Michigan state budget and finances

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Michigan budget and finances

General information

Budget calendar: Annual

Fiscal year: 2017

State credit rating: AA- (as of 2017)

Current governor: Gretchen Whitmer

Financial figures

Total spending (state and federal funds): $54,672,000,000 (estimated 2016)

Per capita spending: $5,507 (estimated 2016)

Total state tax collections: $27,436,607,000 (2016)

Per capita tax collections: $2,763 (2016)

State debt: $33,245,109,000 (2014)

Per capita state debt: $3,352 (2014)

State budget and finance pages • Total state expenditures • State debt • Tax policy in Michigan

Note: In comparing dollar amounts across the states, it is important to note that the cost of living can differ from state to state and within a state. The amounts given on this page have not been adjusted to reflect these differences. For more information on "regional price disparities" and the Consumer Price Index, see the U.S. Department of Commerce, Bureau of Economic Analysis. This article, which is updated on an annual basis, was last updated in June 2017. It contains information from several sources; consequently, the currency of the information can vary from source to source.

In Michigan, as in other states, lawmakers and public officials are elected in part to manage the state's finances. This includes generating revenues (money coming into the state from various sources) and approving expenditures (the money spent on governmental functions and servicing state debt). State budgets are complex and fluid, as they depend on anticipated revenues and planned expenditures, which may alter over the course of a fiscal year. If revenues do not keep pace with expenditures, states generally have to raise taxes, cut services, borrow money, or a combination of the three. State budget decisions are also influenced by policy decisions at the national level, such as the Affordable Care Act or energy and environmental regulations, and issues at the local level, such as crime and the quality of education.

HIGHLIGHTS

Between fiscal years 2015 and 2016, total government spending in Michigan increased by approximately $1.5 billion—from $53.2 billion in fiscal year 2015 to an estimated $54.7 billion in 2016. This represents a 2.8-percent increase.

In Michigan in fiscal year 2015, 48.3 percent of total tax revenues came from sales taxes and gross receipts. Income taxes accounted for 37.2 percent of total state tax collections.

Education accounted for 29.5 percent of state expenditures in fiscal year 2015, while 30.2 percent went to Medicaid.

Definitions

The following terms are used to describe a state's finances:

• Revenues come mainly from tax collections, licensing fees, federal aid, and returns on investments.
• Expenditures generally include spending on government salaries, infrastructure, education, public pensions, public assistance, corrections, Medicaid, and transportation.
• State debt refers to the money borrowed to make up for a deficit when revenues do not cover spending.
• The state credit rating is the grade given by a credit rating agency based on the general financial health of the state's government and economy.
• State funds include general and other state-based funds. A general fund is "the predominant fund for financing a state's operations." Other state funds are "restricted by law for particular governmental functions or activities."
• Federal funds are "funds received directly from the federal government."
• Total spending is calculated by adding together the totals for state and federal funds used for expenditures.

Revenues

2016 revenues

See also: State government tax collections by source

The table below breaks down state government tax collections by source in 2016 (comparable figures from surrounding states are also provided to give additional context). Figures for all columns except "2016 population" and "Per capita collections" are rendered in thousands of dollars (for example, $2,448 translates to $2,448,000). Figures in the columns labeled "2016 population" and "Per capita collections" have not been abbreviated.

State tax collections by source ($ in thousands), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes	Total	2016 population	Per capita collections
Michigan	$2,034,013	$13,239,133	$1,660,663	$10,202,060	$300,738	$27,436,607	9,928,300	$2,763
Illinois	$60,814	$18,524,265	$2,745,949	$17,173,986	$402,206	$38,907,220	12,801,539	$3,039
Indiana	$10,699	$10,608,207	$714,634	$6,252,533	$1,885	$17,587,958	6,633,053	$2,652
Ohio	N/A	$18,231,167	$2,223,747	$8,202,432	$37,537	$28,694,883	11,614,373	$2,471
United States	$18,364,298	$442,909,995	$52,164,396	$392,286,910	$24,538,146	$930,263,745	322,762,018	$2,882.20
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed June 26, 2017

The table below lists 2016 tax collections by source as percentages of total collections. About 48.3 percent of Michigan's total state tax collections came from sales taxes and gross receipts.

State tax collections by source (as percentages), 2016
State	Property taxes	Sales and gross receipts	Licenses	Income taxes	Other taxes
Michigan	7.4%	48.3%	6.1%	37.2%	1.1%
Illinois	0.2%	47.6%	7.1%	44.1%	1.0%
Indiana	0.1%	60.3%	4.1%	35.6%	0.0%
Ohio	N/A	63.5%	7.7%	28.6%	0.1%
Source: U.S. Census Bureau, "2016 annual survey of state government tax collections by category," accessed April 4, 2016

Federal aid to the state budget

See also: Federal aid to state budgets

State governments receive aid from the federal government to fund a variety of joint programs, mainly in the form of grants for such things as Medicaid, education, and transportation. In 2014, federal aid to the states accounted for roughly 31 percent of all state general revenues. Federal aid varies from state to state. For example, Mississippi received approximately $7.2 billion in federal aid in 2014, accounting for about 41 percent of the state's general revenues, the highest percentage of all of the states. By contrast, North Dakota received about $1.5 billion in federal aid in 2014, or just 17 percent of the state's general revenues, the lowest percentage in the nation.

The table below notes what share of Michigan’s general revenues came from the federal government in 2014. That year, Michigan received approximately $17.7 billion in federal aid, 32.1 percent of the state's general revenues. Taking into consideration the state's 2014 population, this came out to about $1,787 in federal aid per capita. Figures from surrounding states are provided for additional context.

