This morning, I testified on behalf of communities throughout Michigan regarding the 2012-13 budget recommendations for the Economic Vitality and Incentive Program (EVIP, formerly statutory revenue sharing). Joining me was Tony Minghine, Associate Executive Director of the League.

Before we testified, the Treasury Department testified.  They outlined the EVIP program, both previous conditions and new conditions this year. They talked about the same three buckets of dollars to qualify for, which are the same as last year.  They did outline some new conditions that they are asking for this year, though.
 – For reporting, they now want locals to have to provide a projected budget report based on three years instead of one.
 – In the consolidation of services component, Treasury is telling locals that they need to report on the projects that they offered up last year and, if they were not accomplished, what the barriers were. They also have to provide a timelne of steps needed to complete the projects. Also, communities have to provide at least one new consolidation project that they can look at for this year.
 – For employee compensation, Treasury is requiring an updated plan from locals including how things were implemented, the barriers, all the contracts they have, and the expiration dates.  New contracts before September 30th must meet EVIP requirements. Also, if PA 152 (80/20) requirements are not then the 10% revenue sharing penalties in PA 152 will also be included in boilerplate in the budget. Finally, by April 1 of next year, all locals would have to certify to Treasury that they are in compliance with PA 152, sections 3, 4, and 5. This means that opt-outs would not be included in satisfying the conditions for this 1/3 of EVIP funding. 

The League testified that the Governor’s proposed budget recognizes the 2% increase in Constitutional revenue sharing, totaling $13.6 million. For the EVIP portion, however – the amount is $210 million, which is flat funding from the current year’s budget after a $15 million supplemental was added mid-year. For years, local governments bore the burden of the state’s budget problems….taking on much more than our fair share of cuts from what statutory revenue sharing calls for in law. We are now over $5 billion below what we would have been had we been funded at the levels tied to actual sales tax collections.  The League also called on the Legislature to start looking at how we are going to invest in our communities and restore some basic funding, long term. 

Because of the confusion created when EVIP was created, we asked the Legislature not to change the conditions of the categories each year. For the Governor’s proposal, we stressed the problems that would be created with the new requirement for 3 year projected revenues and expenditures. When this program started, the Governor stated that he wouldn’t ask locals to do anything the state wouldn’t do. This breaks that commitment and we asked for it to be eliminated. Representative Eileen Kowall also stressed the need for this to be removed as an unfunded mandate. We also asked for language to be re-instated saying local “intend” to reach the employee compensation targets instead of the new language that now says we “shall” implement them. We asked for language in this section allowing locals to qualify for the funds for circumstances beyond our control (i.e. negotiations, arbitrator decisions).  Finally, we strongly called on the Legislature to not remove the opt-out as a satisfactory condition of employee compensation. This would cause big problems in communities where locals have opted out. The opt-out was added in to PA 152 to recognize the circumstances with local governments and their employees, and that policy should not be changed just one year after PA 152 was adopted (causing the loss of 1/3 of all revenue sharing).

Note that the Governor’s budget proposal was just that – a proposal.  The Legislature still needs to pass it and several legislators on the General Government Appropriations Committee expressed concerns about many of the things that we are concerned about.  The committee will have one more hearing on Revenue Sharing / EVIP, and we expect many other discussions before the budget starts moving.  Stay tuned!

Andy Schor is the Assistant Director of State Affairs for the Michigan Municipal League. Contact him at (517) 908-0300 or by email at [email protected].