Whispers, Noise & Rumors: May 25, 2020

WHAT WILL STATE CUTS TO LOCAL GOVERNMENT LOOK LIKE THIS YEAR AND NEXT AS LOCAL GOVERNMENT DECIDES ON LOCAL CUTS? Local government leaders are awaiting news of what the Governor’s proposed cuts will be for local governments in her soon-to-be-released Executive Orders. These proposed cuts are due to massive reductions in tax revenue to states due to the COVID-19-driven economic crisis.

Local government revenue is greatly dependent on state aid/state revenue to local units of government. These might be the largest state aid reductions in more than a decade and could have a dramatic impact on local government services throughout the Upper Peninsula.

Counties, cities, townships and villages in the UP are doing an excellent job of coordinating with each other on the COVID-19-related issues and services, and this coordination will be very beneficial as they all deal with upcoming state aid reductions.

K-12 school districts and universities/colleges are also bracing for hard-hitting budget reductions and waiting for the Governor’s proposed hits. The next several weeks are key ones for finding out what life will look like throughout the state and in the UP post-budget cuts.

MORE LOCAL TAXES AS A RESULT OF STATE BUDGET CUTS THIS YEAR AND NEXT? When local governments have their state aid reduced or eliminated, they have few options other than implementing program reductions and eliminations resulting in reduced services. They need to cut their budgets to reflect the reduced state assistance to local government. Rural local governments have very, very few options to raise revenue.

There are limitations on implementing local taxes. Whispers are out there about looking at the state statues that control how local units of government get new revenue via taxes. Issues in other communities downstate have been about local income taxes, commuter taxes, wealth taxes, etc.

Many government leaders talk of the large, big box stores getting huge tax windfalls due to the “dark store” tax exemption. Some are asking whether the government should resist lobbying from big retail outlets and revisit and reform on the dark store tax exemption. More to come on this issue.

TRAFFIC BACK UP AT THE MACKINAC BRIDGE: This past week we saw huge, six hour backlogs of cars waiting to cross the Mackinac Bridge. Michiganders downstate were escaping to the UP immediately when the Governor lifted some of the restrictions for restaurants, hotels, bars, etc., in the Upper Peninsula. While lots of small businesses throughout the UP want to open up for business, the immediate flooding of folks to the UP caught many by surprise.

Lots of questions from Whisperers about how to implement social distancing, etc. when they all get to the fantastic cities and towns of the UP. Some Noise in the UP saying “just wait until the UP universities open up for the Fall semester in August and we have 15,000-plus students heading to campus and campus towns.” A lot of students will be arriving with their families in tow to help them get set up. “Once they get here, then what?” many are asking.

We will be waiting for news from universities on how they will be handling the return of their students during the COVID-19 world–social distancing, testing, campus activities, etc., etc. More to come.

QUOTES FOR THIS WEEK’S CONSIDERATION AND APPLICATION:
“If you’re going through hell, keep going.” Winston Churchill.
“I’m sort of a pessimist about tomorrow and an optimist about the day after tomorrow.” CBS News Journalist Eric Severide.

Got any tips, suggestions, data or research? Send them to us at david@ruralinsights.org.