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==State debt==
 
==State debt==
According to a January 2014 report by the nonprofit organization State Budget Solutions, Michigan had a state debt of over $142 billion. Its state debt per capita was $14,435. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded [[public pensions]].<ref>[http://www.statebudgetsolutions.org/publications/detail/state-budget-solutions-fourth-annual-state-debt-report ''State Budget Solutions'', "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014]</ref><ref>[http://washingtonexaminer.com/exography-unfunded-public-employee-pensions-are-driving-state-debts-skyward/article/2542548 ''Washington Examiner'', "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014]</ref>
+
According to a January 2014 report by the nonprofit organization [[State Budget Solutions]], Michigan had a state debt of over $142 billion. Its state debt per capita was $14,435. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded [[public pensions]].<ref>[http://www.statebudgetsolutions.org/publications/detail/state-budget-solutions-fourth-annual-state-debt-report ''State Budget Solutions'', "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014]</ref><ref>[http://washingtonexaminer.com/exography-unfunded-public-employee-pensions-are-driving-state-debts-skyward/article/2542548 ''Washington Examiner'', "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014]</ref>
 
{{State debt box
 
{{State debt box
 
|State = Michigan
 
|State = Michigan

Revision as of 14:16, 7 May 2014

Michigan state budget

Flag of Michigan.png
Budget calendar:  Annual
Fiscal year:  2014
State credit rating:  AA- (as of May 2012)
Current governor:  Rick Snyder
Financial figures
GF expenses[1]:  $9.164 billion (estimated for FY 2013)
All funds expenses:  $48.748 billion (estimated for FY 2013)
Spending % change:  Green Arrow Up Darker.svg3.09%[2]
% from federal funding:  33.74%
State debt:  $142,668,026,000
Per capita state debt:  $14,435
Other state budgets
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Policypedia Budget Policy-logo-no background.png
This page contains information about budget processes and policy issues in Michigan, including:
  • A summary of the budget drafting process
  • Trends in expenditures and revenues
  • Current and past fiscal year budget developments
  • Financial transparency measures

Between fiscal year 2009 and fiscal year 2013, Michigan's total expenditures increased by approximately $2.922 billion, from $45.826 billion in 2009 to $48.748 billion in 2013. This represents a 6.37 percent increase, below the cumulative rate of inflation during the same period (9.06 percent, calculated using the Consumer Price Indices for January 2009 and January 2013).[3][4]

Budget process

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:[5][6]

  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.

In Michigan, the governor may exercise line item veto or item veto of appropriations authority.[6]

The governor is legally required to submit a balanced budget proposal. Likewise, the state legislature is legally required to adopt a balanced budget.[6]

Expenditures

Definitions

Although each state executes its budget process differently, the National Association of State Budget Officers (NASBO) breaks down state expenditures into four general categories. This allows for comparisons among the 50 states. NASBO's categories are as follows:[7]

  • General fund: "The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state."[7]
  • Other funds: "Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds."[7]
  • Federal funds: "Funds received directly from the federal government."[7]
  • Bonds: "Expenditures from the sale of bonds, generally for capital projects."[7]

2013 expenditures

Breakdown of expenditures in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down expenditures for fiscal year 2013 (comparable figures from surrounding states are provided to give additional context).[7] Figures for all columns except "Per capita expenditures" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita expenditures" have not been abbreviated.

Total state expenditures, FY 2013 ($ in millions)[7]
State General fund Federal funds Other funds Bonds Total Per capita expenditures
Michigan $9,164 $19,295 $20,107 $182 $48,748 $4,926.22
Illinois 29,260 $15,407 $19,825 $1,955 $66,447 $5,158.07
Indiana $14,189 $10,357 $3,220 $0 $27,766 $4,225.60
Ohio $31,514 $12,630 $12,950 $1,174 $58,268 $5,035.78
Wisconsin $14,042 $10,815 $17,912 $0 $42,769 $7,447.53
Per capita figures are calculated by taking the state's total expenditures and dividing by the number of state residents according to United States Census estimates.[8][9]
Source: National Association of State Budget Officers

Expenditures by function

Breakdown of expenditures by function in FY 2012.
Source: National Association of State Budget Officers

State expenditures in Michigan can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2012 data 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.

Expenditures by function, FY 2012 (as percents)[7]
State Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
Michigan 27.2% 4.1% 0.9% 26.1% 4.7% 6.9% 30.2%
Illinois 15.8% 5.5% 0.1% 19.7% 2.2% 8.5% 48.1%
Indiana 32.9% 6.5% 1.5% 27.3% 2.9% 9.3% 19.7%
Ohio 20.6% 4.2% 1.5% 24.4% 3.1% 5.1% 41.2%
Wisconsin 16.7% 14.1% 0.4% 16.5% 2.9% 6.9% 42.5%
Source: National Association of State Budget Officers

Expenditure trends

From 2008 to 2012, elementary and secondary education fell by 2.30 percent and higher education expenditures fell by 1.40 percent. During the same period, Medicaid spending rose by nearly four percent. The table below details changes in expenditures from 2008 to 2012.[7][10][11][12][13] Figures are rendered as percents, indicating the share of the total budget spent per category.

