Michigan state budget

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Michigan is at a budget impasse between Gov. Jennifer Granholm and the Michigan State Legislature for FY 2010; the fiscal year began October 1, 2009 and ends September 30, 2010. The Senate approved a temporary budget on Sept. 25, 2009 because the full budget was not complete by the end of the fiscal year. After a two-hour technical shutdown lawmakers approved a number of budget bills and the governor signed a 30 day interim budget that expires October 31, 2009.^[1][2]

Gov. Granholm advocates tax increases while the Michigan State Senate wants to reduce state spending without any tax increases to meet the budget shortfall. The Legislature has passed a series of budget bills to cut $1 billion to address the projected $2.8 billion deficit for FY 2010. The final 6 budget bills were sent from the Legislature to Gov. Granholm on October 20, 2009 and are awaiting her veto or signature before the interim budget expires.^[3]

The executive budget Gov. Granholm presented in February of 2009 for FY 2010 showed:^[4]
Projected Revenues

• General Fund/General Purpose Funds $8.77 billion
• School Aid Fund $12.90 billion
• Total $21.67 billion

Projected Appropriations

• General Fund/General Purpose Funds $9.94 billion
• School Aid Fund $13.13 billion
• Total $23.07 billion

Deficit $1.4 billion

[edit] Budget Background

The Michigan Constitution requires the Governor to propose an Executive Budget for state activities on an annual basis. By law the Executive Budget must be submitted to the Legislature within thirty days after the Legislature convenes in regular session on the second Wednesday in January. However, when a newly elected Governor is inaugurated into office, sixty days are allowed to prepare the proposal. The Executive Budget is more than a statutory requirement. It represents a statement of priorities for the policy activities of state government. Therefore, a detailed budget preparation process is necessary to provide information that will help the Governor and the Legislature allocate state resources most effectively. The budget process can be broken down into four stages:^[5]

• Development of the Governor's Executive Budget
• Enactment by the Legislature
• Budget Revisions
• Closing the Books

According to the Michigan Constitution, no appropriation is a mandate to spend. The Governor, by Executive Order and with the approval of the appropriations committees, can reduce expenditures whenever it appears that actual revenues for a fiscal period will fall below the revenue estimates on which the appropriations for that period are based. By statute, any recommendation for the reduction of expenditures must be approved or disapproved by both of the Appropriations Committees within ten days after the recommendation is made. A reduction cannot be made without approval from both committees; not later than thirty days after a proposed order is disapproved, the Governor may submit alternative recommendations for expenditure reductions to the committees for their approval or disapproval.^[6]

[edit] Budget figures

The following table shows total state spending in recent years.

• On Feb. 12, 2009, Gov. Granholm proposed an FY 2009-2010 budget that would spend $44.203 billion gross, of which $16.068 billion is federal money, and $28.135 represents state spending from state sources. However, passage of a 2009 federal "stimulus" bill is expected to boost the federal component and gross speding by many hundreds of millions of dollars. ^[9]

• See Michigan state budget (2008-2009) for more details.

[edit] Accounting Principles

The Michigan Office of the Auditor General has the responsibility, as stated in Article 4, Section 53 of the State Constitution, to conduct 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. Thomas H. McTavish has served as Michigan Auditor General since 1989. Michigan's audit reports are published online.^[10]

The Institute for Truth in Accounting (IFTA) rates Michigan “Timey” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Michigan's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[11] Michigan's CAFRs are published online by the Michigan Office of State Budget, Office of Financial Management. Michael J. Moody is the Director Office of Financial Management. Bob Emerson is the Director of the Office of State Budget.^[12]

[edit] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The website has Comprehensive Annual Financial Reports (CAFR) dating back to 2004.^[13]
• An independent auditor’s report is published.^[14]
• It provides supplements to the budget workup, such as non-major Governmental funds.
• The budget is posted using organized and consistent methods of financial reporting.
• Michigan law requires a balanced budget.^[15]
• It includes all costs incurred by the government, including long-term liabilities.^[16]
• The CAFR compares estimated and actual budgetary numbers.^[17]
• The Michigan office was timely in submitting the budget.

