Michigan's Budget Crisis

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.

Michigan's Fiscal Future
Memorandum 1086 ( May 2008 ) 8 pages

Summarizes Report 349

State Budget "Balance" for FY2007 Achieved with $1 Billion in Additional Non-Recurring Resources
State Budget Note 2007-01 ( June 2007 ) 2 pages

Going into Fiscal Year 2007 the State of Michigan had used $6.8 billion in non-recurring resources to meet the constitutional balanced budget requirement. The recent agreement on the FY2007 budget has increased that total by $1.015 billion adding new challenges to achieving a structurally balanced budget.

Michigan's Deteriorating Cash Position
Note 2007-02 ( May 2007 ) 8 pages

Actions to maintain balance in the State general and school aid funds since Fiscal Year 2001 have relied heavily on the depletion of reserves and the use of one-time accounting maneuvers, which have served to erode the State cash position, by $4.2 billion. Actions to balance the FY07 and FY08 budgets will be subject to the realities of cash constraints brought about by failure to resolve the underlying structural deficit.

Michigan’s Budget Crisis and the Prospects for the Future
State Budget Note ( March 2006 ) 11 pages

On March 14, CRC Director of State Affairs Tom Clay presented an analysis of the state budget problem to the conference "Where Do We Go From Here?" sponsored by the Center for Michigan, the Ford School of Public Policy at the University of Michigan, and the Center for Local, State and Urban Policy within the Ford School of Public Policy.

The paper concluded that the general fund structural deficit is not going away and that eroding revenues and growing Medicaid and corrections spending are making it increasingly difficult to balance the budget.

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.

Prospects for School Aid in the Economic Recovery,
State Budget Notes 2002-03 ( March 2002 ) 4 pages

Discusses the prospects for state school aid, the largest category in the state budget, for the next 5 years and presents a scenario to finish the process of managing through the current budget problem.

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 2002-01 ( January 2002 ) 3 pages

CRC continues to track the deteriorating budget condition and offer analysis.

Michigan's Budget Problems -- Time for Permanent 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 ) 2 pages

Even with economic recovery, the State will face problems as far out as FY2003.

1990-91 State General Fund-General Purpose Budget
Misc., ( February 91 ) 4 pages

Michigan's Financial Improvement Strategy
CC 945, ( November 83 ) 4 pages

(eliminating cash deficit)

The State Fiscal Plan
CC 941, ( June 83 ) 7 pages

1. Tax Increases establish financial base; 2. Increases in key fund spending --- See also Misc. Report ---

The State Fiscal Plan
Misc., ( May 83 ) 7 pages

Resolving Michigan's Past, Present, and Future Fiscal Problems: The 1983 Debate
CC 939, ( March 83 ) 2 pages

Estimates size of the 1983 structural deficit and discusses the use of spending cuts or income tax rate increases to solve the problem. Summarizes findings of 12-page "white paper".

Resolving Michigan's Past, Present, and Future Fiscal Problems -- The 1983 Debate
Misc., ( March 83 ) 12 pages

Michigan's Key Fund Fiscal Problem
CC 933, ( September 82 ) 8 pages

Effects on Michigan of the 1981 Economic Tax Recovery Act
CC 930, ( July 82 ) 6 pages

The State Revenue and Spending Limits
Memo, ( October 81 ) 18 pages

Michigan's Growing Cash Deficit
CC 924, ( July 81 ) 6 pages

State Finances in Distress: Michigan--Fiscal Years 1980 and 1981
CC 921, ( November 80 ) 2 pages