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Michigan state budget and finances

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Michigan budget and finances
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General information
Budget calendar:
Annual
Fiscal year:
2015
State credit rating:
AA- (as of 2014)
Current governor:
Rick Snyder
Financial figures
Total spending (state and federal funds):
$51.2 billion (estimated for 2014)
Per capita spending:
$5,170.30 (estimated for 2014)
Total state tax collections:
$25.1 billion (2013)
Per capita tax collections:
$2,534.06 (2013)
State debt:
$142.7 billion (as of 2014)
Per capita state debt:
$14,435 (as of 2014)
State budgets and finances
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Total state expendituresState debtTax policy in Michigan
Note: This page utilizes information from a variety of sources. As such, the currency of the information varies somewhat. The information presented on this page reflects the most recent data available as of February 2015.
Between fiscal years 2013 and 2014, total government spending in Michigan increased by approximately $4.2 billion, from $47.1 billion in fiscal year 2013 to an estimated $51.2 billion in 2014. This represents an 8.8 percent increase. The cumulative rate of inflation during the same period was 1.58 percent, calculated using the Consumer Price Indices for January 2013 and January 2014. As of 2014, financial services firm Standard and Poor's had assigned Michigan a AA- credit rating.[1][2][3]
According to Standard and Poor's, Michigan earned a AA- credit rating in 2014. Only three states had lower ratings.

Spending

Definitions

The information below comes from the National Association of State Budget Officers (NASBO). These spending figures are broken into three broad categories in order to facilitate comparison between the states.[3]

  • State funds: State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
  • Federal funds: Federal funds are "funds received directly from the federal government."
  • Total spending: Total spending is calculated by adding together the totals for state and federal funds.

These figures exclude spending from the sale of bonds.

2014 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2014 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.[3]

In Michigan in fiscal year 2014, total estimated spending amounted to $51.2 billion. Estimated per capita spending equaled $5,170.

Total estimated state spending, FY 2014 ($ in millions)
State State funds Federal funds Total spending Population Per capita spending
Michigan $30,605 $20,632 $51,237 9,909,877 $5,170.30
Illinois $50,392 $19,964 $70,356 12,880,580 $5,462.18
Indiana $17,282 $9,978 $27,260 6,596,855 $4,132.27
Ohio $46,043 $13,046 $59,089 11,594,163 $5,096.44
Wisconsin $33,887 $11,006 $44,893 5,757,564 $7,797.22
Per capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census estimates.[4]
Source: National Association of State Budget Officers

Spending by function

See also: State spending by function as a percent of total expenditures
Breakdown of spending by function in FY 2013
Source: National Association of State Budget Officers

State spending in Michigan can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2013 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percents, indicating the share of the total budget spent per category.[3]

In Michigan in fiscal year 2013, corrections accounted for 4.6 percent of total state spending, a greater share than in any neighboring state.

State spending by function as a percent of total expenditures, FY 2013
State K-12 education Higher education Public assistance Medicaid Corrections Trans-
portation
Other
Michigan 27.2% 4.2% .7% 26.4% 4.6% 7.8% 29.%
Illinois 13.3% 3.7% .3% 23.8% 2.1% 8.4% 48.4%
Indiana 30.8% 6.1% 1.4% 31.2% 2.7% 8.3% 19.6%
Ohio 17.% 4.3% 1.5% 29.2% 3.2% 5.1% 39.8%
Wisconsin 16.2% 14.3% .3% 17.2% 2.9% 6.9% 42.1%
Source: National Association of State Budget Officers
Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Spending trends

Between 2009 and 2013, the share of the Michigan state budget spent on Medicaid increased from 23 percent to 26.4 percent. See the table below for further details (figures are rendered as percents, indicating the share of the total budget spent per category).[3][5][6][7][8]

Spending by function from 2009 to 2013 (as percents)
Year K-12 education Higher education Public assistance Medicaid Corrections Transportation Other
2013 27.2% 4.2% 0.7% 26.4% 4.6% 7.8% 29%
2012 27.2% 4.1% 0.9% 26.1% 4.7% 6.9% 30.2%
2011 27.6% 4.4% 0.7% 24.9% 4.5% 6.8% 31.1%
2010 28.4% 4.5% 1.1% 24.2% 4.7% 7.4% 29.7%
2009 28.9% 4.9% 1.1% 23.0% 5.0% 7.4% 29.6%
Source: National Association of State Budget Officers
Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."[3]

Revenues

2013 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2013 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "population" and "per capita revenue" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "population" and "per capita revenue" have not been abbreviated).[9]

In Michigan in 2013, total state tax collections amounted to $25.1 billion. Per capita tax collections equaled $2,534.

