Government Budgeting Issues
Report 313-10, 
Michigan Constitutional Issues ... Finance And Taxation Examines provisions of Article 9 that a constitution convention might consider: state and local property taxes; a graduated income tax; local sales taxes; and the effectiveness of the 1978 (Headlee) tax limitation amendment ( October 94 ) 4 pages
CC 992, State and Local Government Expenditures and Revenues in the 15 Most Populous States Compared Michigan to other major states on major revenue sources and major expenditure categories. ( November 90 ) 6 pages
Michigan Spending Programs
Michigan's 1974-75 Spending Program
CC 875 ( August 74 ) 4 pages
Michigan's 1973-74 Spending Program
CC 870 ( October 73 ) 8 pages
Michigan's 1972-73 Spending Program
CC 856 ( September 72 ) 8 pages
Late Budgets in Michigan: Causes, Effects, and Implications
Memorandum 1092 ( August 2009 ) 10 pages
August 13, 2009, Late adoption of State of Michigan appropriations in recent years has created significant problems, particularly for substate governments, but a deadline earlier than the end of the fiscal year probably would have little effect in alleviating the problem. That is the conclusion of a new Citizens Research Council of Michigan Memorandum, Late Budgets in Michigan: Causes, Effects, and Implications.
Economic stress and consequent falling state revenues have combined to produce an environment in which timely adoption of appropriations by the Michigan Legislature has become the exception rather than the rule. Local units of government and educational institutions that rely on the State for large portions of their expenditures are forced to make decisions regarding numbers of personnel, contracts, tuition levels, and many other financial considerations in an informational vacuum when their fiscal years begin in advance of legislative appropriation decisions.
Moreover, the Michigan Constitution contains one of the strongest balanced budget provisions in the nation and its requirement that no money may be withdrawn from the treasury "except in pursuance of appropriations made by law" means that state expenditures may not be incurred without an adopted budget. This led to a brief, but disruptive, shutdown of state government in October 2007.
The State of Michigan Budget Process,
Presentation 99-01
Presentation to the Freshman class of Representatives on January 20, 1999.
Report 320, A Guide to the State Budget Process in Michigan, This report is designed to be a reference document to the state budget process, budgeting concepts, key actors in the budget process and their responsibilities in preparing the Michigan budget. ( February 97 ) 51 pages
Nonrecurring Resources and the FY2011 General Fund Budget
State Budget Note 2010-03 ( October 2010 ) 12 pages
The Michigan legislature completed its work on the FY2011 General Fund budget before October 1 and the governor signed all but one of the appropriations bills (higher education) before the start of the new fiscal year, thus avoiding another temporary government shutdown. The FY2011 state School Aid Fund budget, which provides operating funding for Michigan's local and intermediate school districts, was completed in July, when local schools start their new fiscal year. Both "early" adoption of the SAF budget along with the avoidance of another government shutdown mark some progress in the budget development process compared to the experience in recent years; however, while the FY2011 budget did contain some cuts, it still relies heavily on nonrecurring resources.
The Citizens Research Council of Michigan's new report, Nonrecurring Resources and the FY2011 General Fund Budget, looks at the major solutions to achieve budget balance for FY2010 and FY2011 and provides some indication of the FY2012 fiscal problems that will face the new governor and the new legislature that will be seated in January 2011.
The FY2011 budget, while technically "balanced" in the short term, will contribute to fiscal imbalance in FY2012. The budget is premised on nearly $1 billion in one-time resources, which will not be available in the coming fiscal year. These resources included the exhaustion of federal stimulus funding, state debt refinancing, and accelerating the collection of unclaimed property. Furthermore, the new budget does not address the structural budget challenges that have faced the state for years.
The FY2012 budget will take effect on October 1, 2011. The first step in the process takes place when the new governor presents his FY2012 executive budget proposal to the legislature within 60 days (early March) of the 96th Legislature convening in early January. At this time, it is estimated that the new cohort of policymakers will have to address a General Fund shortfall of at least $1 billion, due in large measure to the solutions employed to achieve budget balance in FY2011.
"The FY2011 budget presented yet another opportunity for Michigan to address the near decade-long structural deficit." said Craig Thiel, CRC's Director of State Affairs. "However, the final budget passed by the legislature and signed by the governor failed to make major inroads toward solving the state's chronic budgetary problems."
The FY2011 School Aid Fund Budget: A Day Late and A Few Hundred Million Dollars Short
State Budget Note 2010-02 ( July 2010 )
Before embarking on its traditional 4th of July two-week recess, the Michigan Legislature passed the Fiscal Year 2011 (FY2011) budget for the School Aid Fund (SAF), which provides operating funding for Michigan's local and intermediate school districts. July action on the SAF budget this year breaks with recent history, during which the state budget (SAF and General Fund) has not been enacted until late September or even after October 1, the start of the new state fiscal year. The legislature's "early" adoption of the budget provides schools with a greater degree of certainty as they begin their fiscal years on July 1. Observers should be cautious about placing too much importance on the recent legislative action, however, as a number of major budgetary issues, both for this year and next, remain to be resolved.
The Citizens Research Council of Michigan's recent report, The Fiscal Year 2011 School Aid Fund Budget: A Day Late and a Few Million Dollars Short, looks at the impetus, issues, and implications surrounding the adoption of the new state school-aid spending plan.
