The preceding model provides a brief, single-year approximation of the services received and the taxes paid by the residents of the various jurisdictions in Ingham County. It makes no judgement about tax equity nor about the impact that policy decisions might have on the results. This section of the analysis examines the effects that major policy shifts would have on the tax burden of County residents. The data here are still based on the 1996 budget and the 1990 census. Many changes in governmental structure and policies have occurred since that time. For example, the Family Court reorganization is not incorporated into the model. Another significant change is the creation of the Capital District Library, which benefits residents differently than is depicted in this model. Also, a contract with Alaiedon Township was agreed upon for the provision of basic police services through the County Sheriff. Each of these would increase the level of equity among municipalities.

    This model is useful to determine how policy decisions will impact tax collection and delivery of services at the jurisdictional level. The implementation of four policies were simulated to forecast how the model results would change if major shifts were made in the allocations to certain departments. The four scenarios include a major transfer between departments, two residential property tax reductions, and a residential property tax increase. The agencies used, Health Department and Sheriff Office, are the largest agencies in the County and are therefore best suited for examination in the scenarios. The scenarios are meant only to indicate how variables interact with one another at the local level and are not meant to advance any set of political beliefs.

    The Scenario Results graphic in the Appendix shows the degree to which the outcomes shift when these major policy decisions are instituted. An additional outcome, average change in tax burden vs. benefits, compares the net changes from the original model as a function of municipal population. This can be viewed as a measure of transitional equity - the shift in tax burden that results from a change in tax collection or program implementation.

Scenario I - Funding for primary law enforcement services is reduced by $3.7 million and the balance goes to supply property tax relief.

    The size of the budget and personnel of the County Sheriff is left largely to the discretion of the Board of Commissioners. The duties of the Sheriff are determined somewhat by jurisdiction, as the rural outlying areas of the County receive a larger portion of enforcement services than the urban and suburban jurisdictions, which usually have their own police force. The Board can determine whether these services should be increased or decreased. This scenario examines the shift in the per capita revenues minus expenditures that would occur if the Sheriff’s budget for primary enforcement were reduced by $3.7 million. Such a decision would virtually prohibit the Sheriff from providing any law enforcement services to jurisdictions which do not have a contract with the Sheriff.

    Scenario I Results: As expected, most of the rural jurisdictions receive fewer benefits vis. County services. In fact, several municipalities which were net recipients become net payors. These include Alaiedon, Bunker Hill, Delhi, Vevay, Wheatfield and White Oak. Alaiedon experiences the largest shift of $139 more per year. Overall, the average shift in tax burden vs. benefits is $22, meaning that all municipalities are either increased or decreased by an average of $22. This outcome is due largely to the fact that Sheriff’s law enforcement activity is highly concentrated to 14 municipalities which account for a total of 12.5 percent of the population while the benefits of tax relief is spread out to the whole population. Although it accounts for just 4 percent of total expenditures, Sheriff activity has a profound impact on the outcome of the model. The average residents of Meridian and Lansing Charter benefit significantly in this arrangement, as their average tax burden declines by $20 per year. The average change in revenues minus expenditures is very high - 45.9 percent. This impact is due largely to the movement of rural municipalities from recipients to payors which causes a change of 400 percent or greater for some municipalities.

Scenario II - The Health Department’s annual general fund allocation is reduced by $2 million and the balance goes toward property tax relief. The Health Department’s appropriation from intergovernmental transfers is also reduced by $2 million, so that less income tax proceeds are transferred to the County.

    This scenario examines the shift in per capita revenues minus expenditures that would occur if the Health Department’s budget were reduced by a total of $4 million. Since a large portion of the Health Department’s budget is state-sponsored matching funds, a reduction of $2 million in the general fund allocation is likely to result in an equal reduction in state funds. The reduction in services which would result are assumed to be distributed among all health services and clinics equally, resulting in a 27 percent reduction in programs to service the economically disadvantaged and a 27 percent reduction in programs to service the general population.

