Contact: Craig Thiel
517 485-9444

New CRC Report: The Problems with Late Budgets

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contains one of the strongest balanced budget provisions in the nation and its requirement that no money may be withdrawn from the treasury "except in pursuance of appropriations made by law" means that state expenditures may not be incurred without an adopted budget.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.

"While it is highly desirable for the legislature to complete its appropriations in July or earlier, there does not appear to be a mechanism that could be employed to assure this," commented Craig Thiel, CRC Director of State Affairs. "Experience in other states has shown that it is relatively simple to ignore an arbitrary deadline for budget adoption. It is up to the political process, not the budget process, to bring the budget to completion in time for orderly fiscal planning."

The report, Late Budgets in Michigan: Causes, Effects, and Implications, can be accessed on the CRC website.

The Citizens Research Council of Michigan is a private, nonprofit public affairs research organization established in 1916 to analyze issues of significance to state and local government organization and finance in Michigan.