"Given the fiscal struggles of FY2009 and FY2010, coupled with the loss of $1.3 billion in temporary federal stimulus funding from the budget, crafting a balanced budget that did not further reduce per-pupil spending is a significant accomplishment." said Craig Thiel, CRC's Director of State Affairs. "However, the adoption of this "early" budget was aided greatly by the significant positive change in the official SAF revenue estimates and the fact that major General Fund budget shortfalls were not addressed at the same time."
With the passage of the FY2011 SAF budget now complete, the legislature will turn its attention to the General Fund budget, which is in much worse shape. Current projections indicate that the General Fund faces a shortfall of at least $220 million in FY2010, with only three months in the fiscal period remaining. For the upcoming FY2011, the state budget is in deficit by $500 million. Legislative deliberations on the General Fund were stalled during the development of the SAF budget and will resume sometime in late July or early August, following the July 4th recess.
The FY2011 Executive Budget: "Déjà Vu All Over Again"
State Budget Note 2010-01 ( February 2010 ) 7 pages
The FY2011 Executive Budget: "Déjà Vu All Over Again", examines the Governor’s FY2011 executive budget, with special attention to those aspects intended to address the long-term structural imbalance plaguing the General and School Aid Fund budgets.
The exhaustion of the temporary federal recovery funds used to support state spending in FY2009 and FY2010 and the revelation of the resultant "revenue cliff" in FY2011 will bring the state’s structural deficit problems into clearer focus. Absent any further extraordinary sources of fiscal relief, the Michigan legislature is now tasked with passing appropriations bills and associated legislation that reduce spending and/or raise taxes to achieve balance in the coming fiscal year.
Dual Deficits and Federal Recovery Assistance: Prospects for State Budget Balance
State Budget Note 2009-02 ( April 2009 ) 8 pages
Although federal stimulus funds can help balance the Michigan budget in Fiscal Years 2009 and 2010, they also create a real possibility of aggravating the ongoing structural deficit by permitting policy makers to postpone actions to bring long-term revenues and expenditures into balance. This is one of the findings of a new State Budget Note released by the Citizens Research Council of Michigan.
The State has been operating with a structural deficit, a deficit that will not be eliminated by a more buoyant economy, during the past decade. It has met the constitutional balanced budget requirement principally by using nonrecurring sources of income totalling over $8 billion over that period and has not solved the basic structural problem. Federal stimulus dollars, available from the American Recovery and Reinvestment Act (ARRA) will provide the State with $7 billion, which will help in the short run, but which may make more difficult the resolution of the structural deficit.
ARRA, which is aimed at the cyclical downturn, will provide significant new funding, but:
- Will not be sufficient to prevent spending cuts
- Will mask the size of the cuts necessary to deal with the structural deficit
- Will not be available long enough see the state through the entire period of reduced revenues caused by the recession
- Will cause a revenue "cliff" when the additional federal funding expires
"Policy makers must take steps to assure that the FY2011 budget is not more difficult than it has to be," said CRC Director of State Affairs, Craig Thiel. "While we won't be turning down the federal stimulus funding, we can't relax our efforts to eliminate the ongoing deficit."
Michigan's Weakened Financial Position and The Problem of Dual Deficits
State Budget Note 2009-01 ( January 2009 ) 8 pages
The much-anticipated Consensus Revenue Estimating Conference forecast to be released on Friday will shed light on the Fiscal Year 2009 and 2010 budget outlooks for the State of Michigan, but the basic financial condition of the State is known and shows a weakened cash position in the face of Michigan's ongoing structural deficit. This is the principal conclusion of a new analysis of the State budget by the Citizens Research Council of Michigan.
The report, Michigan's Weakened Financial Position and the Problem of Dual Deficits, notes that Michigan is ill-prepared to deal with the current cyclical problems associated with the national economic recession because it has failed to deal with the underlying structural deficits that have existed since FY2000. At the end of FY2000 the State had amassed over $3.9 billion in major fund cash reserves to deal with the 2001 recession. Today it faces a cash deficit of approximately $400 million that it must finance by means of both internal and external borrowing.
Michigan's Fiscal Future
Memorandum 1086 ( May 2008 ) 8 pages
Summarizes Report 349
Michigan's Fiscal Future
Report 349 ( May 2008 ) 152 pages
The Citizens Research Council of Michigan projects that Michigan's budget challenge will continue to grow through Fiscal Year 2017 (FY17) because virtually every area of the State budget faces spending pressure increases that outpace projected revenue growth. This "structural deficit" will persist even as the economy improves.
Provisions in the Michigan Constitution require the Governor and Legislature to take annual actions to keep current spending in line with current revenues. The CRC projections in Michigan's Fiscal Future quantify that absent those requirements and without substantial policy changes, structural deficits in Michigan's General Fund, K-12 education finances, and highway finances -- by FY17 - would grow to:
- $6.0 billion in the state General Fund
- $3.6 billion in K-12 education finances
- $417 million in the state highway program
Using a well-established regional economic forecasting model, CRC and the W.E. Upjohn Institute collaborated on an analysis of Michigan's future state budget challenges from FY09 through FY17. The analysis is based on a series of assumptions about the performance of Michigan's economy between 2007 and 2017. This new analysis covers budgets supported by three major state funds: General Fund (GF), School Aid Fund (SAF), and the Michigan Transportation Fund. Major changes in the State's tax structure made in 2007 that will affect future State revenues have been factored into this analysis as have two series of tax cuts required by state law for FY09 and beyond.