    Scenario II Results: Most jurisdictions are affected only marginally by this shift in policy, with a shift of less than a $15 per capita from the 1996 results. Lansing residents pay an average of $6 more per capita under this policy. Since Lansing accounts for 44 percent of the County’s population, this amounts to a value large enough to account for the small tax benefits received by most other jurisdictions. The average change in tax burden vs. benefits is just 10.8 percent - an average shift of just $6 in either direction.

    Scenario II serves only a theoretical purpose.  In fact, a $2 million reduction in intergovernmental revenues would not result in a $2 million reduction in income tax for County residents.  Rather, the portion of the tax on County residents' incomes that goes to fund County services would be reduced.  The County has no authority over the collection or disbursement of taxes on income.  However, this scenario is useful in estimating the impact of a significant change in County policy.

Scenario III - Property taxes are increased by $4 million to support the efforts to provide primary access to health care for County residents.

    The Board of Commissioners and the Health Department have stated publicly the desire to provide access to primary health care for uninsured individuals. If implemented, support for this goal might need to come from an increase in the property tax. This scenario examines the shift in per capita revenues minus expenditures if the Health Department’s budget were increased by $4,000,000 to assist in the provision of primary health access. The increase in services is assumed to benefit lower-income individuals - a characteristic which is estimated by the poverty rate.  The poverty rate is the best available estimate, given the limited number of data sources.  It is, however, not a reliable indicator of insurance since those within 185 percent of the poverty line are eligible for some Medicaid benefits.  But the poverty rate is a reliable indicator of low-wage earners and number of low-wage earners is a factor used to estimate the rate of uninsured.  Actual data could not be found that connects number of uninsured with local jurisdiction.  Actual data of the number of uninsured by locality would yield a different result.

    Scenario III Results: This scenario is in many ways the inverse of Scenario II. As such, the results are in many ways the opposite. Localities with high poverty rates benefit at the expense of localities with high property values. Only Alaiedon and Williamstown residents are affected by an average of more than $15 per year. However, the degree of change is generally greater than in Scenario II and the average change in tax burden vs. benefits is 21.5 percent. The increase in degree of change is attributed to the shift in revenue sources.

Scenario IV - The Health Department’s budget is reduced by $4 million and the balance goes to fund the general operations of the court system, Sheriff, jail, and related agencies.

    This scenario examines a five percent shift in the County budget from one objective to another. This assumes that the degree to which the state matches funds for law enforcement purposes is the same as the degree to which they match funds for public health purposes when in fact, only about 20 percent of the funding to law enforcement, court costs, and related agencies comes from intergovernmental transfers. Unlike the other scenarios, this does not consider any change in County revenues but is only a shift in allocations. Under this scenario, priority of law enforcement is increased and the priority in public health is decreased. The benefits from this increase are distributed in the same proportions as they appear in the 1996 budget with funds coming from a general decrease in the Health Department’s total budget. The reduction in services which would result is distributed among all health services and clinics equally, resulting in a 27 percent reduction in programs to service the economically disadvantaged and a 27 percent reduction in programs to service the population.

    Scenario IV Results: This scenario is designed to isolate the municipalities which benefit more from law enforcement, incarceration, and court processing than they do from health programs. However, most municipalities are largely unchanged. The average change in tax burden vs. benefit is just 3.7 percent - by far the lowest of the scenarios. This is due to the fact that 57 percent of enforcement and court expenditures and 55 percent of Health Department expenditures go to benefit the general population. The majority of this transfer therefore goes from one segment of the population to another segment of the population within the same municipality. The remaining variables used for allocation, crime activity and poverty, are strongly correlated with one another. This also has the effect of minimizing the impact of the transfer.

    These scenarios support empirically what is presumed intuitively. A property tax reduction benefits the localities with high average property values. A decrease in the Sheriff’s budget for enforcement has a negative impact on those municipalities which depend on the Sheriff for basic police services. Allocations to the Health Department benefit the municipalities which have higher poverty rates. The results of the scenarios only measure the extent of the impact of these major policy changes. A more thorough examination of the rate in which the variables interact with one another at the municipal level can be found in the Variance graphics. This analysis examines the degree to which the outcomes for each municipality is dependent on census data, expenditures and revenues.