Numerous local government representatives in Michigan—particularly at the municipal and county tiers—believe that a temporary or enduring reduction in public funding will lead to financial challenges, although fewer are making provisions for such cuts.
The results stem from the most recent edition of the Michigan Public Policy Survey, carried out by the University of Michigan’s Center for Local, State, and Urban Policy. These insights are especially pertinent as key federal funding resources face imminent expiration.
In total, 40% of local government officials across the state indicate that the loss or suspension of a specific type of federal or state funding will present difficulties. This figure escalates to 72% among city officials and 68% among their county counterparts in Michigan.
The research also reveals that 60% of local governments are currently not making provisions for a funding loss. Cities and counties are more inclined to report that they are taking steps to prepare, while villages and townships are less likely to do so.
Nevertheless, even among jurisdictions that acknowledge the termination or cessation of one or more types of funding as a somewhat or considerably significant issue for their fiscal health, 44% are not readying themselves for a reduction in federal or state funding.
“Uncertainty, along with various internal challenges related to local government capacity, are preventing some municipalities from preparing for the impending decline in revenues that will affect their budgets and service delivery,” stated Debra Horner, the senior program manager for the survey.
Numerous local governments are facing the conclusion of several temporary federal funding streams, including the 2021 American Rescue Plan Act, the 2022 Infrastructure Investments and Jobs Act, and the Inflation Reduction Act, alongside potential reductions in ongoing federal support for services like housing and transportation.
Funding for the latter two initiatives was halted due to an executive order issued by the Trump administration in January, leaving the future distribution of funds uncertain. The American Rescue Plan, however, injected substantial resources into communities, although local governments must allocate these funds for designated purposes by December 2024 and expend them by the close of 2026.
Many Michigan authorities have reported being in a “wait and see” stance, observing the evolving situation or analyzing their current spending and dependency on grants. Others noted that they are curbing spending and expediting projects prior to the funds depleting and expenses escalating due to tariffs. Community leaders are also indicating efforts to boost revenues through new fees and taxes or pursuing grant funding from alternative sources.
The survey was conducted from April 7 to June 12. Participants included county, city, township, and village officials from 1,328 jurisdictions statewide, leading to a 72% response rate by unit.