A Recap of the FY04 Budget and Look Ahead to FY05 and Beyond,
State Budget Note 03-10 ( October 2003 ) 10 pages
The forecast of lower-than-anticipated General Fund and School Aid fund revenues for the State of Michigan fiscal year that began on October 1 portends increased fiscal pressure on the budget for fiscal year 2004-05, which will be submitted by the Governor in February. The report points to growth in Medicaid and corrections as the basic problems in the General Fund. Growth in these programs has begun to crowd out other state programs, such as higher education and revenue sharing. School aid, which has been protected to a higher degree than other programs, will be under great pressure in FY05, largely because school districts will be faced with an increase of at least 10 percent in their contributions to the Public School Employees Retirement System and increased health care insurance costs.
The Problematic Fiscal Year 2003-04 State Budget,
Memo 1073 ( April 2003 ) 10 pages
Debate on the FY2004 State Budget is beginning to heat up and it is clear that agreement will not come easily. CRC has just released its first analysis of the FY2004 budget.
The Prospects for a Long-Term Solution to Michigan's General Fund Structural Deficit,
State Budget Notes 2002-04 ( April 2002 ) 6 pages
This analysis seeks to determine how soon, or indeed if ever, growth from currently authorized revenues will permit eliminating the structural defict without very large cuts i program spending.
The FY2003 Executive Budget: Short-Term Balance, Long-Term Gaps,
State Budget Notes 2002-02 (February 2002 ) 2 pages
Analyses how the Governor's proposed FY2003 Executive Budget addresses the imbalance between spending and revenues.
The Problem Facing the New Budget,
State Budget Notes 2001-01 (January 2002 ) 3 pages
CRC continues to track the deteriorating budget condition and offer analysis.
Michigan's Budget Problems -- Time for Permenant Solutions?,
State Budget Notes 2001-01 (December 2001 ) 3 pages
CRC continues to track the deteriorating budget condition and offer analysis.
Michigan's Budget Situation - A Long-Term Problem
Note 2001-05 (September 2001 ) 4 pages
In June, Note 2001-02 outlined the difficulties confronting the State in dealing with the budget. Since that time, actions were taken by the Governor and State Legislature to close the budget gaps for fiscal years 2000-01 and 2001-02. This Note summarizes the Fiscal Year 2000-01 and 2001-02 actions and provides some finding relative to the fiscal year 2002-03 budget outlook.
Michigan's Precarious Budget Situation,
Note 2001-02 ( June 2001 )
Even with economic recovery, the State will face problems as far out as FY2003.
Report 313-10, Michigan Constitutional Issues ... Finance And Taxation Examines provisions of Article 9 that a constitution convention might consider: state and local property taxes; a graduated income tax; local sales taxes; and the effectiveness of the 1978 (Headlee) tax limitation amendment ( October 94 ) 4 pages
CC 1025, State Budget Outlook, Analysis of the well being of the key funds and long-term reasons for concern ( May 94 ) 4 pages [14,387 bytes]
CC 945, Michigan's Financial Improvement Strategy (eliminating cash deficit) ( November 83 ) 4 pages
CC 941, The State Fiscal Plan: 1. Tax Increases establish financial base; 2. Increases in key fund spending --- See also Misc. Report --- ( June 83 ) 7 pages
CC 939, Resolving Michigan's Past, Present, and Future Fiscal Problems -- The 1983 Debate ( March 83 ) 2 pages
CC 933, Michigan's Key Fund Fiscal Problem ( September 82 ) 8 pages
CC 922, State Ballot Issues: Proposal A -- State Subsidy of Local Taxes (defeated 28% for to 72% against) ( May 81 ) 8 pages
CC 914, Fiscal Management in an Age of Limits: Balancing the State Budget ( July 80 ) 4 pages
CC 907, State Spending for 1978-79: General Fund-General Purpose ( January 79 ) 8 pages
CC 867, Preliminary Action on State Budget -- Tax Relief in Jeopardy ( July 73 ) 2 pages
CC 866, The New (state) Tax Relief Program in Brief ( June 73 ) 4 pages
Report 259, A Suggested Budget Measure for Local Units of Government in Michigan The purpose of this document is to present a sample budget ordinance, resolution, or charter provision that may be adopted by local units of government in Michigan. This measure, if adopted, will help to institutionalize budgeting procedures that will result in accountable allocation of local public resources and retention of fiscal stability. It should also enable local units to adopt provisions consistent with the new local budgeting provisions of the Uniform Budgeting and Accounting Act, P. A. 621 of 1973. ( November 79 ) 56 pages
Report 251, Proposed Local Government Uniform Budgeting System, Leading to enactment of the Uniform Budgeting and Accounting Act (P.A. 621 of 1978), this paper offered suggestions to bring a uniform budgeting and accounting system to Michigan local governments. ( April 77 ) 38 pages
Memo, City Of Detroit Bond Refinancing Proposal: Chrysler/Jefferson Avenue Jeep Assembly Plant Issues relative to the refinancing of $118.56 million of general obligation bonds as limited tax bonds to be voted on September 14, 1993 ( August 93 ) 2 pages
CC 1008, Ballot Issues: City of Detroit Bond Proposals -- August 4, 1992, Proposal A - Neighborhood Redevelopment and Economic Development Programs; Proposal B - Public Lighting Service and Extension Bonding Proposal; Proposal C - Recreation and Zoo Facilities Bonding ( July 92 ) 4 pages [34,746 bytes]
Revenue Estimating
CC 997, Income, Spending, and Taxation -- Michigan Compared to the U.S. Average ( April 91 ) 4 pages
Misc., 1990-91 State General Fund-General Purpose Budget ( February 91 ) 4 pages
