Thursday, March 24, 2011

An arguement for small communities

People have, as it is said, voted with their feet when they left the City of Detroit for other places. The other places are both to the northern suburbs and other states.

Yesterday, the United States Census data was released for the City of Detroit and surrounding areas. It shows that the population for the city is as low as it was a hundred years ago, down to just over 714,000. The counties of Macomb and Oakland showed small increases. The increases were not enough to keep the state of Michigan from losing population also. It was the only state that lost in the last ten years.

Dave Bing, the mayor of Detroit, has said that he will fight the numbers. He claims that the city was under counted by about 40,000 people. If the mayor can raise the count to over 750,000 it will enable the city to keep more state and federal dollars rolling in than at the lower number. But, none of the reasons he provided for the under count sounded very positive. The truth is, your honor, Detroit is suffering just like the rest of the region.

Detroit and most of the surrounding cities like much of Michigan will have to make do with less. Less people, less tax dollars and less sales for the businesses that employ the residents. With a lower population, revenue sharing from the state and federal government will not be as great. Yes, most revenue is shared on a population basis so there will be a cut. But, less people will also mean less representation in both the state and federal governments. States that have more representation will now demand a bigger share of the dollars.

But, there is something else going on that most don’t know about. It is the Headlee Amendment. With property values falling like they have because of foreclosures and people leaving the state (creating less demand) taxes generated from the property are also falling. Cities are having to work with budgets that are far less than they were just a few years ago. Services are being cut, personnel are being laid off and the security of communities is being affected. Many people are assuming that when property values start to grow again, so will tax revenues. But, the Headlee Amendment only allows a small increase in property tax revenues each year. Local governments now need to examine every means possible to make up for the loss of revenue over the long haul. They could ask for a Headlee override, but that is not likely in the short run.

Another way is begin consolidating services with other communities or create regional consortiums to provide base services. Michigan Governor Rick Snyder in his government restructuring drive, is planning on asking the legislator to reduce revenue sharing to communities that don’t consolidate services with other communities.

Tight knit, well run communities may not want to consolidate with neighboring communities. The communities that they may need to consider consolidating services with may not be very well run. They also may have other problems like high unemployment or crime that wouldn’t make it a good fit.

But, let’s move back to the opening of this post. Detroit is losing population because people don’t like the way the city is run, they can’t make a good enough living, because crime is bad, or, for a long list of other reasons. If a community creates a large, intertwined system of services with other communities, people will not be able to just move across the street to avoid the problems in one community. They will have to either stay put and suffer or move much farther away, like out of state. Neither would benefit the local communities or the state.

With few exceptions, many small players is always better than a few large players. This is true in business and government. In business, many small players means no one business can dominate the market, if one fails there are plenty more and competition is much greater. Government works the same way. If people live in a region with many small communities, if one community turns bad, they can leave and go to another. But, if there is a large, regional consortium that is managing the entire region, there is nowhere to go except far away.

If the latest Census has taught us anything it is that people will vote with their feet. If we move to consolidating many of the small communities that we have now, we run the risk of people leaving the state.

Let’s not go there so people will stay here.


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