Local Government Organization
entity created by one or more general-purpose governments to produce
and provide a specific government service.
Charter (home-rule) government
unit A county, township, or village that has taken
the special steps necessary to permit it to organize and operate
in ways different from a general-law unit; by law, all cities are
General-law government unit
A county, township, or village that organizes and operates
in accordance with the general law set out in state statute and
constitution. Has not taken the special steps necessary to change
to a charter (home-rule) unit.
General-purpose government units
Counties, villages, townships, and cities; all but cities
may be either general-law or charter units (cities automatically
are charter units).
Special-purpose government unit
An entitye.g., an authority or a K12 or community
college districtcreated to carry out a specific function.
[APRIL 1, 2002] Collectively, if authorities are included,
there are more than 2,700 government units in Michigan (see
Exhibit 1), and they fall into two categories.
- General-purpose units are counties, cities,
villages, and townships; all have an elected board as their legislative
- Special-purpose units are K12 school
districts, intermediate school districts (ISDs), regional educational
service agencies (RESAs), community colleges, and authorities;
all have a governing body that may be elected or appointed.
General-purpose units of government operate with restricted
power, that is, the unit's authority is granted by the state, either
through the constitution or statute. Whether a unit is empowered
to engage in an activity depends on whether the state has expressly
granted it authority to do so. (By contrast, local governments in
most western states operate with permissive power, that is,
they may exercise any authority that the legislature has not expressly
prohibited or restricted.) In Michigan, counties, townships, and
villages begin as general-law units, but if they meet certain statutory
requirements, they may change to charter (home-rule) units. By law,
all cities are charter units.
- General-law units may organize themselves
and exercise authority only in the way that the state constitution
and statutes have specifically set forth for this type of government.
- A charter (home-rule) unit has more control
over its organization and broader authority than does a general-law
unit. The unit's charter sets forth the taxing and borrowing limits
(subject to state law), number of departments, and types of services
to be delivered to residents.
All Michigan counties but one are general-law units.
(Wayne County is the exception; the electorate adopted a charter
in 1980.) The difference between a general-law county and a charter
county is found in administrative and legislative functions.
Under state law, general-law counties may adopt, with
voter approval, a unified form of governmentthat
is, they may centralize their administration by having either an
elected county executive or a county manager appointed by the elected
board. Only Bay and Oakland counties have adopted the unified form,
both with an elected executive.
The state Charter County Act permits voters in a charter
county with population exceeding 1.5 million (only Wayne) to choose
to have either an elected county executive (as Wayne does) or an
appointed county manager, who handles the county's day-to-day operations.
Whether an elected executive has veto power, how staff functions
are handled, and over which line department s/he has control depend
on the provisions of the charter adopted by the electorate.
State law gives the home-rule (charter) option to
townships of 2,000 or more residents. One advantage of home rule
for townships is some protection against being annexed by adjacent
cities. Townships may achieve charter status via (1) a resolution
adopted by the township board or (2) a vote of township residents.
The latter course gives a township greater taxing authority than
the former: five mills upon voter approval of charter status plus
authority to go to the voters for additional mills. If charter status
is achieved by resolution, the authority to tax property is restricted
to the amount levied on the date the resolution is adopted. A charter
township board also may appoint a superintendent or manager to serve
as the township's chief administrative officer (general-law townships
are administered by the elected township board). Of Michigan's 1,242
townships, 130 have opted for charter status.
A Michigan village may establish itself, with voter
approval, as either a general-law or (if its population is 750 or
more) a home-rule (charter) unit. Although both types may levy up
to 20 mills for operation, general-law villages are limited as to
how they may use the millage: streets (5.0 mills), cemeteries (2.5
mills), and general government operation (12.5 mills). Of the 261
villages in Michigan, 213 are general law and 48 are home rule.
All of Michigan's 272 cities are home-rule units.
A city's residents, in adopting a charter, determine the form their
government shall take; three options are available.
- Council, manager Under
this structure, which has been adopted by 180 cities, the city
council appoints a city manager who administers the day-to-day
operations of city government; the council is responsible for
policy decisions and adopting the annual budget.
- Strong mayor, council This
structure is used most often in larger cities where the mayor
is elected directly by voters and is not a member of the legislative
body (council). The mayor is the chief administrative officer
and appoints/removes administrative officials designated by the
charter as reporting directly to him/her.
- Weak mayor, council This
structure is found mostly in smaller cities where the mayor is
a council member and elected to the mayoralty by fellow council
members. The mayor chairs council meetings and serves as the city's
chief administrative officer.
K12 districts, ISDs, RESAs, community college
districts, and authorities are special-purpose governmentsthat
is, they have been created to produce and provide a specific government
service. They have limited property-taxation authority and are governed
by an elected or appointed board. Among the purposes for which authorities
may be created are to operate an airport, harbor, or port; finance
and oversee building or transportation projects; promote downtown
development; construct and operate sewer and water systems; or operate
emergency (police, fire, ambulance) services.
