Michigan’s $1.8 billion budget crisis has prompted Democratic Governor Jennifer M. Granholm and state lawmakers to engage a very old issue: How best to deal with one of the country’s most fragmented systems of local governance.

Michigan’s Constitution gives the state’s 1,242 townships, 259 villages, and 274 cities the power not only to provide services, but also make independent governing decisions. Only Pennsylvania has more local units of government. Critics and proponents alike recognize that Michigan’s unusually complex jurisdictional boundaries have fostered a distinctive go-it-alone political culture at the local level.

But in these days of short budgets and long-range financial problems, lawmakers in Lansing are struggling with two major questions: First, are local governments doing enough to collaborate in providing civic services like fire and police protection? And second, will compelling local governments to collaborate actually save the state any money?

Townships insist that their form of small government is less costly to operate. But Governor Granholm and some of her fellow Democrats in the state Legislature assert that all of those different units of government—1,775, to be exact—are together duplicating many services and wasting lots of taxpayer dollars.

"It’s about giving the tax payers more bang for their buck," said Liz Boyd, Governor Granholm’s press secretary.

House Democrats, mindful of Michigan’s huge and looming budget deficit, have introduced two proposals, and Ms. Granholm is proposing a third; each attempts to nudge local governments, particularly townships, to share services and cooperate. Smart Growth advocates support all three proposals, while many local officials remain strongly opposed to anything that they perceive as reducing the independence and authority of local jursidictions.

One Idea: Let Counties Do It
The most controversial of the three proposals is the Township Services Consolidation Act, (HB 4780-4788), sponsored by state Representative Paul Condino, a Democrat of Southfield. It would direct townships to transfer the responsibilities of tax collecting, assessing, and running elections from individual townships to the county. Local governments vigorously oppose Mr. Condino’s proposal, which is now under consideration by the House Committee on Intergovernmental, Urban, and Regional Affairs.

Governor Granholm has not taken an official position, but her office says it has been working with Representative Condino and generally favors its concept. "We are certainly supportive of reform," said Ms. Boyd.

But, say local government officials, the proposal has scant chance of passing in its current form. For example, the County Board of Commissioners of largely Democratic Monroe County in southeast Michigan unanimously opposed the measure on June 26th, 8 to 0. To the west, the respected Grand Valley Metropolitan Council, representing 31 largely Republican-dominated cities, villages, and townships in the Grand Rapids area, also voted unanimously on June 7 to oppose the bill.

"It forces townships that already provide these services in an efficient, cost-effective manner to surrender these functions to their county government," said the council in a statement.

The proposed bill is also raising a considerable fuss among local government officials who see it as a plain and simple power grab. By stripping townships of their authority to oversee elections and tax assessing and collecting, say these leaders, the state is reducing the influence of local governments.

"This is a first step to try to eliminate townships," claimed Lee Wilson, supervisor Garfield Township, just south of Traverse City. "That is kind of interesting because more than half the population resides within townships."

Robert Mann, the supervisor of Manchester Township in Washtenaw County, asserts that transferring the administration of elections to the county, as the Candino proposal would do, would not save money. Small rural townships like Manchester, he said, rely heavily on local retirees, homemakers, and other community members to staff polling places. These citizens, he said, want to contribute to their community and will accept lower pay.

A Rare Opportunity
What townships see as a threat, however, Smart Growth advocates see as a rare opportunity to shift how regions think about their responsibilities in the 21^st century, especially in regard to planning, zoning, and community design decisions.

"If you’re able to share services and work together, then obviously you’re going to be more likely to agree on planning and zoning kinds of decisions," said Eric Scorsone, an extension specialist and faculty member in Michigan State University’s Department of Agricultural Economics.

Robert Marans of the Taubman College of Architecture & Urban Planning at the University of Michigan, who is a board member of the Michigan Land Use Institute, said "there are opportunities for collaboration on very specific things. Once that gets going and people at the township level realize that there are some benefits and relatively little cost to that type of cooperation, then there is the opportunity to collaborate on a larger scale."

