University of Michigan Gateway Ford School

State funding incentives increase local collaboration, but also raise concerns

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March 2012

Abstract

In 2011, the state of Michigan implemented major policy changes in its statutory revenue sharing program, through which it distributes funding to a subset of Michigan's 1,856 local governments. The new policy replaced formula-based funding with an incentive program that uses revenue sharing to foster local government reform. The new program, called the Economic Vitality Incentive Program (EVIP), requires local governments to certify that they have met state-specified standards for "best practices" in three categories (accountability and transparency; intergovernmental collaboration; and employee compensation policies) in order to receive their full allotment of incentive-based funds. This report focuses on the second EVIP category (intergovernmental collaboration and consolidation) and examines how Michigan’s local governments are responding to the state’s incentive-driven push for local reform. The findings are based on statewide surveys of local government leaders in the Fall 2011 and Fall 2010 waves of the Michigan Public Policy Survey (MPPS).

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Keywords: Intergovernmental Relations, Public Finance & Taxation




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