CC 992, State and Local Government Expenditures and Revenues in the 15 Most Populous States Compared Michigan to other major states on major revenue sources and major expenditure categories. ( November 90 ) 6 pages
CC 946, State and Local Government Expenditures/Revenues in the 21 Largest States ( December 83 ) 6 pages
CC 945, Michigan's Financial Improvement Strategy (eliminating cash deficit) ( November 83 ) 4 pages
CC 930, Effects on Michigan of the 1981 Economic Tax Recovery Act ( July 82 ) 6 pages
CC 928, State and Local Government Expenditures/Revenues in the 14 Largest States ( April 82 ) 4 pages
CC 924, Michigan's Growing Cash Deficit ( July 81 ) 6 pages
CC 921, State Finances in Distress: Michigan--Fiscal Years 1980 and 1981 ( November 80 ) 2 pages
CC 883, Michigan's Financial Problem ("Worst fiscal crunch in state history") ( November 75 ) 6 pages
Report 248, Recent Michigan Expenditure Trends ( March 75 ) 15 pages
Misc., Letter to Senator H. A. DeMaso re Revenue & Expenditure Analyses of General Fund Operations ( March 73 ) 6 pages
CC 946, State and Local Government Expenditures/Revenues in the 21 Largest States ( December 83 ) 6 pages
Local Government Performance Dashboards and Citizens’ Guides
Memo 1108 ( September 2011 ) 12 pages
Local governments have less than a month to create citizens' guides to financial information and performance dashboards to qualify for state funding through the new Economic Vitality Incentive Program (EVIP). CRC's new paper, Local Government Performance Dashboards and Citizens' Guides, offers guidelines and recommendations to help local governments make the guides and dashboards meaningful tools that will keep residents better engaged in the operations and financial condition of their local governments.
The State of Michigan's Fiscal Year 2012 budget replaces statutory state revenue sharing with a new Economic Vitality Incentive Program that creates incentives for local government reforms. In order to qualify for funding that formerly was automatically distributed based on a statutory formula, local governments will have to comply with requirements related to employee compensation reforms, intergovernmental collaboration for the delivery of services, and new accountability tools - citizens' guides to financial information and performance dashboards.
The citizens' guide is intended to be a short, quick way of conveying the financial health of the government to the residents and consumers of governmental services. The performance dashboard should provide a few metrics that chart government performance. Those metrics could include: fiscal stability, economic strength, public safety, quality of life, and any other measures that are relevant to the strategic goals and objectives of the local government.
"Local governments should develop metrics that are relevant, understandable, timely, reliable, provide comparability over time and across governments, and are measured consistently over time," said Eric Lupher, CRC's Director of Local Affairs. "Although local government officials had little time to put these reports together to qualify for funding in the fiscal year that begins October 1, they have time to improve on their performance dashboards and citizens' guides for next year. We hope that this report will assist in those efforts."
CRC's new paper explains the context within which the new accountability tools were introduced; discusses the state's guidelines for development of these tools; critiques the templates the state has created to provide some guidance to local officials; and recommends the content of performance dashboards. It provides links to resources local governments can use to draw on best practices and organizations that have developed reports on performance measurement to citizens.
Michigan’s Unrestricted Revenue Sharing Program: Retrospect and Prospect
Report 330, ( September 2000 ) 33 pages
In December 1998, the Michigan Legislature approved a major revision in the State's revenue sharing program. The unrestricted revenue sharing program in Fiscal Year (FY) 2000 will pay over $1.4 billion to general-purpose local units of government: cities, villages, townships, and counties. These units may use the revenues for any legitimate governmental purpose.
Although counties receive revenue sharing, most revenue sharing dollars are paid to cities, villages, and townships and it is these payments that have attracted the greatest legislative attention and interest and are the focus of this report. The report traces the development of Michigan's program over a six decade period, describes the formula components in place prior to the 1998 revisions, and provides illustrative projections of payments under the new formulas beyond the year 2000.
Michigan’s Unrestricted Revenue Sharing Program: Retrospect and Prospect
Memo 1054, ( September 2000 ) 4 pages
Summary of Report 330
The 2000 Census and State and Local Finance in Michigan
Report 328, (March 2000 ) 32 pages
The study identifies 34 provisions in state law where a reference to local government population affects state and local government finance: 11 affect the allocation of state funds to local governments and 22 affect local governments’ authority to raise revenue. The potential changes of the most significance are the provisions in: (1) the State Revenue Sharing Act that eliminate limitations on growth for as many as 1,000 cities, villages, and townships whose population increases more than ten percent between censuses; (2) the Downtown Development Authority Act that could allow Detroit to raise its tax from one to two mills; and (3) the City Income Tax Act that could restrict Saginaw’s ability to levy its tax at a rate higher than that generally allowed other cities.
