The New Revenue Sharing: EVIP
The Good, The Bad, The Ugly
By Anthony Minghine
|Executive Director/COO Anthony Minghine updated our members about critical developments in Lansing—EVIP and the new EM law.|
For nearly a century, communities in Michigan have received funding from the state through a program called revenue sharing. As you are probably aware, there are two components to revenue sharing: the constitutional portion and the statutory portion. The constitutional portion is guaranteed; it is written into our state constitution. It has remained stable and even grown somewhat. On the other hand, the statutory portion has dwindled. Over the past ten years, the state has failed to provide over $4 billion in funding to locals, and the governor’s new budget has further eroded local funding. Beginning in October 2011, the statutory source of revenue sharing is set to undergo some significant changes—way beyond the yearly downward ratcheting Michigan local governments have experienced. Essentially, Governor Snyder has eliminated the former statutory revenue sharing program and created a new program called Economic Vitality Incentive Program, or EVIP.
What Is EVIP and How Does it work?
The intent of EVIP is to encourage communities to make certain changes in their operations by tying funding to specific actions. The EVIP program identifies three different measures, or steps, that Michigan municipalities need to accomplish in order to receive this new state funding. Each step that is accomplished qualifies an eligible community for 1/3 of their possible EVIP funding. The total funding for EVIP is approximately 2/3 of what a community received under the former statutory revenue sharing (provided the community received more than $6,000 in total statutory payments). Unfortunately, a community that receives less than $6,000 is disqualified from the program altogether and will now receive zero dollars. There are two provisions that apply to new hires, and two that apply to all employees.
Dashboard and Citizen’s Guide
While no one is happy about competing for 2/3 of funding they historically received, the benchmarks are certainly achievable. Let’s take each step separately—the dashboard and citizen’s guide are not one and the same. The dashboard shows progress or trends in several key areas and is not limited to financial data—it also includes many important community factors. Municipalities are encouraged to track and report additional data that is important to them, beyond the required points. The dashboard should then be publicized on your website or other appropriate means. The League worked closely with the governor’s office and the state treasurer to identify appropriate measures, and assisted in formulating a working template that communities can use to create their dashboard (visit www.mml.org to access the template).
The citizen’s guide describes the financial condition of the community in a way that is understandable to a layperson. The League, in conjunction with Plante & Moran, one of the League’s Business Alliance Program participants, worked closely with both the governor’s office and the state treasurer’s office to develop a working template for the citizen’s guide. Communities can either develop their own versions of both the dashboard and the citizen’s guide, or use the state’s templates.
Expanding cooperation efforts are nothing new to most communities. For many years, local governments have looked to service sharing as a way to stretch tax dollars and deliver services more effectively. Nevertheless, as part of the EVIP program, communities need to look to further expand these efforts. We recognize that many communities are concerned about the equity of this requirement since it treats communities with numerous cooperative ventures the same as those with none, but unfortunately, that is the language in the law that passed. The League will continue to work on this provision for future iterations of the program, but for now we encourage all of our qualifying members to comply by developing a plan to expand cooperative efforts. Again, at this juncture, all that is required is a PLAN to expand cooperation, not actual agreements.
Retirement and Healthcare
The last provision relates to employee compensation matters; more specifically, to retirement and healthcare provisions. To qualify for this part of the EVIP funding, communities must indicate their intent to implement a number of changes to their employee compensation packages dealing with health care and retirement. There are two provisions that apply to new hires, and two provisions that apply to all employees. These provisions do not apply to existing contracts, but rather to new agreements entered into after May 1, 2012. There is a detailed summary of the provisions available at the League’s EVIP resource page on our website.
EVIP has its challenges, but in its present form it should be relatively easy for communities to comply with the requirements and receive the available funding. Each community must report its status in each of the three areas to the state treasury department on the prescribed form available at their website. Communities will receive funding beginning October 2011 as if they are in compliance, and payments will be made on the same schedule as statutory payments were received. This program will be self policing and communities are expected to exercise reasonable judgment in reporting their status. Again, the dashboard and citizen’s guide must be submitted by October 1, 2011; the cooperation plan by January 1, 2012; and the health care/retirement plan by May 1, 2012. As always, the League is here to help if you are unclear on how to proceed.