Expenditures from 2008 to 2012 (as percents)
Year Elementary and secondary ed. Higher ed. Public assistance Medicaid Corrections Transportation Other
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%
2008 29.5% 5.5% 1.1% 22.2% 5.3% 8.0% 28.4%
Change in % -2.30% -1.40% -0.20% 3.90% -0.60% -1.10% 1.80%
Source: National Association of State Budget Officers

Revenues

2013 revenues

Breakdown of general fund revenue sources in FY 2013.
Source: National Association of State Budget Officers

The table below breaks down general fund revenues by source in fiscal year 2013 (comparable figures from surrounding states are also provided to give additional context).[7] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, FY 2013 ($ in millions)[7]
State Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
Michigan $1,832 $5,844 $438 $0 $1,075 $9,189 $928.59
Illinois $7,335 $16,630 $3,086 $340 $8,899 $36,290 $2,817.08
Indiana $6,796 $4,978 $968 $555 $1,165 $14,462 $2,200.92
Ohio $8,445 $9,508 $262 $0 $11,344 $29,559 $2,554.62
Wisconsin $4,410 $7,497 $925 $0 $1,254 $14,086 $2,452.85
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates for 2013.[8]
Source: National Association of State Budget Officers

Revenue trends

The table below details the change in revenue sources in the general fund from 2009 to 2013.[7][10] Figures for all columns except "Per capita revenue" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the column labeled "Per capita revenue" have not been abbreviated.

Revenue sources in the general fund, Michigan ($ in millions)[7][10]
Year Sales tax Personal income tax Corporate income tax Gaming tax Other taxes and fees Total Per capita revenue**
2013 $1,832 $5,844 $438 $0 $1,075 $9,189 $928.59
2012 $1,875 $4,817 $1,279 $0 $1,293 $9,264 $937.41
2011 $1,801 $4,445 $1,347 $0 $1,221 $8,814 $892.59
2010 $1,785 $3,695 $1,137 $0 $1,063 $7,680 $777.63
2009 $748 $3,959 $1,555 $12 $1,092 $7,366 $738.84
Change in % 144.92% 47.61% -71.83% -100.00% -1.56% 24.75% 25.68%
Per capita figures are calculated by taking the state's total revenues and dividing by the number of state residents according to United States Census estimates.[8][9]
Source: National Association of State Budget Officers

State budgets by year

DocumentIcon.jpg See budget bill: HB 4328 and HB 4228

Fiscal year 2014

Michigan state budget -- 2014
Michigan State Legislature
Legislative history
Introduced:February 27, 2013 (HB 4328; general appropriations); February 12, 2013 (HB 4228; education appropriations)
House:April 24, 2013
Vote (lower house):59-51 (general bill); 58-52 (education bill)
Senate:May 1, 2013
Vote (upper house):26-11 (general bill); 25-12 (education bill)
Conference:May 28, 2013 (lower house); June 4, 2013 (upper house)
Conference vote (upper house):24-14 (general bill); 25-12-1 (education bill)
Conference vote (lower house):63-46 (general bill): 65-43 (education bill)
Governor:Rick Snyder
Signed:June 13, 2013

On June 13, 2013, Governor Rick Snyder signed the fiscal year 2014 budget into law. Snyder praised the budget as an "outstanding work product," pointing in particular to increased funding for early childhood education programs and a dental health program for low-income children. The budget as enacted also included funds for the hiring of additional state troopers and increased municipal revenue sharing. Elementary and secondary education spending was increased by three percent in the fiscal year 2014 budget (removing funds for retirement and early childhood education, the increase amounted to just over one percent).[14]

Some Democrats criticized the budget for failing to devote more funds to education, arguing that recent increases did not make up for cuts made during Snyder's first year in office. Snyder maintained that per-pupil spending had increased every year of his governorship.[14]

The budget did not include funds for expanded Medicaid coverage, which had been included in Snyder's proposed budget. At the time the fiscal year 2014 budget was enacted, Medicaid expansion was being debated as separate topic in the state legislature.[14]

Fiscal year 2013

See also: Michigan state budget (2012-2013)

Fiscal year 2012

See also: Michigan state budget (2011-2012)

Fiscal year 2011

See also: Michigan state budget (2010-2011)

Fiscal year 2010

See also: Michigan state budget (2009-2010)