[edit] The bad

• The CAFR is posted in non-searchable PDF formats, separating the sections into separate files, so it’s not searchable online.

[edit] Economic Stimulus Package

Michigan is expected to receive $7 billion from the $787 billion dollar economic stimulus. ^[18] All told, the federal stimulus plan would create or save 109,000 jobs in Michigan, based on White House estimates.^[19]
For more information on how the federal stimulus funds are being used in the state of Michigan, visit the state recovery website.

According to preliminary reports, Michigan is expected to receive:

• $2.27 billion for Medicaid^[18]
• $1.34 billion for fiscal stabilization in education^[18]
• $419 million for special education^[18]
• $211million for K-12 construction^[18]
• $501 million for community services grants^[18]
• $293 million for general state government^[18]
• $280 million for weatherization^[18]
• $2.6 million for health clinics^[20]
• $7.3 million for adoption and foster care programs^[21]
• $3.1 million for senior nutrition programs^[22]
• $1 billion to improve child support enforcement^[23]
• $873 million in road projects^[24]
• $50 million for modernization and development of public housing^[25]

[edit] Budget transparency

At present, no department of Michigan state government provides a comprehensive and searchable online checkbook register that gives a full and timely accounting for all expenditures. Spokespersons for the office of Michigan governor Jennifer Granholm have asserted that providing such a service for all of Michigan state government would cost in excess of $100 million, and is thus cost-prohibitive given the state's recurring inability to align desired spending with available revenue.^[26]

[edit] News

• Proposal to open budget meetings: In January of 2010 State House and Senate members considered a proposal, which would open traditionally closed state budget meeting to the public. The reform is building off other proposals such as earlier deadlines for adopting a budget and docking lawmakers' pay for not adopting a budget in time.^[27]

• Michigan Department of State provides first online expenditure report:On April 23, 2008, Michigan Secretary of State Terri Lynn Land announced that the Michigan Department of State would begin posting quarterly expenditure reports.^[28] These reports provide the names for most of the recipients of departmental funds, the general category for the expenditures and the total amount paid during the preceding quarter.^[28] The MDOS made the decision to post this expenditure report after a request from the Mackinac Center for Public Policy's "Show Michigan the Money" transparency project.^[29] The MDOS report is presently the only regular accounting of expenditures provided by any department of state government. The MDOS report does have limitations. It is provided as a searchable PDF document, but does not provide check numbers nor is it subdivided by date for individual transactions. The reports also do not provide the names, titles and salaries paid to departmental employees. (However, the names of employees and amounts paid to them for travel and other work-related reimbursements are included in the reports.)
• Governor's response to lack of online "check register":Democratic Governor Jennifer Granholm has responded to calls to put the state "check register" online by asserting that current information systems could not provide this information, and making the capable of doing so would be too costly. An April 9, 2008 report by the Michigan Information News Service (MIRS, subscription required) reported that a letter to House leaders from state Department of Information Technology (DIT) director Ken Theis said that the state's financial accounting mainframe computer system acquired in the in 1980s would require "extensive" upgrades costing between $100 million and $150 million to produce the kind of searchable spending database that Missouri has created. The point of the Mackinac Center request referred to above was merely to ask state departments to replicate the Secretary of State standard, leaving them to decide whether or not they wished to exceed it. As reported on the Mackinac Center's "Show me the money" website, using the same mainframe computer system the Michigan Secretary of State department posts quarterly spending reports at an initial cost of $2,400, and $700 for each new quarterly report. If those figures were extended to the entire state government the initial cost to produce similar quarterly reports would be $516,000, and $129,000 per quarterly report, or 0.0012 percent and 0.00035 percent of the annual budget, respectively.^[30] The reply to the Mackinac Center's request from the Office of the Governor also addressed employee salary information, stating that "this level of detail provides little value to the taxpayer."^[31]
• In February 2009, two freshmen Republican members of the Michigan House (Amash and McMillin) began posting detailed records of their own office spending, including itemized monthly expenditures by category, and the names and salaries of their legislative aides. The House Republican caucus has claimed that it is posting detailed spending data, but to date these two legislators are the only ones actually doing so.