Mr. Mann, of Manchester, agrees that there are benefits to collaboration. Communities in his region, for example, each employ their own part-time assessor, meaning that the assessor has office hours only one day a week in each township. He says that pooling resources and hiring one fulltime assessor for the region would lead to a higher quality service.

"We may not save any money but we can give a lot better service," said Mr. Mann, who opposes the legislation. "Let us decide when and where we will work together. If it makes good sense to contract with the county, we are in favor of that."

Mike Bisco, who until June, 2007 was chairman of the neighboring Bridgewater Township Planning Commission, expressed considerably more enthusiasm for the proposed Township Services Consolidation Act.

"I think it’s a marvelous idea," he said. "I don’t, in concept, see anything wrong with it except that it takes political power away from certain entities in the township and they are afraid of it.

"There is no reason why the governments in this area couldn’t be combined," he said. "We are chewing up tax dollars to support five-member township boards in every one of these communities. How many dollars is that for doing the same job six miles away?"

Another Idea: Buy in Bulk
A second plan, proposed by state Representative Steve Tobocman, a Democrat of Detroit, generates much less controversy and could actually win legislative approval. The bill, introduced on April 5, encourages local governments to save money by purchasing supplies through the state’s already established bulk purchasing program, called MiDEAL.

MiDEAL offers a variety of products such as office supplies, vehicles, computers, and other technology. Because MiDEAL contracts are negotiated through the state and purchasing occurs in bulk, small governments could theoretically save a lot of money by combining their purchasing power. Local communities would also be able to reduce administrative costs in the bidding process, according to the program’s Web site.

The original version of Mr. Tobocman’s bill, HB 4587, which would have penalized communities for not participating in MiDEAL by reducing revenue-sharing payments, did not make it out of a House committee.

The current proposal, which passed the House unanimously on May 8 and has been transferred to the Senate’s committee on Local, Urban, and State Affairs, is a voluntary measure that reduces MiDEAL membership fees by up to 50% for local government units.

Only 68 townships in Michigan are currently MiDEAL members, according the Michigan Townships Association. David Bertram, legislative liaison for MTA, said the new version of the proposal is more politically palatable. "It’s a much better gesture," he said.

Granhom’s Idea: Cash for Cooperation
Governor Granholm’s plan also prompts local governments to cooperate; it would earmark $27 million in incentives to encourage communities to collaborate "creatively."

Her proposal would manage the incentives through the state’s existing revenue sharing program, which allocates a portion of the state’s tax revenue to local governments. According to the formula, townships, villages, cities, and counties should be collectively awarded about $1.1 billion annually. But, due to Michigan’s economic and fiscal crisis, over the last six years local governments have experienced a 55 percent decrease in "statutory" or discretionary revenue sharing dollars. That is a loss of about $600 million a year, according a 2007 report by Eric Lupher, a researcher at the respected and non-partisan Citizens Research Council of Michigan.

Since revenue sharing to local governments has only been fully funded by the state three times in the last 15 years—and a blue ribbon committee recently confirmed that many local governments are now in deep financial trouble and must find ways to operate far more efficiently—the Granholm incentives might appeal strongly to cash-crunched local government officials.

Ms. Granholm’s plan would offer communities a 2.5 percent increase in revenue sharing dollars if they develop "cooperative agreements" to share "core services" like garbage collection, road, sewer, sidewalk maintenance, and police and fire protection.

In her State of the State address in February, the governor described the proposal this way: "It's simple. When they show us they're consolidating or sharing, we'll ‘show them the money.’"

But the governor's proposal faces a serious challenge from the Republican-controlled Senate, acording to Ms. Boyd. In a budget bill now awaiting action by the House, the Senate removed Governor Granholm's $27.5 proposal for providing incentives to local governments that collaborate.

The Michigan Townships Association says the governor’s plan has merit, though it worries that the plan may be designed to benefit cities more than townships. According to the MTA’s Mr. Bertram, the governor worked with cities and not townships in formulating her proposal.

"I think that’s a bit disingenuous. They can’t fashion it so that’s just going to reward cities," said Mr. Bertram.

Liz Boyd, Ms. Granholm’s press secretary, said neither cities nor townships were invited to participate in formulating the proposal. "There were not a lot of detailed discussions with any specific group," she said.