State tax collections by source ($ in thousands)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes Total 2013 population Per capita collections
Michigan $1,954,898 $12,268,026 $1,454,634 $8,239,086 $900,667 $265,343 $25,082,654 9,898,193 $2,534.06
Illinois $61,806 $14,705,739 $2,583,108 $16,538,662 $4,462,627 $363,378 $38,715,320 12,890,552 $3,003.39
Indiana $7,008 $10,298,491 $699,373 $4,976,375 $781,585 $167,899 $16,930,731 6,570,713 $2,576.70
Ohio N/A $13,636,046 $3,445,620 $9,869,545 $262,226 $117,511 $27,330,948 11,572,005 $2,361.82
Wisconsin $148,600 $7,088,411 $1,035,743 $7,227,690 $955,752 $66,416 $16,522,612 5,742,953 $2,877.02
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
Michigan tax collections by source in 2013
Source: Tax Policy Center

The table below lists 2013 tax collections by source as percentages of total collections. In Michigan, property taxes accounted for 7.8 percent of total state tax collections, a greater share than in any neighboring state.[9]

State tax collections by source (as percentages)
State Property taxes Sales and gross receipts Licenses Individual income taxes Corporation net income taxes Other taxes
Michigan 7.79% 48.91% 5.8% 32.85% 3.59% 1.06%
Illinois .16% 37.98% 6.67% 42.72% 11.53% .94%
Indiana .04% 60.83% 4.13% 29.39% 4.62% .99%
Ohio N/A 49.89% 12.61% 36.11% .96% .43%
Wisconsin .9% 42.9% 6.27% 43.74% 5.78% .4%
Source: Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014

Current fiscal year budget

See also: Historic Michigan budget and finance information

Fiscal year 2015

DocumentIcon.jpg See budget bill: HB 5313

Governor Rick Snyder announced his fiscal year 2015 budget proposal on February 5, 2014. Under the governor's proposal, total spending for fiscal year 2015 would have equaled approximately $52.13 billion (a 2.1 percent increase over fiscal year 2014), including $9.84 billion in general fund spending (a 7.1 percent increase of fiscal year 2014).[10]

On June 30, 2014, Snyder signed into law the fiscal year 2015 budget. The enacted budget totaled $53.2 billion. The budget included $10.1 billion in general fund spending and $12.3 billion in school aid spending.[10]

State debt

See also: State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Michigan had a state debt of approximately $142.7 billion. Its state debt per capita was $14,435. The report revealed that state governments faced a combined $5.1 trillion in debt. The obligation amounted to $16,178 per capita in the nation.[11]

Total state debt, 2014
State Total state debt State debt per capita Per capita debt ranking
Michigan $142,668,026,000 $14,435 25
Illinois $321,354,115,000 $24,959 5
Indiana $46,377,635,000 $7,094 48
Ohio $321,340,764,000 $27,836 4
Wisconsin $45,026,643,000 $7,863 47
Sources: State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014

Public pensions

See also: Michigan public pensions and Michigan public employee salaries

A 2012 report from the Pew Center on the States noted that Michigan's pension system was funded at 72 percent at the close of fiscal year 2010, below the 80 precent funding level experts recommend. Consequently, Pew designated the state's pension system as cause for "serious concern."[12]

Taken together, the funding ratio for the state's pension systems decreased from 87.12 percent in fiscal year 2007 to 65.86 percent in fiscal year 2011, a decrease of 21.26 percentage points, or 24.4 percent. Likewise, unfunded liabilities increased from over $9.5 billion in fiscal year 2007 to more than $31 billion in fiscal year 2011.[13][14][15][16][17][18]

Credit ratings

See also: State credit ratings

Credit rating agencies, such as Standard and Poor's, assign grades to states that take into account a state's ability to pay debts and the general health of the state's economy. Generally speaking, a higher credit rating indicates lower interest costs on the general obligation bonds states sometimes sell to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). This in turn results in lower interest costs, thereby lowering the cost to taxpayers.[19][20]

The table below lists the Standard and Poor's credit ratings for Michigan and surrounding states from 2004 to 2014. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest.[21]

State credit ratings, 2004 to 2014
State 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004
Michigan AA- AA- AA- AA- AA- AA- AA- AA- AA AA AA+
Illinois A- A- A A+ A+ A+ AA AA AA AA AA
Indiana AAA AAA AAA AAA AAA AAA AAA AA+ AA+ AA AA
Ohio AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+ AA+
Wisconsin AA AA AA AA AA AA AA AA- AA- AA- AA-
Source: Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014

