for seamless transitions at all levels of the organization.
By: Bob Kittle
If it ain’t one thing, it’s another. Perhaps not the best way to start a blog that is ultimately on education, but as the economy hums along (despite some potentially scary headwinds with the recent GM announcement) education is the nemesis that Michigan (or at least Detroit) can’t seem to conquer.
The Detroit Regional Chamber recently released its 2018-2019 State of the Region providing economic indicators and critical areas of improvement for its 11-county region plus Detroit. The report overall offered an upbeat outlook on the region’s progress in many sectors, but underscored the importance in addressing areas in which the region continues to lag – notably education. In a spot-on Detroit News column by Daniel Howes, the education void is so dark and vast, its challenges may temper many of the positive gains made in the region and the state for recent years.
The good news is that Detroit is outpacing the nation in growth in real gross domestic product (2.7 percent vs. 2.2 percent nationally) and per capita income (4.3 percent compared to 4.1 percent nationally). That can’t be overlooked. Nor can the fact that Detroit was second in the nation in growth of median home values between 2013 and 2017, increasing by 42.4 percent (Seattle was number one). The high cost of living on the East and West Coasts makes Detroit attractive—a plus for companies aiming to boost and cultivate tech talent.
But contradicting these positive indicators are critical areas where Detroit is missing out, notably extreme poverty, low metrics on community well-being, and stagnant population growth. Yet the most pressing issue is the mediocre status of Detroit’s educational attainment—which was actually below the national numbers in 2017.
The State of Michigan Department of the Treasury sent out a press release on June 27, 2018 announcing that for the first time in 18 years, neither a school district or municipality in Michigan has an emergency manager. You can read the press release in its entirety here, but following is an excerpt.
“LANSING, Mich. – State Treasurer Nick Khouri today announced that no Michigan municipality or school district is under state financial oversight through an emergency manager for the first time in nearly 18 years. The…announcement comes after releasing Highland Park School District from receivership under the Local Financial Stability and Choice Act. Since 2000, there has been an emergency manager providing financial oversight somewhere in Michigan.”
For many years the Emergency Financial Manager (later changed to Emergency Manager or EM) concept was regularly maligned by some constituents, citing it as an overreach of state government at the loss of local control and racially motivated. The term carpetbagger was bandied about as well. One respected national government trade publication headlined a 2012 article, Emergency Financial Managers: Michigan’s Unwelcome Savior. As local government financial advisors ourselves, (Katrina was the State-appointed City Manager for Hamtramck from 2014 to 2017) we, but especially Katrina, have been on the receiving end of some hurtful and untrue verbal attacks about roles and motives.
Maybe you’ve heard us talk about the silver tsunami, or perhaps you’ve read other articles on it, but the reality is while we all can clearly see what’s coming for us, few of us are doing anything to prepare for it.
Let’s be clear about what awaits us: in less than 10 years’ time almost half of the public sector workforce will retire.
Conservative estimates put the looming exodus at 40 percent. Depending on the make-up of your workforce this mass departure could happen at a more subtle pace throughout the next decade or it could happen almost over night, in a single fiscal year or season. Regardless of the makeup of your workforce, the coming silver tsunami will leave destruction in its wake.
With the first quarter behind us, the following three topics are high-value items to consider in Q2 for planning purposes:
The problems associated with aging infrastructure can cripple municipal budgets, but with proper planning, communities can strategically use their revenue when and where it counts most. The most effective way to plan for infrastructure improvements is to create an inventory of assets, public lands and utilities, noting: the present condition; when repairs were last made and how long they are expected to last; the cost and time associated with needed repairs; and average usage. Many states statutorily require this to be performed.
Once you have a complete inventory, use common sense and data science to plan projects. Avoid redundancy and lower costs by planning street projects with local utilities. Address potholes and surface damage by assessing the extent of the damage, the risk to safety and average traffic flow. Align infrastructure planning across all departments. Maintaining centralized oversight of large infrastructure projects and ensuring all staff members adhere to an internal communications plan, decreases risks of redundancy and improves timeline efficiency.
Transparency in government is an oft-used catch phrase that’s defined differently from one person to the next. States regulate what data must be provided to the public and sometimes how that data is displayed, but for the most part it is a free for all that results in communities posting fancy charts that average people — both residents and employees — have little time and inclination to understand. Reading lines on a chart or graph is one thing, but walking away with an understanding of the full picture and what it means down the road is another.
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