July 1, 2009, 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."

IN THE NEWS

Stimulus Funds Must Be Managed Carefully to Cope With Revenue "Cliff"

April 22, 2009, 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."

Access Dual Deficits and Federal Recovery Assistance: Prospects for State Budget Balance.

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Recent Publications

Dual Deficits and Federal Recovery Assistance: Prospects for State Budget Balance

Michigan's Weakened Financial Position and the Problem of Dual Deficits

Federal Expenditures in Michigan, 2007

Provisions Related to Filling a Vacancy in the Office of Lieutenant Governor

Approaches to Consolidating Local Government Services

 

 

 

 

 

 

Last Updated July 1, 2009