Historical spending

State budget historical spending below was compiled by the National Association for State Budget Officers. Figures reflect the reported "Total Expenditures" in Table 1. Figures for all columns are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000).[7][11]

Historical state budget spending in Michigan ($ in millions)
Fiscal year General Fund Other funds Federal funds Bonds Budget totals
Total % of Budget Total % of Budget Total % of Budget Total % of Budget
2011-2012 $8,619 18.2% $20,844 44.1% $17,549 37.1% $274 0.6% $47,286
2010-2011 $8,360 17.2% $20,035 41.2% $19,919 41% $283 0.6% $48,597
2009-2010 $7,696 16.1% $20,254 42.4% $19,542 40.9% $267 0.6% $47,759
Averages: $8,225 17% $20,377.67 43% $19,003.33 40% $274.667 1% $47,880.67
General Fund: The predominant fund for financing a state’s operations. Revenues are received from broad-based state taxes. However, there are differences in how specific functions are financed from state to state.
Other funds: Expenditures from revenue sources that are restricted by law for particular governmental functions or activities. For example, a gasoline tax dedicated to a highway trust fund would appear in the “Other funds” column. For Medicaid, other state funds include provider taxes, fees, donations, assessments, and local funds.
Federal funds: Funds received directly from the federal government.
Bonds: Expenditures from the sale of bonds, generally for capital projects.

State debt

According to a January 2014 report by the nonprofit organization State Budget Solutions, Michigan had a state debt of over $142 billion. Its state debt per capita was $14,435. The report revealed that state governments faced a combined $5.1 trillion in debt, 33 percent of annual gross state product. The obligation amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79 percent -- was linked to unfunded public pensions.[15][16]

Total state debt in Michigan[17]
Type Totals U.S. rank
Total state debt $142,668,026,000 9
Per capita debt $14,435 25
State and other fund expenditures $29,463,000,000 17

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."[18]

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 21.26 percent drop. Likewise, unfunded liabilities increased from over $9.5 billion in fiscal year 2007 to more than $31 billion in fiscal year 2011.[19][20][21][22][23][24]

Credit ratings

States sometimes sell general obligation bonds to investors in order to finance large-scale undertakings (e.g., road construction and other public works projects). Credit rating agencies, such as Standard and Poor's, assign grades to states, evaluating their ability to pay the principal and interest on such bonds. Standard and Poor's grades range from AAA, the highest available, to BBB, the lowest. Generally speaking, a higher credit ranking indicates lower risk for an investor, which in turn lowers costs for taxpayers.[25]

The table below lists the Standard and Poor's credit ranking for Michigan from 2001 to 2012 (grades from surrounding states are provided for additional context).[25]

S&P credit ratings from 2001 to 2012
Michigan Illinois Indiana Ohio Wisconsin
2012 AA- A+ AAA AA+ AA
2011 AA- A+ AAA AA+ AA
2010 AA- A+ AAA AA+ AA
2009 AA- A+ AAA AA+ AA
2008 AA- AA AAA AA+ AA
2007 AA- AA AA+ AA+ AA-
2006 AA AA AA+ AA+ AA-
2005 AA AA AA AA+ AA-
2004 AA+ AA AA AA+ AA-
2003 AA+ AA AA+ AA+ AA-
2002 AAA AA AA+ AA+ AA-
2001 AAA AA AA+ AA+ AA

Federal aid to state budget

See also: Federal aid to budgets in the 50 states

The chart below notes how much of the state’s general revenues come from the federal government. Figures were calculated by dividing each state’s federal intergovernmental revenue into its general revenue. The number in the rightmost column indicates the state's ranking in relation to the rest of the nation (e.g., if "1," the state receives the highest percentage of federal funding in the nation). Figures from neighboring states are included to provide additional context.[26]

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.[26]

Federal aid to state budgets in 2012
State Federal aid as % of general revenue Total federal aid National rank
Michigan 33.74% $17,849,942,000 24
Illinois 25.66% $15,646,844,000 43
Indiana 32.96% $10,441,125,000 27
Ohio 34.88% $20,687,909,000 17
Wisconsin 28.19% $8,855,079,000 38

Stimulus

Michigan received $7.72 billion in federal stimulus funding between February 2009 and June 2013.[27]

Budget transparency

Transparency evaluation
Michigan Transparency and Accountability
Searchability N
600px-Red x.png
Grants N
600px-Red x.png
Contracts P
Partial.png
Line item expenditures N
600px-Red x.png
Dept./agency budgets Y
600px-Yes check.png
Public employee salaries N
600px-Red x.png
Last evaluated in 2008.
See also: Evaluation of Michigan state website and Constitutional provisions regarding reading of bills

The Michigan Transparency and Accountability website can be accessed here. The table to the right is helpful in evaluating the level of transparency provided by the site.

Independent transparency sites

The Mackinac Center for Public Policy maintains a transparency website, "Show Michigan The Money."