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

Michigan.gov is the website for the state of Michigan.

• Main article: Evaluation of state websites

[edit] The good

• Budget is published.^[32]
• State tax information is provided.^[33]
• Homepage has a "State Officials" tab which leads to elected officials and their contact information.^[34]
• Ethics commission information is posted.^[35]
• Annual financial audits are published.^[36]
• All current state contracts are published.^[37]
• Information on registered lobbyists is available in a searchable database.^[38]

[edit] The bad

• Site has a search function, but is somewhat difficult to navigate.
• Some agencies have administrative officials listed, but not all.^[39]
• Does not provide information on state-paid lobbying and agency lobbying contracts.
• Some departments have forms/contact info for making Michigan Freedom of Information Act requests, but not all.^[40]

[edit] Legislation

See also: Michigan Freedom of Information Act

• In 2009, Republican legislators have introduced several bills that essentially call for a searchable online state "check register" (bills listed here). This continues a pattern begun in 2008, when GOP members of the Democratically-controlled House sought to attach amendments to state department budget bills requiring the departments to post on a website all their expenditures during a fiscal year, and the purpose of each. These were defeated in voice votes or through parliamentary maneuver. These amendments were introduced after the Democratic governor's response described below to calls to produce an online "check register," and were generally viewed as political gamesmanship, especially since the Republican-controlled Senate chose not to back up the demand.
• In February, 2009 legislation passed in the state Senate that would require detailed reporting by the Department of Treasury and the Michigan Economic Development Corporation on subsidies and targeted tax breaks granted to particular businesses selected by bureaucrats, or indentified by thinly disguised statutes (Senate Bills 70, 71 and 72). The future of the legislation in the Democratic-controlled House is uncertain.

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

[edit] Independent transparency sites

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

The National Taxpayers Union produces an "www.showmethespending.org" website, with weekly transparency e-updates. This is expected to include Michigan data at some point.

[edit] Public employee salary information

LSJ.com, a Michigan newspaper, offers this resource for searching public payrolls: State of Michigan salary search.

Another Michigan news source, MLive.com, has done an extensive series of articles about public school instructor's pay which includes salary databases. See the whole Teacher Pay series here.

University of Michigan employees' salaries are updated annually at High Ed Salaries.

[edit] Economic Stimulus Transparency

• The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[41]

• Michigan will receive an estimated $4,925,282,005 ^[42]

• The economic recovery website to show how legislators and government officials in Michigan are spending Federal funds is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[43][44]

The ARRP website created 10 non-existing districts in Michigan, as well, awarding them $5,387,945 to "create/save" 49.5 jobs.^[45]

The ARRP website lists the Michigan capital, Lansing, ZIP code as receiving $1,217,275,548 and creating 17,966.9 jobs. The website credits Michigan with “creating/saving” 22,514 total jobs, meaning Lansing accounts for almost 80 percent of the jobs “created.” statewide.

The state calculates it will create or retain 19,190 jobs and Lansing ZIP code 48933 would account for nearly 94 percent of the state’s stimulus job creation.^[46]

[edit] See Also

Michigan taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Gov. Granholm,"State of the State address 2009"
• Lansing State Journal,"40 ways to cut the Michigan budget deficit," May 17,2009
• Associated Press,"More bad news ahead for Michigan state budgets," May 13,2009

[edit] References

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	v • d • e State of Michigan Lansing (capital)
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