CC 1020, Unrestricted State Revenue Sharing In Michigan, Describes the system, the component taxes (sales, income, single business, and intangibles), the history of state actions, and examines the effect on local government revenues ( October 93 ) 6 pages [43,973 bytes]
Report 291, Effects of Population on Major Revenue Sources in Detroit, Explores the financial and representational consequences of Detroit losing population in the1990 census ( April 89 ) 19 pages
Overview of the Effects of Federal Decennial Census on Detroit's Major State Source Revenues,
CC 981, ( March 89 ) 2 pages [36KB]
Analyzes how populations interact with state revenue sharing, transportation funding, and apportionment to affect the city of Detroit. --- Summarizes Report #291 ---
The Sales Tax Amendment
Bureau Notes 512 ( October 46 ) 5 pages
A proposed constitutional amendment (No. 2) is to be voted upon at the election November 5 providing that one cent of the sales tax should be distributed to localities; half cent to cities, villages, and townships, half cent to schools. The Bureau believes the proposal is unsound in principle, is inimical to the best interests of good government in the state, and could readily be contrary to the best interests of Detroit.
State Supervision of Local Government Finance
Memo, An Analysis of the Effectiveness of the Local Government Fiscal Responsibility Act (Public Act 72 of 1990, formerly Public Act 101 of 1988), The Michigan Commission on Intergovernmental Relations, in response to a legislative request to evaluate Public Act No. 101 of 1988, the Local Government Fiscal Responsibility Act, asked CRC to analyze the effectiveness of the act. Criticisms of the act focused on several areas: the susceptibility of the process to political influence; the length of time required for the appointment of an emergency financial manager; the extent of the authority of the emergency financial manager; and the bankruptcy provision. ( August 90 ) 16 pages [54KB]
State Tax Limitation (Headlee Amendment)
CC 1039, "Headlee Rollbacks" and the Constitutionality of Public Act 415 of 1994, Examined the interaction between assessed value, which is the basis of Headlee millage rollbacks, and the taxable value cap as implemented by the Legislature. ( January 96 ) 4 pages [24,950 bytes]
Misc., Local Government Tax & Expenditure Limitations ( June 81 ) --- pages
CC 949, Proposal C -- Voter's Choice (Initiatory Petition re Article IX, Sections 1 & 2) --- See also CC #947 and Misc. Report --- ( October 84 ) 4 pages
CC 947, The Voter's Choice Proposal (Initiative Petition re Article IX, Sections 1 & 2) --- See also CC #949 and Misc. Report --- ( May 84 ) 4 pages
Misc., Discussion Draft of Analysis of the Voter’s Choice Initiative Petition to Amend the Constitution ( June 83 ) 8 pages
Misc., Summary Analysis of the Voter's Choice Proposal ( February 84 ) 24 pages
CC 927, The Michigan Tax Limitation Amendment -- State Revenue and Spending Limits --- See also CC #947 and #949, and Misc. Report --- ( November 81 ) 4 pages
Misc., The Michigan Tax Limitation Amendment -- Current Status & Issues I. The State Revenue and Spending Limits ( June 81 ) 18 pages
The Prospects for a Long-Term Solution to Michigan's General Fund Structural Deficit,
State Budget Notes 2002-04 ( April 2002 ) 6 pages
This analysis seeks to determine how soon, or indeed if ever, growth from currently authorized revenues will permit eliminating the structural defict without very large cuts i program spending.
The FY2003 Executive Budget: Short-Term Balance, Long-Term Gaps,
State Budget Notes 2002-02 (February 2002 ) 2 pages
Analyses how the Governor's proposed FY2003 Executive Budget addresses the imbalance between spending and revenues.
The Problem Facing the New Budget,
State Budget Notes 2001-01 (January 2002 ) 3 pages
CRC continues to track the deteriorating budget condition and offer analysis.
Michigan's Budget Problems -- Time for Permenant Solutions?,
State Budget Notes 2001-01 (December 2001 ) 3 pages
CRC continues to track the deteriorating budget condition and offer analysis.
Michigan's Budget Situation - A Long-Term Problem
Note 2001-05 (September 2001 ) 4 pages
In June, Note 2001-02 outlined the difficulties confronting the State in dealing with the budget. Since that time, actions were taken by the Governor and State Legislature to close the budget gaps for fiscal years 2000-01 and 2001-02. This Note summarizes the Fiscal Year 2000-01 and 2001-02 actions and provides some finding relative to the fiscal year 2002-03 budget outlook.
Michigan's Precarious Budget Situation,
Note 2001-02 ( June 2001 )
Even with economic recovery, the State will face problems as far out as FY2003.
