Report 329, ( July 2000 ) 56 pages
Avoiding Local Government Financial Crisis: The Role of State Oversight
Over the years, the State of Michigan has enacted a number of laws to prevent or react to local government fiscal distress. Despite these laws, the state has remained relatively inactive in the oversight of local government finances, and a few units of local government have experienced fiscal distress. Through proactive monitoring of local government finances, the state could identify local units with management policies, financial practices, or debt management practices that allow financial conditions to erode. By continuously working with local governments, the state could assist in changing the course of those unit’s finances. Based on the experiences of other states, the likely result of such actions is tax savings for residents of those units likely to get into fiscal distress, improved management practices by officials of those units, and reduced interest costs for all Michigan residents.