State Funding Incentives Foster Local Collaboration, But Also Raise Concerns

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 each of three categories (accountability and transparency; intergovernmental collaboration and consolidation; 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). In order to encourage greater levels of intergovernmental collaboration, the EVIP program withheld the 2nd portion of revenue sharing funds unless eligible jurisdictions submitted a plan to the state by January 1, 2012, documenting their plans to launch new or expanded collaboration or consolidation efforts.

Findings in this report are based on statewide surveys of local government leaders in the Fall 2011 wave of the Michigan Public Policy Survey (MPPS), as well as supplementary data from the Fall 2010 MPPS wave which focused on intergovernmental collaboration.

Keywords: revenue sharing, intergovernmental collaboration