CC 1020, Unrestricted State Revenue Sharing In Michigan, Describes the system, the component taxes (sales, income, single business, and intangibles), the history of state actions, and examines the effect on local government revenues ( October 93 ) 6 pages [43,973 bytes]
CC 1038, The Earmarking of State Taxes in Michigan, Describes the past and present status of dedicated state taxes and Michigan ( December 95 ) 8 pages [35,853 bytes]
CC 1025, State Budget Outlook, Analysis of the well being of the key funds and long-term reasons for concern ( May 94 ) 4 pages [14,387 bytes]
CC 1016, State Financial Problems, Discusses the condition of the state's finances which was very similar to the condition in the early 1980s. ( February 93 ) 4 pages [36,544 bytes]
CC 933, Michigan's Key Fund Fiscal Problem ( September 82 ) 8 pages
CC 924, Michigan's Growing Cash Deficit ( July 81 ) 6 pages
CC 883, Michigan's Financial Problem ("Worst fiscal crunch in state history") ( November 75 ) 6 pages
The 2000 Census and State and Local Finance in Michigan
Report 328, (March 2000 ) 32 pages
The study identifies 34 provisions in state law where a reference to local government population affects state and local government finance: 11 affect the allocation of state funds to local governments and 22 affect local governments’ authority to raise revenue. The potential changes of the most significance are the provisions in: (1) the State Revenue Sharing Act that eliminate limitations on growth for as many as 1,000 cities, villages, and townships whose population increases more than ten percent between censuses; (2) the Downtown Development Authority Act that could allow Detroit to raise its tax from one to two mills; and (3) the City Income Tax Act that could restrict Saginaw’s ability to levy its tax at a rate higher than that generally allowed other cities.
Memo, An Analysis of the Effectiveness of the Local Government Fiscal Responsibility Act (Public Act 72 of 1990, formerly Public Act 101 of 1988), The Michigan Commission on Intergovernmental Relations, in response to a legislative request to evaluate Public Act No. 101 of 1988, the Local Government Fiscal Responsibility Act, asked CRC to analyze the effectiveness of the act. Criticisms of the act focused on several areas: the susceptibility of the process to political influence; the length of time required for the appointment of an emergency financial manager; the extent of the authority of the emergency financial manager; and the bankruptcy provision. ( August 90 ) 16 pages [54KB]
CC 978, Insuring Fiscal Responsibility in Local Units of Government ( December 88 ) 8 pages
Misc., State Limitations on Local Taxes and Spending (Letter of '9/29 (with memo)) ( September 81 ) 5 pages
Misc., Local Government Tax & Expenditure Limitations ( June 81 ) --- pages
CC 978, Insuring Fiscal Responsibility in Local Units of Government ( December 88 ) 8 pages
Memo, An Analysis of the Effectiveness of the Local Government Fiscal Responsibility Act (Public Act 72 of 1990, formerly Public Act 101 of 1988), The Michigan Commission on Intergovernmental Relations, in response to a legislative request to evaluate Public Act No. 101 of 1988, the Local Government Fiscal Responsibility Act, asked CRC to analyze the effectiveness of the act. Criticisms of the act focused on several areas: the susceptibility of the process to political influence; the length of time required for the appointment of an emergency financial manager; the extent of the authority of the emergency financial manager; and the bankruptcy provision. ( August 90 ) 16 pages [54KB]
Memo, Letter to Ralph J. Wagner, Chairman of the Dearborn Budget Stabilization Task Force ( February 82 ) 13 pages
Legacy Costs and Indebtedness of the City of Detroit
Report 373 ( December 2011 ) 29 pages
Both the Mayor of Detroit and the Governor of Michigan have expressed concerns over Detroit's precarious financial position. The Mayor has indicated that the city may run out of cash early next year, and there is a significant risk that an emergency manager will be appointed to oversee the city's finances. Balancing Detroit's budget is made more difficult by the significant indebtedness and legacy costs of the city. This report is an analysis of the city's current obligations to bond holders, retirees, and others. The city had in excess of $14.1 billion of such liabilities outstanding as of June 30, 2010.
While total legacy costs and debt approaches $20,000 for each resident of the city, over a third of the liability ($5.2 billion of the $14.1 billion) is bonded debt of the water and sewerage system that will be repaid from payments made by residents of suburban communities as well as Detroiters who use the water and sewerage system. In addition to this debt, Detroit has voter-approved unlimited tax general obligation debt (the city's debt service levy is 8.92 mills) and limited tax general obligation debt totaling more than $1 billion, on which it will pay an additional $467.7 million in interest. The city's general obligation debt rating is below investment grade.
The Michigan Constitution makes pensions earned by state and local government workers contractual obligations of the governmental employer. Detroit's pension funds have high funded ratios with the General Retirement System 87 percent funded, and the Police and Fire Retirement System 97 percent funded. However, these high funding ratios were achieved by issuing pension obligation certificates in 2005 and 2006, under the assumption that Detroit could earn enough investing the bond proceeds to both pay the debt service and help fund future pension payments. Detroit has $1.5 billion of principal debt outstanding on the certificates, plus unfunded actuarial accrued liabilities of $615.7 million for the two pension systems. The current year Detroit budget allocates $191.8 million for payments to the pension funds ($147.2 million from general city agencies and $44.5 million from enterprise agencies including Water and Sewerage).
In addition to pension obligations, the city has promised to pay a portion of the cost of health care and other benefits for retirees. These costs have traditionally been funded on a "pay-as-you-go" basis, and in the current fiscal year the city budgeted $157.3 million ($124.7 million for general city agencies) for fringe benefits for retirees (this compares to $181.8 million for fringe benefits for all active employees). Detroit has $5.0 billion of unfunded actuarial accrued liabilities for other post employment benefits, equal to approximately $7,000 per resident. Making the contribution required to pay off the unfunded liability over 30 years would have required more than $150 million in additional payments in FY2010.
