LANSING — Charles Dickens penned his classic novel, Oliver Twist, as a commentary on England’s Poor Law Amendment Act of 1834. It exposed unseemly and unsettling workhouse conditions for England’s  orphaned children. Oliver himself succinctly summarized those conditions when, after consuming his alloted daily bowl of gruel, bravely stepped forward to ask for “more.”

Over the past two months, as the Legislature has considered the fiscal 2007 budget, the word "more" has been showing up. But it will likely become even more common when lawmakers begin another looming political discussion, the one about a very large annual state expenditure: revenue sharing, which awards roughly $1 billion in state tax revenue to local governments.

When it comes to revenue sharing, ‘more’ is exactly what Michigan’s cities, villages, and towns are asking for. Although not orphaned, local governments feel as though the state treats them as something akin to discarded stepchildren at a time when their fiscal health is in serious need of an infusion – the capital kind. 

At the center of the discussion is Representative Dan Acciavatti, the chairman of the House Appropriations Subcommittee for General Government, the key Legislative forum for considering changes in the state’s revenue sharing formula, which expires next year.

Now in his second term in the state House, Mr. Acciavatti, who is a Michigan native, describes himself as a “citizen-legislator,” an engineer who took a hiatus from his family’s construction business to represent his neighbors in St. Clair and Macomb Counties.

Mr. Acciavatti , a Republican who represents portions of Macomb and St. Clair counties, is the second generation of his family dedicated to serving the public as an elected official. His mother, Mary Ann Acciaviatti, served eight years on the St. Clair County Commission while he was growing up.

Revenue Sharing Debate On The Way
All of that experience and depth of understanding about the give and take of policy making will help Mr. Acciavatti guide the Legislature down the long and politically complex path to reauthorize the revenue sharing formula. Revenue sharing, which is administered by the state Department of Treasury, is essentially a local government rebate on sales tax collections. The amount that local governments receive is determined by a multi-faceted formula.

Although one part of the revenue sharing formula is determined in the state Constitution, at issue in the budget process is the statutory share – the level actually appropriated by the Legislature through the annual budget process. Generally that amounts to roughly a third of $1 billion sent to local governments annually.

Earlier this year, Governor Jennifer M. Granholm proposed $405.3 million in statutory payments to local governments, about 36 percent of $1.11 billion of total revenue to be shared. In a series of Legislative hearings, and in written testimony, local governments have responded with a consistent message: That is not enough.

Whether the comments came from small towns like Brown City, Ishpeming and Three Rivers, growing townships like Canton, Waterford and Addison, or cities like Grand Rapids, Flint, and Detroit – local government officials have explained their common plight. Communities are losing money, laying off key personnel, and are financially at risk of reducing the services that maintain their communities’ quality of life. Local government officials say citizens deserve better.  

Cities, Village, Towns Have A Point
The state’s budget data substantiates what local governments assert. In each of the last five years, revenues shared with local communities have declined. The cumulative loss over those five years is $1.5 billion. According to the State Department of Treasury, 667 communities in Michigan have negative balances for one or more critical programs.

Representative Acciavatti , who listened to local officials and was sympathetic, responded with a new approach. He proposed in House Bill 5780 to add $15.2 million to the revenue sharing pie next year, and tie the extra money to performance measures that contain costs. His proposal, which he called SHARE grants — Supplemental Help for Accountable Result Efficiencies — calls for awarding Michigan communities more money if they do such things as take measures to contain health care expenses, retirement costs, or share police, fire, or emergency services with other local governments. Communities would have until June 30, 2007 to formally adopt resolutions that assure the state they are taking steps to contain costs in at least three of the program areas the Legislature identified for potential cost-savings, including modernizing roads, bridges, public buildings, treatment plants and other infrastructure to attain higher levels of environmental protection.

Mr. Acciavatti’s proposal displays his characteristic resourcefulness. While he was still a student, Mr. Acciavatti worked summers and weekends in the family business as a landscaper and member of the cleanup crew. After earning his engineering degree at the University of Michigan, he returned to work with his father and brothers until he was elected to the House of Representatives in 2002. 

