Survey: Federal funding cutoff is breeding concerns for Michigan cities

BY KYLE DAVIDSON, MICHIGAN ADVANCE

MICHIGAN—Many Michigan localities expect to see harm from the loss of public funding, though few are preparing for cuts according to a recent survey from the University of Michigan Center for Local, State and Urban Policy.

Released earlier this month, the survey examines city and county governments’ plans as funding from several major streams enacted during the administration of former President Joe Biden, including the American Rescue Plan Act, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, come to an end, with federal cuts to housing and transportation championed by President Donald Trump and congressional Republicans also on the table.

The survey included county, city, township and village officials from 1,328 jurisdictions across the state, with a 72% response rate. In their responses, 40% of local government officials said the loss or pause of one type of federal or state funding would pose problems.

Of that 40%,  72% of cities, 68% of counties, 46% of villages, and 30% of townships voiced concerns with the loss of funding.

Concerns were greater in communities facing high fiscal stress, with 6% of jurisdictions with high fiscal stress reporting that the loss of American Rescue Plan Act Funding would pose a significant problem, compared to 2% of communities with low fiscal stress.

Through the American Rescue Plan Act, Michigan’s counties received a collective $1.93 billion in federal funds, while 49 townships received $1.8 billion and a group of smaller cities, villages and townships received $664 million. Although governments were required to commit the funds to specific purposes by December 2024, and have until December 2026 to spend them, the Michigan Public Policy Survey has previously noted administrative challenges tied to procuring the funding and navigating bureaucracy.

Despite these concerns, 60% of governments had not begun preparing for a loss of state or federal funding as of spring 2025. According to the survey, this includes 31% of counties, 42% of cities, 59% of villages and 66% of townships.

“Both uncertainty as well as other internal local governmental capacity challenges are hindering some local governments from girding themselves for the coming drop in revenues that will impact their budgets and their service provision,” Debra Horner, the survey’s senior program manager, said in a statement.

For local governments who are preparing for a loss in funding, 12% of jurisdictions focused on water and sewer infrastructure, with 14% focusing on other capital improvements, with both categories among the most commonly reported uses of ARPA funds.

Eleven percent of jurisdictions were preparing for a loss of funding for public safety and economic development while 5% were preparing for a loss of funding on energy programs and infrastructure.

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This coverage was republished from Michigan Advance pursuant to a Creative Commons license.