LANSING, Mich. (Michigan News Source) – Michigan’s Department of Treasury has unveiled its latest compassion project: a $2.5 million pot of money for cities, villages, and townships that qualify as “financially distressed.” Translation: if you’ve struggled to keep your books balanced, Lansing has a consolation prize waiting.
Under the Financially Distressed Cities, Villages and Townships (FDCVT) grant program, local governments meeting at least one condition of “probable financial distress” can apply for up to $2 million – meaning a single municipality could claim a large share of the available funding. Applications are due by January 30, 2026.
According to the press release from the Michigan Treasury, the money is to help fund special projects in order to “free up tax dollars for important services.”
The messier the books, the better the odds.
The treasury helpfully explains who gets priority – and it’s bonus points if your community has declared a financial emergency in the past decade, is operating under a deficit elimination plan, or has watched its general fund balance steadily sink below 3 percent of revenues. In other words: consistency matters, especially when it comes to bad habits.
But to taxpayers in communities that have tightened belts, made tough cuts, and kept budgets in check, the message sounds different: prudence is optional, and poor management appears to result in a pay off in the end.
Moral hazard, now with a grant application.
This is the classic government paradox. Cities that lived within their means get applause and not much else. Cities that didn’t, get cash and encouragement. There’s little explanation for how this avoids incentivizing future mismanagement, other than optimistic faith that next time will be different.
School districts, notably, are excluded – apparently fiscal discipline is still expected in classrooms, just not city halls.
Free money, expensive lesson.
The program may help struggling municipalities in the short term. But it also reinforces a familiar lesson in government finance: when consequences disappear, so does accountability. And somewhere, a city treasurer is learning that balance sheets are optional – as long as Lansing’s checkbook stays open.
