ALL REVENUES AND EXPENSES

1.    63.41% of County residents live in a municipality that in aggregate receives more County services than it pays in revenues. 36.59% of the population reside in municipalities that in aggregate pay more revenue than they receive in services by way of County expenditures. The municipalities which were net recipients in the per capita method were also net recipients in the ratio method, thereby confirming the results. Note that this does not mean that 36.59% of all residents give more tax dollars than they receive in services, rather those jurisdictions that are on average a net payor constitute 36.59% of the County’s population. Variations exists in all communities as to an individual’s benefits and tax payment situation.

2.    This model projects Lansing Charter Township as the largest net per capita payor (total revenues minus total expenditures divided by population), with $166 annually. This means that on a per capita basis, the funds received from Lansing Charter Township in total County property taxes, special millages, income taxes and user fees are $0.45 more per day than expenditures made on residents for County services. Stockbridge Village is the largest net per capita recipient at ($131) annually, or ($0.36) per day. These results can be a bit misleading because they includes commercial property taxes as well as residential property taxes. Put another way, the numerator (total tax load) is not fully compatible with the denominator (number of residents). A more accurate comparison of residential tax burden by municipality is the Residential SEV minus Expenditures.

3.    The ratio method confirms Lansing Charter Township as the largest payor, as it receives $.61 in County services for every dollar it produces in County revenues, and Stockbridge as the largest recipient, as it receives $1.47 for every dollar it produces. The level of cross-subsidization here is likely to be overstated for the same reasons as above. A municipality in which the ratio of property value to residents is relatively high is very likely to be projected as a net payor. Since industrial and commercial lots contribute to property value without contributing to the number of residents, highly commercialized municipalities will be projected as net payors in this model.

4.    The median County resident probably lives in the City of Lansing and is likely to receive $53 more in services than is paid in total taxes and fees ($0.15 per day) or $1.19 in services for every dollar paid in taxes and fees.

5.    Lansing’s suburbs tend to be net payors while rural towns and townships tend to be net recipients. A primary factor which contributes to this is the poverty rate, which accounts for 11 percent of the expenditures in this model. Many County programs are designed to assist the lower-income segments of the population. Such individuals tend not to reside in suburban municipalities to the degree that they reside in urban and rural areas. A large portion of the revenues used to fund these activities comes from intergovernmental transfers from the state and federal government through individual income tax payments - a policy for which the County has no jurisdictional control. A second factor which contributes to this trend is population density. The model distributes many County expenditures according to population although some expenditures might be attributable to land area as well (e.g. drains). However, the factor that influences this outcome the most is the ratio of residential SEV to total SEV. Municipalities with a high percentage of industrial and commercial property will naturally have a higher tax burden per resident.

PROPERTY TAXES AND EXPENDITURES

6.    Comparing the revenues for which the County has jurisdictional control (all property taxes) to total expenditures yields a wide disparity between jurisdictions on a per capita basis, from $48 in Lansing Charter Township to ($259) in Stockbridge. The range is due largely to commercial and industrial lots which are less common in Stockbridge and other rural localities than they are in Lansing Charter Township and other urban and suburban localities. It is also a function of the ratio of residents to the total amount of property taxes produced by a locality. This result shows that the proportion of revenues from commercial and industrial property taxes is much greater in Lansing Charter Township than in any other locality.

7.    The ratio method confirms the disparity. Expenditures over SEV revenues ranges from $.84 in Lansing Charter Township to $3.01 in Leslie City. The average municipality receives $1.81 for every dollar it produces in property taxes.

8.    Comparing per capita residential property tax to total expenditures produces similar outcomes, with the greatest disparity going to Alaiedon Township at ($416) per person and the smallest disparity going to Williamstown at ($114) per person. Put another way, the average resident of each jurisdiction annually receives between $114 and $416 more in services than is paid through residential property tax. Suburban areas with higher residential property values tend to have a greater burden than rural areas where residential property values tend to be lower. This statistic is perhaps the best way to compare individual tax load between jurisdictions because it compares residential tax burden to the number of residents.

9.    The ratio method reveals similar results. Williamstown receives $1.64 in County services for every dollar it produces in residential property taxes and the City of Leslie receives $5.18 for every dollar it produces in residential property taxes. The City of Lansing is very near Leslie, at $5.03. These results are a direct function of the proportion of residential value and population density. The average municipality receives $3.86 for every dollar produced in residential property taxes.

LIMITS OF THE MODEL

10.    Much of the disparity that exists in the levels of cross-subsidization between units results from the characteristics of the local units in question, and not necessarily the policy objectives of the County. County governments are constrained in both the amount of revenues which can be produced and the delivery of services to populations. Stated differently, the County directs its services toward individuals or defined groups, not geographic areas or governmental jurisdictions. The County also collects property taxes from parcels, not regions. The local residency of defined groups and the value of property are incidental from a policy standpoint.

11.    The very structure of revenue collection and the functions of county government also account for much of the disparity. For example, Court activity is determined largely by the incidence of crime and the formula used to fund income assistance programs is determined largely by the number of residents whose incomes are below the poverty level. This is a result of the structure of county government in a federalist system and the division of the responsibilities of tax collection and service delivery. Cities, townships and villages also have different roles and duties in this system.

12.    The data used in this model are entirely point estimates - budgets, census data, criminal activity, etc. are rarely exactly correct. As such, the outcomes are also only estimates. However, when ranges of plausible estimates are substituted for the point estimates, a statistical program reveals a high level of accuracy in the model - all but four municipalities are within $10 of their highest and lowest possible estimates. A range of outcomes appears in the Appendix.

13.    Note that this model considers average per capita effort by locality, making no attempt to measure cross-subsidization within a particular unit. Undoubtedly redistribution would exist within these local units as well. For example, a similar model applied to a city might show cross-subsidization among neighborhoods.

14.    Lastly, this model attempts to describe a phenomenon that is fairly obvious - a system of taxation which utilizes a proportional or percentage taxing rate will collect more tax dollars from wealthier communities. A mix of services which are designed to assist lower income individuals contributes to this as well. Cross-subsidization among units of government is inevitable. However, this model attempts to provide some insight into the level of cross-subsidization and the factors which contribute to this phenomenon.