Multi-measure budget transparency profile

The Institute of Government and Public Affairs at the University of Michigan created a multi-measure transparency profile for Michigan, which measured state transparency as of September 2011 using indicators from a range of organizations. These indicators measured both website transparency and other recognized facets of governmental transparency. In addition, IGPA presented four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.[28][29]

IGPA devised a budget transparency index based on information available from the National Association of State Budget Officers. Michigan tied for first in the nation with two other states, earning eight out of eight possible points.[29]

Michigan - IGPA score for budget process, contents and disclosure
Budget transparency indicator Yes or no?
Performance measures
{{{1}}}
"Generally Accepted Accounting Principles" budget Y
600px-Yes check.png
Multi-year forecasting
{{{1}}}
Annual cycle Y
600px-Yes check.png
Binding revenue forecast
{{{1}}}
Legislative revenue forecast
{{{1}}}
Non-partisan staff Y
600px-Yes check.png
Constitution or statutory tax/spend limitations Y
600px-Yes check.png
TOTAL 8

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.[29]

U.S. PIRG "Following the Money" report

See also: Following the Money 2014 Report

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.[30] 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.[30]

Accounting principles

See also: Michigan government accounting principles

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. In addition, certain sections of the Michigan Compiled Laws contain specific audit requirements in conformance with the constitutional mandate. Michigan's audit reports are published online.[31]

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. Refers to General Fund spending. Typically in state budgets the General Fund is spending that is most directly controlled by state legislators.
  2. This figure is derived by calculating the percent difference between the prior two years' spending levels according to the National Association of State Budget Officers.
  3. Bureau of Labor Statistics, "CPI Detailed Report Data for February 2014," accessed April 9, 2014
  4. InflationData.com, "Cumulative Inflation Calculator," February 28, 2014
  5. National Conference of State Legislatures, "State Experiences with Annual and Biennial Budgeting," updated April 2011
  6. 6.0 6.1 6.2 National Association of State Budget Officers, "Budget Processes in the States, Summer 2008," accessed February 21, 2014
  7. 7.00 7.01 7.02 7.03 7.04 7.05 7.06 7.07 7.08 7.09 7.10 7.11 7.12 7.13 National Association of State Budget Officers "State Expenditure Report, 2011-2013," accessed February 21, 2014
  8. 8.0 8.1 8.2 United States Census Bureau, "Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2013," accessed February 26, 2014
  9. 9.0 9.1 United States Census Bureau, "Vintage 2009: Annual Population Estimates," accessed February 26, 2014
  10. 10.0 10.1 10.2 National Association of State Budget Officers, "State Expenditure Report, 2009-2011," accessed February 24, 2014
  11. 11.0 11.1 National Association of State Budget Officers, "State Expenditures Report, 2010-2012," accessed February 24, 2014
  12. National Association of State Budget Officers, "State Expenditure Report, 2009," accessed February 24, 2014
  13. National Association of State Budget Officers, "State Expenditure Report, 2008," accessed February 24, 2014
  14. 14.0 14.1 14.2 MLive.com, "Michigan Gov. Rick Snyder signs 'solid' $49.5 billion budget short on money for Medicaid expansion," July 1, 2013
  15. State Budget Solutions, "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  16. Washington Examiner, "EXography: Unfunded public employee pensions drive state debts skyward," January 21, 2014
  17. State Budget Solutions "State Budget Solutions' Fourth Annual State Debt Report," January 8, 2014
  18. Pew Center on the States, "Widening Gap Update: Michigan," June 18, 2012
  19. State of Michigan, "Comprehensive Annual Financial Report, Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  20. Michigan Judges' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  21. Michigan State Employees' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  22. Michigan Public School Employees' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  23. Michigan Judges' Retirement System, "Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2012," accessed November 13, 2013
  24. Municipal Employees' Retirement System of Michigan, "2012 Comprehensive Annual Financial Report, Financial Section," accessed November 13, 2013
  25. 25.0 25.1 Stateline: The Daily News Service of The Pew Charitable Trusts, "Infographic: S&P State Credit Ratings, 2001-2012," July 13, 2012
  26. 26.0 26.1 United States Census Bureau, "State Government Finances: 2012," accessed February 24, 2014
  27. Recovery.gov, "Stimulus Spending by State," accessed February 21, 2014
  28. Institute of Government and Public Affairs at University of Michigan, "Home page," accessed February 21, 2014
  29. 29.0 29.1 29.2 Institute of Government and Public Affairs at University of Michigan, "Budget Transparency Profiles - All 50 States," September 2011
  30. 30.0 30.1 U.S. Public Interest Research Group, "Following the Money 2014 Report," accessed April 15, 2014
  31. Michigan Office of the Auditor General, "Home page," accessed October 26, 2009