Three Criteria for Qualifying for EVIP Payments
1. October 1, 2011 – Communities must have a citizen’s guide and dashboard for citizens. The dashboard must include unfunded liabilities.
2. January 1, 2012 – Communities must produce a plan with one or more proposals to increase existing levels of cooperation, collaboration, and consolidation within their jurisdiction or with other jurisdictions. The plan must list previous efforts of cooperation, collaboration, and consolidation and include any cost savings and give estimates of any potential savings through future efforts.
3. May 1, 2012 – Communities must certify they INTEND to implement a number of changes to their employee compensation packages dealing with healthcare and retirement. There are two provisions that apply to new hires, and two that
apply to all employees.
Anthony Minghine is the associate executive director and COO of the League. You may reach him at [email protected]
How Your Solid Waste Program Can Bring in More State Revenue Dollars
By Michael A. Czuprenski
Are you thinking about how your community’s “dashboard” will look? Would you like to turn your dashboard arrow upwards in the ‘percent of community served by curbside recycling’ category? If the answer is yes, read on—the following case studies may give you some tips on how to secure more EVIP revenue sharing dollars.
The Southeastern Oakland County Resource Recovery Authority (SOCRRA) is comprised of 12 member communities (Berkley, Beverly Hills, Birmingham, Clawson, Ferndale, Hazel Park, Huntington Woods, Lathrup Village, Oak Park, Pleasant Ridge, Royal Oak, and Troy), representing almost 300,000 residents. From the time this consortium formed in 1951 through June of 2007, each community managed their own refuse, recyclables, and yard waste collection contracts. Beginning in July of 2007, that all changed. SOCRRA eliminated the borders and consolidated services after an exhaustive two-year RFP process.
The results were:
• $1,040,000 in first year savings (16 percent average annual savings)
• 20 years of guaranteed landfill space
• small, family-run haulers eager to provide exceptional service
• annual rate modifications that have resultedin rates going down as well as slightly up
• enhanced recycling opportunities for commercial and multi-family sectors
• number of days/week of truck traffic reduced in most communities
• customer service centers transferred from community to hauler
• dual-stream recycling program with members being paid $30/ton for their recyclables
• highlighted as a success story in the state’s Shared Public Services Initiative
In 2009, Traverse City and eight other jurisdictions in Grand Traverse County decided that they had heard enough complaints from residents about the excessive truck traffic and costs associated with individual subscription contracts. After a series of workshops, new intergovernmental contracts, franchise agreements, and local ordinance amendments, typical residential collection rates dropped from $15-$24 per household per month to $10-$12 per household per month.
City of Pontiac
In 2005, this city faced an impending budget crisis. With their landfill having less than five years of capacity, an aging truck fleet, property tax millage at its max, and the Mackinac Center breathing down their backs about privatizing, the city wasted no time evaluating options. Their solid waste RFP process resulted in:
• automated refuse collection, via private contractor instead of municipal crews
• one-time $1,000,000 payment to the city upon contract execution
• selling off all equipment and airspace associated with the municipal landfill
• host community fee of $1/ton for private contractor’s use of city’s landfill
• private contractor closing the sanitary landfill at their expense
• one-time $2.5 million payment to city from private contractor for exclusive use of transfer station
• host community fee of $2/ton for private contractor’s waste brought into city’s transfer station
There are a multitude of options for Michigan communities desiring to leverage their solid waste program in order to help achieve more revenue sharing dollars from the state. The projects described above highlight many of these options and hopefully will lead to a lot of dollars and happier constituents.
Michael Czuprenski, P.E., is a principal associate with Gershman, Brickner & Bratton. You may reach him at 586-533-9430 or [email protected].