Authorities are of two general types, depending on
how they are created.
- By vote If the authority
is created by a vote of the residents in the general-purpose government
jurisdiction(s) that wish the authority to exist, the voters also
decide whether the unit shall have power to levy a property tax
as a source of revenue.
- By resolution If
the authority is created by resolution by the general-purpose
government(s), it does not have the power to levy a millage for
operations and must rely on other funding (e.g., an appropriation
from the board[s] that created it).
Intergovernmental Cooperation and Consolidation
The Michigan Legislature has enacted several statutes
permitting intergovernmental cooperation. Basically, any local governments
authorized to engage in a given activity or provide a given service
may do so collaboratively. Numerous examples of intergovernmental
contracting and cooperation may be found, ranging from joint fire
departments to sewer/water authorities. Intergovernmental collaboration
usually arises from locals' wish to reduce costs through specialization
or take advantage of economies of scale in producing and providing
There are three types of consolidation, although only
two occur regularly: functional and geographical (the third is political
and last occurred in 1837).
- Functional consolidation is service specificfor
example, consolidating fire, police, or emergency-service departments.
Across the state there are numerous instances of functional consolidation.
- Geographical consolidation is embodied in
the wave of school consolidations that occurred from the 1930s
to the 1960s, when Michigan reduced the number of public school
districts from 6,200 to the present 554. Geographical consolidation
ignores political or jurisdictional boundaries and focuses on
a service area, in this case the reasonable geographic boundary
of a school district.
The property tax is an important revenue source for
local governments, and its distribution as a percentage of total
collections has shifted since the 1994 passage of Proposal A. As
Exhibit 2 shows, prior to Proposal A, about
72 percent of the property taxes collected annually were directed
to education, primarily K12, and the balance went to other
local units. Local government now receives about 42 percent of total
property tax collectionsan increase of about 14 percent from
before Proposal A (2000 data). Thus, while Proposal A reduced property
taxes, it increased the share of revenue available for non-education
State Revenue Sharing
The State of Michigan shares some of its tax revenuemore
than $10 billion in the 1990swith local units of government.
Funding for the revenue-sharing program is based both in the constitution
and in law.
In Michigan, revenue sharing is unrestrictedthat
is, there are no strings attached: local governments may use it
as they see fit. Until 1996, when the state revenue-sharing
program was changed, local governments had received a portion of
revenue from four taxes levied by the state: sales, income, intangibles,
and single business. These funds were distributed to cities, villages,
and townships in two ways: per capita and by relative
tax effort (RTE). Per capita distribution is straightforward:
High-population units (e.g., Oakland County) receive more than low-population
units (e.g., Montmorency County). Relative tax effort rewards units
according to how their taxation level stacks up against the state
average: high-tax units receive more than low-tax units.
The 1996 changes (1) removed income, intangibles,
and SBT revenue from the revenue-sharing pool (these were offset
by the new sales tax revenue) and (2) began to phase out the use
of RTE as a basis for revenue sharing. Constitutional revenue sharing
now is distributed solely on a per capita basis, and the statutory
sales-tax share is distributed according to
- a percentage share of the unit's FY 199798
share of revenuethe percentage is decreasing every year
as the RTE is phased out;
- the per capita value of the unit's total taxable
- yield equalizationa formula that offsets
variances in taxable-property wealth among local units and helps
units that have low such wealth; and
- a formula whereby a unit's population is multiplied
by a weight factor assigned to that type of unit.
The movement from RTE to full per capita distribution
is creating winners and losers. Winners are units of government
with large and rapidly expanding population (e.g., townships that
are being suburbanized); losers are units with slow-growing or declining
population (e.g., older, land-locked cities).
State revenue sharing is particularly important to
townships, which currently derive about 40 percent of their general
fund revenue from the program.
All local governments share three problems, and all
have to do with money: declining authorized millage rates, the difference
between the state-equalized and taxable value of property, and fluctuating
state revenue sharing. The so-called Headlee amendment (1978) amended
the state constitution to clarify the responsibility of state government
with respect to revenue sharing with local units, and it has provided
some legal recourse for local units in their attempts to secure
funding from the state. (Readers are directed to Michigan in
Brief, 6th Edition, which may be found at www.michiganinbrief.org,
for specific information about the Headlee amendment.)
Such issues as transportation funding, fire protection,
land use, solid waste management, and consolidation and intergovernmental
contracting also are persistent concerns for many local officials.
Problems in these areas frequently have to do with local controleither
among local jurisdictions or between the locals and the state. The
line between state and local authority sometimes is vague, and spheres
of influence often are overlapping, ambiguous, and contested.