Mr. Acciavatti commutes to Lansing from the Chesterfield Township home he shares with his wife, Michelle. An avid mountain biker, his neighborhood rides also give him ample opportunities to stop and talk to constituents. Representative Acciavatti granted the Great Lakes Bulletin News Service an interview, where he reflected on his leadership, the state’s future, and Michigan’s unfolding budget dilemma: 

Question: As chair of the House Appropriations Committee on General Government, you presided over a series of hearings that brought consistent appeals from local communities – particularly their hopes for revenue sharing. Considering the sum of the comments and testimony, what did you learn that was unexpected?  

Answer: The biggest surprise was the common thread connecting both large and small communities. Both are trying to provide daily services with limited resources – police, fire and other community programs such as neighborhood services. In that respect, they’re all facing the same problem.

On April 27^th, your subcommittee voted to include the SHARE grant amendment. But even so, concerns were expressed about the City of Detroit being treated differently than the rest of the state. It receives $2 million under this proposal. In your reply, you stated you had “no malice or ill will” towards Detroit. 

Would you elaborate on how the SHARE grants were envisioned, as well as the fairness issue raised by your colleague, Representative Morris Hood, a Democrat from Detroit?

On the equity issue I tried very hard to fight for these resources through the entire process. We’re demanding that the funds we allocate yield the best results . These are supplemental funds to encourage efficiencies and results. The complicated part is what’s fair – disbursing the money fairly. I see differences between communities. I also see the city of Detroit as our biggest city. That led us to yesterday’s committee discussion – not singling out one city. We’re trying to offer something that is fair for all communities.

As the budget process continues, the subcommittee reports now go to General Appropriations. Do you anticipate difficulty in preserving your committee’s recommendations – specifically on the SHARE grants? 

I think I can get it through the committee process and the full House floor. I have made it a priority and so has the House leadership. The difficulty will be getting it through the Senate and the governor. But I do think we have a pretty good shot.

Staying with the budget process for the moment, what do you believe should be the state’s budget priorities – overall – in next year’s budget? And what are the differences between the governor’s proposal and the majority party? 

Our main priorities should be education, health care, and public safety – they have been our priorities throughout the process. Those three will be highlighted. But the devil is in the details. We will have a budget that is balanced, and also that funds programs that are yielding the best results. 

What is your sense of how the Senate will respond to the budget version that will be forwarded by the House?

Every year it’s a three-legged stool – the House, the Senate and the governor. Everyone has their priorities. At the end of the day, we’ll wind up with a budget that somewhere in between. I don’t expect us to agree 100 percent on all priorities. But our chamber will report out a responsible budget that lives within its means.

Looking ahead to revenue sharing reauthorization. Are shared local services or local consolidation – two of the criteria for the SHARE grants – are those reforms necessary to return fiscal health to local governments?

It’s going to depend upon the local government. Specifics will change greatly from community to community. I do think that these are things done in business practices and other competitive environments. Government should at least look at this approach – to ensure our local governments are efficient.

Another question on reauthorization, During the recent committee hearings, there were suggestion by one of your colleagues that per capita funding would be a better approach than a weighted formula. This week, your comments suggested that per capita might be the way to go. Will per capita funding be your focus during reauthorization? 

The discussion of what formula should be used will definitely be a part of the overall big picture. It’s going to be discussed—absolutely and should be. The SHARE grant –which I referenced – my comments were specific to that.

When we have the overall discussion, per capita will be a part of the discussion. But something has to be in place for our older cities with older infrastructure and different challenges. Perhaps the more important part is performance indicators, results for the money appropriated.

Now that elected and governmental officials have spoken to legislators about revenue sharing, are there windows of opportunity – specifically in the budget process – for citizens to appropriately weigh in? 

They can always write their legislators, all of their elected officials and the governor’s office. That’s the best way.

You can follow the process on the Internet – set up meetings with your local representative.

Is there anything I haven’t asked about revenue sharing that you feel would be important for citizens to know and understand? Any closing comments on what’s ahead for revenue sharing?

It hasn’t really been a part of the discussion in years past. If we’re going to budget results, revenue sharing has an opportunity to have an increase in funding and the results that our citizens see on a daily basis. I hope the committee process shined light on this.

Charlene Crowell, a journalist and public policy specialist, is the Michigan Land Use Institute’s state policy director based in Lansing. Reach her at Charlene@mlui.org.