Federal aid to state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, such as Medicaid. Federal aid varies considerably from state to state. For example, Mississippi received approximately $7.7 billion in federal aid in 2012, which accounted for more than 45 percent of the state's general revenues. By contrast, Alaska received roughly $2.9 billion in federal aid in 2012, just under 20 percent of the state's general revenues.[22]

The table below notes what share of Michigan’s general revenues came from the federal government in 2012. That year, Michigan received approximately $17.8 billion in federal aid, 33.8 percent of the state's total general revenues. Figures from surrounding states are provided for additional context.[22]

Federal aid to state budgets, 2012
State Total federal aid ($ in thousands) Federal aid as a % of general revenue Ranking
Michigan $17,849,942 33.76% 24
Illinois $15,646,844 25.66% 43
Indiana $10,441,125 32.32% 29
Ohio $20,687,909 34.88% 17
Wisconsin $8,855,079 28.19% 38
Source: United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014

Stimulus

Michigan received $7.72 billion in federal stimulus funding between February 2009 and June 2013.[23]

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[24][25]

  1. Budget instruction guidelines are sent to state agencies in August of the year preceding the start of the new fiscal year.
  2. State agencies submit their requests to the governor in November.
  3. Agency hearings are held in December.
  4. The governor submits his or her proposed budget to the state legislature in February.
  5. The legislature typically adopts a budget in June or July. The fiscal year begins October 1.

Michigan is one of 44 states in which the governor has line item veto authority.[25]

The governor is legally required to submit a balanced budget proposal. Likewise, the state legislature is legally required to adopt a balanced budget.[25]

Agencies, offices and committees

The following standing committees in the Michigan Legislature deal with budget and finance matters:[26][27]

  1. Appropriations Committee, Michigan House of Representatives
  2. Appropriations Committee, Michigan State Senate
  3. Finance Committee, Michigan State Senate
  4. Tax Policy Committee, Michigan House of Representatives

The Michigan Auditor General, as stated in Article 4, Section 53 of the state constitution, is responsible for conducting post-financial and performance audits of state government operations. Michigan's audit reports are published online.[28]

Studies and reports

U.S. PIRG "Following the Money" report

See also: "Following the Money" report, 2014

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2014. The report, entitled "Following the Money," measured how transparent and accountable state websites are with regard to state government spending.[29] According to the report, Michigan received a grade of B and a numerical score of 86.5, indicating that Michigan was an "advancing" state in terms of transparency regarding state spending.[29]

Budget and finance ballot measures

See also: Spending and finance on the ballot and List of Michigan ballot measures

Ballotpedia has tracked 2 ballot measures relating to state and local budget and financial matters in Michigan.

  1. Michigan Sales Tax, Proposal B (1989)
  2. Michigan Sales and Property Tax Amendment, Proposal A (June 1993)

Recent news

This section displays the most recent stories in a Google news search for the term "Michigan + budget"

All stories may not be relevant to this page due to the nature of the search engine.

Michigan state budget news feed

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Contact information

Michigan State Budget Office
111 South Capitol Avenue, 6th Floor
Lansing, Michigan 48913
Telephone: 517-373-7560

See also

External links

Additional reading

References

  1. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  2. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 National Association of State Budget Officers, "State Expenditure Report: 2012-2014," accessed February 18, 2015
  4. United States Census Bureau, "State and County QuickFacts," accessed February 23, 2014
  5. National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  6. National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  7. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  8. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  9. 9.0 9.1 Tax Policy Center, "State Tax Collection Sources 2000-2013," June 20, 2014
  10. 10.0 10.1 National Association of State Budget Officers, "Summaries of Fiscal Year 2015 Proposed and Enacted Budgets," July 11, 2014
  11. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  12. Pew Center on the States, "Widening Gap Update: Michigan," June 18, 2012
  13. State of Michigan, "Comprehensive Annual Financial Report, Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  14. Michigan Judges' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  15. Michigan State Employees' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  16. Michigan Public School Employees' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  17. Michigan Judges' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  18. Municipal Employees' Retirement System of Michigan, "2012 Comprehensive Annual Financial Report, Financial Section," accessed November 13, 2013
  19. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  20. Bankrate, "The 6 states with the worst credit ratings," September 27, 2012
  21. Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2014," June 9, 2014
  22. 22.0 22.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  23. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  24. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  25. 25.0 25.1 25.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  26. Michigan Senate, "Standing Committees," accessed March 19, 2015
  27. Michigan House of Representatives, "House Standing Committees," accessed March 19, 2015
  28. Michigan Office of the Auditor General, "Home page," accessed October 26, 2009
  29. 29.0 29.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014