The Fiscal Condition of the City of Detroit
Report 361 ( April 2010 ) 74 pages
The "Great Recession" that began in December, 2007 has exacerbated the effects of population loss, poverty, and disinvestment on the City of Detroit. The tax base, already stressed, has deteriorated significantly, as the number of businesses and jobs has declined, unemployment has increased, and population has dwindled. The recently published Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2007-08 (FY2008) indicates that the city's general fund deficit increased from $155.6 million at the end of FY2007 to $219.2 million at the end of FY2008. No CAFR is available for FY2009, but city officials budgeted a $280 million prior years accumulated deficit for FY2010, and they estimate the current year general fund operating deficit to be in the range of $100 million. The Crisis Turnaround Team appointed by Mayor Bing to assess city operations and make recommendations estimated that, absent major changes, the city's average annual (structural) deficit for Fiscal Years 2010 through 2112 would be $260 million.
The current City of Detroit budget was balanced by including $275 million in revenues from the sale of future city revenues from the Detroit-Windsor Tunnel, Municipal Parking Department, and Public Lighting Department. It is highly unlikely that these budgeted revenues will materialize. Detroit imposes a high tax burden on residents, property owners, and those who work in the city, but revenues from municipal income, property, utility users' excise, and casino wagering taxes will fall significantly below the amounts included in the budget. Further, reductions in state revenue sharing will exceed the reductions budgeted.
It is unlikely that state financial resources will be made available to address the city's crisis, and no federal assistance has been, or is likely to be, made available for general operations.
Detroit: At a Fiscal Crossroads,
Memo 1041, ( May 96 ) 8 pages [52,668 bytes]
Reviews Detroit's finances by analyzing its 1996 budget. Discusses the relative strength of the City's fiscal position.
CC 1027, The Proposed 1994-95 City Of Detroit Budget, Analysis of the proposed revenues, expenditures, general fund deficit, the structural deficit and the changes needed to eliminate the problems ( May 94 ) 6 pages [17,017 bytes]
Report 310-11, The Detroit City Charter: Budget And Finance Issues, Examines the budget and finance operations under a strong mayor-council for of government in the City of Detroit ( October 93 ) 6 pages [37,113 bytes]
Memo, City Of Detroit Bond Refinancing Proposal: Chrysler/Jefferson Avenue Jeep Assembly Plant Issues relative to the refinancing of $118.56 million of general obligation bonds as limited tax bonds to be voted on September 14, 1993 ( August 93 ) 2 pages [7 KB]
Report 300, Fiscal Trends of the City of Detroit --- See also CC #999 --- ( June 91 ) 81 pages
CC 999, Fiscal Trends of the City of Detroit --- Summarizes Report #300 --- ( June 91 ) 6 pages [39,656 bytes]
Report 291, Effects of Population on Major Revenue Sources in Detroit, Explores the financial and representational consequences of Detroit losing population in the 1990 census ( April 89 ) 19 pages
Overview of the Effects of Federal Decennial Census on Detroit's Major State Source Revenues,
CC 981, ( March 89 ) 2 pages [36KB]
Analyzes how populations interact with state revenue sharing, transportation funding, and apportionment to affect the city of Detroit. --- Summarizes Report #291 ---
Detroit Ballot Issues: Authorization Sell General Obligation Bonds,
CC 971, ( July 88 ) 4 pages
On August 2, 1988, Detroit voters were asked to authorize the issuance of $199 million of general obligation bonds in five general categories: lighting; recreation and zoo; economic development and neighborhood redevelopment; Cobo Hall completion; and Detroit Institute of Arts.
Misc., Trends in Operating Revenues and Expenditures, For The City of Detroit, 1960-1983 ( February 85 ) 26 pages
CC 891, City of Detroit Finances in 1976-77 ( January 77 ) 4 pages
CC 881, The City of Detroit Budget for 1975-76 ( July 75 ) 4 pages
CC 878, The 1974-75 Budget Problem-City of Detroit and the Outlook for 1975-76 ( February 75 ) 2 pages
Memo to Budget Stabilization Committee of the City of Highland Park, Michigan
Memo, ( May 82 ) 3 pages
Report of the Business Advisory Committee of the City of Highland Park, Michigan
Misc., ( May 82 ) 6 pages
Comparison of Highland Park 1982-83 General Fund Budget with CRC Estimates
Misc., ( May 82 ) 1 page
Comparison of Highland Park Estimates of General Fund 1981-82 Operations with CRC Projections
Misc., ( May 82 ) 1 page
Long Range Financial Planning (City of Highland Park)
Misc., ( May 82 ) 2 pages
1982-83 Highland Park Legal Obligations
Memo, ( May 82 ) 1 page
Highland Park: Reduce Labor Costs
Memo, ( May 82 ) 1 page
Business Advisory Committee Report (City of Highland Park)
Memo, ( May 82 ) 4 pages
Highland Park Pension Systems: Minimum Constitutional Contribution
Memo, ( May 82 ) 4 pages
Wayne County Finance
CC 991, Wayne County Ballot Issues Description of the issues surrounding millage requests for one mill for Wayne County Community College and one mill for general county operations. ( July 90 ) 4 pages
Report 269, Wayne County Charter Issues ... Financial Processes ( March 81 ) 22 pages
CC 948, Wayne County and Detroit Ballot Issues (A: Wayne County Millage Renewal; B: Abolish Wayne County Road Commission; C: Ombudsman; L: Detroit Library Operating Millage) ( July 84 ) 4 pages
Reforming the Process for Identifying and Funding Section 29 Mandates on Local Governments
Report 355 ( July 2009 ) 74 pages
Today the Citizens Research Council of Michigan issued its report to the Legislative Commission on Statutory Mandates, a body created by Public Act 98 of 2007, that was created as one of two legislative commissions as part of the 2008 state budget agreement. The Commission is reviewing and investigating the extent to which unfunded mandates have been imposed on local governments, and is to recommend process reforms to the legislature so that laws that require local governments to provide new activities or services can be properly addressed in the future. The Commission engaged CRC to investigate practices in other states with similar laws.
