Michigan Governor Takes on Local Governments

The new governor of Michigan issued a stern challenge to local governments Monday, saying he wants to withhold revenue sharing from municipalities to prod them into reducing expenses and consolidating services.

At an event in Grand Rapids, Governor Rick Snyder called on local governments to trim employee compensation, enroll their employees in a 401(k) rather than a guaranteed benefit pension plan and make workers pay 20 percent of their health care premiums. He also wants local officials to consider merging services and posting more financial information online.

The plan would cut about $100 million, roughly 10 percent, from revenue sharing funds that the state sends to local governments. It would also hold $200 million in a reserve to be distributed to municipalities that enact the changes Snyder wants, according to the Detroit Free Press . Local leaders reacted cautiously to the plan. Detroit Mayor Dave Bing called the revenue sharing cuts "a serious impediment to our progress." The city stands to lose about $59 million under the proposal. Other local officials in the state praised the governor for giving them more flexibility to share services, even as they expressed concerns about the cuts. Under the proposal, localities that decide to share services would have to rewrite collective bargaining agreements. Some Democratic lawmakers criticized the plan as another way to force concessions from public sector unions.

Snyder has been defending a wide range of spending cuts ever since his budget came out in February. Protesters have turned out at the Capitol in massive numbers over the past several weeks, many of them retirees who oppose taxing retirement income to pay for $1.8 billion in business tax breaks that Snyder says are necessary to attract new corporations. A recent poll found most residents oppose taxing retirement income, a change that would raise about $900 million, according to the Lansing State Journal .

Education advocates meanwhile are against Snyder's proposed $960 million reduction in aid to K-12 schools, a roughly 5.3 percent cut, according to the Kalamazoo Gazette . The superintendent of Grand Rapids schools said his district "may be facing our Armageddon," reports The Grand Rapids Press .