More than 100 large cities nationwide require their
employees to live within city boundaries. Detroit did so in 1999,
hoping to create a safer and more vibrant city by bringing its employees
(especially police and firefighters) into the community and encouraging
economic growth as these new residents lived, raised their families,
and spent money in the city. Residency opponents argued that such
requirements violate individual freedom of choice. In 1999 the Michigan
Legislature enacted a law prohibiting Michigan jurisdictions from
imposing residency requirements, although they are permitted to
require that employees live within 20 miles.
How local land shall be usedfor agriculture,
recreation, housing, industry, small business, and so onand
the extent to which larger areas or the state should be involved
in land-use decision-making is a contentious matter and is discussed
elsewhere in this book.
ACORN, a community-advocacy organization, reports
that nationwide about 60 local government units require businesses
with which the unit has contracts to pay employees working under
the contract a wage that is higher than the federal minimum ($5.15
an hour) plus certain benefits, enabling the workers to earn a so-called
living wage. Michigan jurisdictions that have such a law are
- the cities of Ann Arbor, Detroit, Eastpointe, Ferndale,
Kalamazoo, Warren, and Ypsilanti;
- Ypsilanti and Pittsfield townships; and
- Washtenaw County.
Debate about the wisdom of a living wage is heated,
and state legislation to prohibit locals from imposing one has been
introduced. Among the arguments opponents make against such laws
- wage minimums should be set at the federal level,
- when laws vary from jurisdiction to jurisdiction,
doing business with the jurisdictions becomes complicated and
expensive, particularly for new businesses;
- they discourage firms from locating in living-wage
- enforcement requires additional local-government
- they discourage competition in bidding for jurisdiction
- they cost local units more when purchasing goods
- studies (e.g., Michigan State University, 1999)
show that they result in there being fewer low-level jobs available,
because firms cut back on the number of workers to compensate
for the higher payroll; and
- they pose a particular hardship for nonprofits
(e.g., the Salvation Army has moved its headquarters out of Detroit,
contending that it could not financially comply).
Proponents for living-wage laws argue that
- studies (e.g., Wayne State University, Urban Studies
Center and Labor Studies Center, 1999) show that the maximum possible
cost to both living-wage jurisdictions and employers is minor;
- most importantand they assert that this position
trumps all othersensuring that workers earn a livable wage
and receive benefits (e.g., medical coverage) not only helps workers
and their families but also the jurisdiction, the state, and society.
Let Local Votes Count
Local units had been anxious about encroachment on
their rights for many years, and in 1999 the Michigan Legislature
passed the municipal-residency ban, right-to-farm act, and imposed
a state construction code. This lead Michigan cities, in 2000, to
craft a ballot initiativeLet Local Votes Countto amend
the state constitution to require a two-thirds vote of the legislature
(rather than a simple majority) to pass any state law dealing with
an issue that could be addressed by city, county, village, or township
government. The Michigan Municipal League, which represents about
500 cities and villages, headed the effort. Opponents argued that
requiring a two-thirds vote would permit a minority to disrupt crucial
legislation that in any way affected local matters. Proponents argued
that something was necessary to protect the state from running roughshod
over the wishes of local citizens and the authority of the local
officials who speak for them. The initiative did not pass, and local
governments' scope of authority is likely to remain the same, at
least for now.
See also Highway Funding and Safety; Land Use
and Sustainability; Solid Waste and Recycling; Taxes on Businesses;
Taxes on Consumers.
FOR ADDITIONAL INFORMATION
Bureau of Local Government
Michigan Department of Treasury
430 West Allegan Street
Lansing, MI 48922
(517) 373-2621 FAX
Michigan Association of Counties
935 North Washington Avenue
Lansing, MI 48906
(517) 482-4599 FAX
Michigan Association of Intermediate School Administrators
1001 Centennial Way, Suite 300
Lansing, MI 48917
(517) 327-0771 FAX
Michigan Association of School Administrators
1001 Centennial Way, Suite 300
Lansing, MI 48917
(517) 327-0771 FAX
Michigan Association of School Boards
1001 Centennial Way, Suite 400
Lansing, Michigan 48917
(517) 327-0775 FAX
Michigan Municipal League
1675 Green Road
Ann Arbor MI 48105
(734) 662-8083 FAX
Michigan Townships Association
512 Westshire Drive
P.O. Box 80078
Lansing, MI 48908
(517) 321-8908 FAX
Office of Revenue and Tax Analysis
Michigan Department of Treasury
430 West Allegan Street
Lansing, MI 48922
(517) 373-8414 FAX
Readers are directed to Michigan in Brief, 6th
Edition, which may be found at www.michiganinbrief.org,
for a list of publications pertaining to local government organization
CONTENT CURRENT AS OF APRIL 1,
© 2002 Public
Sector Consultants, Inc.
Sponsored by the Michigan Nonprofit Association and the Council
of Michigan Foundations