Article IX, Section 29 of the Michigan Constitution prohibits the State from mandating local governments to provide new services or activities without proper funding. The process to implement this section of the Headlee Amendment was never fully implemented and local government associations suggest that mandates have been enacted without funding over the 30 years since adoption. CRC's report offers alternatives and options to reform the process by analyzing processes used to implement similar laws in other states.
"As local governments endeavor to balance their budgets, state mandates stand out as a fixed cost for which they have no latitude to achieve savings," said Eric Lupher, CRC's Director of Local Affairs. "A vigorous enforcement process is needed to investigate local governments' claims of unfunded state requirements, determine relevant costs, and develop a legislative response when claims are found to be legitimate."
"Processes used in other states can be adapted to implement Section 29 in Michigan," said Lupher. "While aspects of the systems used in several states are notable, the processes used in Massachusetts and California have the tools most relevant to Michigan."
Federal Expenditures in Michigan, 2007
Note 2008-05 ( November 2008 ) 3 pages
The U.S. Bureau of the Census has released its report of Federal expenditures by state for Fiscal Year 2007. (Reports for FY2005 and FY2006 were released earlier this year.) Once again, Michigan's position in total Federal spending fell a notch, from 44th in 2006 to 45th in 2007. Michigan's rank in Federal grants to state and local government, however, rose to 36th in 2007 from 40th in 2006, largely as a result of increased Federal funding of the Michigan Medicaid program and funds for Temporary Assistance to Needy Families.
Federal Expenditures in Michigan, 2006
Report 351 ( September 2008 ) 30 pages
Per capita federal expenditures in Michigan in Michigan rose from $6,414 in fiscal year 2005 to $6,671 in fiscal year 2006, but Michigan's rank among the 50 states fell from 43rd to 44th. If Michigan had received the same per capita amount as the average of the other states, $15.4 billion more in federal spending would have occurred in Michigan. This is one of the principal findings of a new report (Federal Expenditures in Michigan, 2006) released by the Citizens Research Council of Michigan.
Michigan tends to do fairly well in receiving Social Security, Medicare, and other income supplement programs, but in major areas, such as transportation and education, Michigan receives substantially less than the average.
State and local governments in Michigan did not fare much better, falling from 37th in FY05 to 40th in FY06, with the actual amount declining by $467.5 million. Increases in housing and urban development and justice were more than offset by a major decline in funding for health and human services programs.
Federal Expenditures in Michigan
Report 348 ( March 2008 ) 28 pages
In 2005 (the most recent year for which data are available), Michigan had 3.41 percent of the nation’s population, but received only 2.84 percent of all federal expenditures and obligations paid to governmental, non-profit, and for-profit entities and individuals. During the same period, Michigan state and local governments received 3.0 percent of outlays from federal grants and payments programs. If this state had received a proportion of federal payments identical to its share of population, an additional $13.0 billion would have been transferred from the federal government to governmental and nongovernmental recipients in Michigan. Included in that $13.0 billion would have been $1.6 billion in payments to the State of Michigan and Michigan local governments.
This new report from Citizens Research Council analyzes federal payments for retirement and disability, grant awards, procurement contracts, salaries and wages, and other direct payments made to governmental and non-governmental entities, as well as federal grants and payments to state and local governments. The analysis identifies federal agencies from which payments are made, types of payments, specific federal programs that disproportionately benefited Michigan and federal programs that should be scrutinized to determine whether benefits to Michigan can be increased.
The analysis suggests that more could be done to maximize potential payments from existing federal programs and to refine existing, or shape new federal programs to better meet Michigan needs.
CC 922, State Ballot Issues: Proposal A -- State Subsidy of Local Taxes (defeated 28% for to 72% against) ( May 81 ) 8 pages
Memo 1048, The Durant Decision, On July 31, 1997, the Michigan Supreme Court held that special education programs are a State mandate and that the State had failed to fund such programs at the level required by the State Constitution. A financial settlement has been structured covering both the plaintiffs and other school districts similarly affected by the State's actions. Correcting the underfunding of special education programs is not the only Headlee Amendment issue which should concern the Governor and Legislature. An effort should be undertaken to identify and catalogue existing mandates imposed upon units of local government by the State, and to identify new mandates as they are adopted. In addition, the Legislature should invigorate the local government claims review board which it established in 1979. Finally, the Legislature needs to adopt amendments to its joint rules to establish a process to identify potential mandates, as required by the Headlee Amendment implementation legislation. ( January 98 ) 7 pages [75,136 bytes]
Adobe Format
Downloadable CRC publications are provided in Adobe Acrobat's Portable Document Format (pdf). Access to these files requires use of Acrobat Reader. This software is available at no cost from the Adobe.
Acrobat and the Acrobat logo are trademarks of Adobe Systems Incorporated..
Last Updated December 1, 2011
Facebook page
Twitter Page
LinkedIn Page