Federal aid to state budgets, 2014
State	Total federal aid ($ in thousands)	Federal aid as a % of general revenues	Ranking (by % of general revenues)	Est. 2014 population	Aid per capita
Michigan	$17,722,616	32.1%	27	9,915,767	$1,787
Illinois	$17,851,826	26.5%	42	12,867,544	$1,387
Indiana	$10,974,721	33.0%	23	6,595,233	$1,664
Ohio	$21,760,672	35.0%	13	11,594,408	$1,877
Sources: United States Census Bureau, "2014 State and Local Government Finances," accessed June 26, 2017 Note: Per-capita figures were generated by Ballotpedia by dividing total federal aid for the state by the estimated population of that state in 2014.

Spending

Estimated 2016 expenditures

See also: Total state expenditures

The table below breaks down estimated spending totals for fiscal year 2016 (comparable figures from surrounding states are included to provide additional context). Figures for all columns except "Population” and “Per capita spending" are rendered in millions of dollars (for example, $2,448 translates to $2,448,000,000). Figures in the columns labeled "Population” and “Per capita spending" have not been abbreviated.

The total estimated government spending in Michigan in fiscal year 2016 was $54.7 billion.

Total estimated state spending, FY 2016 ($ in millions)
State	State funds	Federal funds	Total spending	Population	Per capita spending
Michigan	$31,944	$22,728	$54,672	9,928,300	$5,507
Illinois	$39,168	$16,810	$55,978	12,801,539	$4,373
Indiana	$18,958	$12,448	$31,406	6,633,053	$4,735
Ohio	$55,000	$12,450	$67,450	11,614,373	$5,807
Per-capita figures are calculated by taking the state's total spending and dividing by the number of state residents according to United States Census Bureau estimates. Source: National Association of State Budget Officers, "State Expenditure Report (Fiscal 2014-2016)," accessed June 26, 2017

Spending by function

See also: State spending by function as a percent of total expenditures

State spending in Michigan can be further broken down by function (elementary and secondary education, public assistance, etc.). Fiscal year 2015 information is included in the table below (information from neighboring states is provided for additional context). Figures are rendered as percentages, indicating the share of the total budget spent per category.

In fiscal year 2015, Medicaid accounted for 30.2 percent of Michigan's total expenditures.

State spending by function as a percent of total expenditures, FY 2015
State	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Trans- portation	Other
Michigan	25.2%	4.3%	0.4%	30.2%	4.2%	6.9%	28.8%
Illinois	14.0%	3.4%	0.3%	27.1%	2.4%	9.0%	43.7%
Indiana	30.0%	6.6%	1.4%	31.2%	2.6%	5.3%	22.7%
Ohio	16.8%	4.1%	1.3%	37.4%	2.9%	5.1%	32.4%
Source: National Association of State Budget Officers Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."

Spending trends

The table below details the spending trends in Michigan in previous years. Figures are rendered as percentages, indicating the share of the total budget spent per category.

Spending by function from 2010 to 2015 (as percentages)
Year	K-12 education	Higher education	Public assistance	Medicaid	Corrections	Transportation	Other
2015	25.2%	4.3%	0.4%	30.2%	4.2%	6.9%	28.8%
2014	26.9%	4.3%	0.5%	27.6%	4.4%	7.5%	28.7%
2013	27.2%	4.2%	0.7%	26.4%	4.6%	7.8%	29%
2012	27.2%	4.1%	0.9%	26.1%	4.7%	6.9%	30.2%
2011	27.6%	4.4%	0.7%	24.9%	4.5%	6.8%	31.1%
2010	28.4%	4.5%	1.1%	24.2%	4.7%	7.4%	29.7%
Source: National Association of State Budget Officers Note: "Other" expenditures include "Children's Health Insurance Program (CHIP), institutional and community care for the mentally ill and developmentally disabled, public health programs, employer contributions to pensions and health benefits, economic development, environmental projects, state police, parks and recreation, housing and general aid to local governments."

State debt

See also: Michigan state debt

State debt refers to any debt owned by a state government. Debt may include any financial obligations a state has that have not been paid, such as bonds issued by state governments, money borrowed by a state government that has not been repaid, or post-retirement benefits promised to state employees. According to the U.S. Census Bureau, Michigan had a debt of $33,245,109,000 in fiscal year 2015. The state debt per capita was $3,352. This ranked Michigan 10th among the states in debt and 23rd in per capita debt. The total state debt owned by the 50 states was $1.15 trillion with a per capita debt of $3,582.

Economic indicators

See also: Economic indicators by state

Michigan's GDP increased by 1.9 percent in 2014. Click the image to view a larger version.

Broadly defined, a healthy economy is typically one that has a "stable and strong rate of economic growth" (gross state product, in this case) and low unemployment, among many other factors. The economic health of a state can significantly affect its healthcare costs, insurance coverage, access to care, and citizens' physical and mental health. For instance, during economic downturns, employers may reduce insurance coverage for employees, while those who are laid off may lose coverage altogether. Individuals also tend to spend less on non-urgent care or postpone visits to the doctor when times are hard. These changes in turn may affect the decisions made by policymakers as they react to shifts in the industry. Additionally, a person's socioeconomic status has profound effects on their access to care and the quality of care received.

About 15 percent of Michigan's population earned incomes below the federal poverty level (FPL) in 2013, the largest percentage among its neighboring states. However, most Michigan residents earned incomes at least 400 percent above the FPL, with a median annual household income of $49,902. The state's unemployment rate in September 2014 was 7.2 percent, the highest rate among neighboring states.

Note: Gross state product (GSP) on its own is not necessarily an indicator of economic health; GSP may also be influenced by state population size. Many factors must be looked at together to assess state economic health.

Various economic indicators by state
State	Distribution of population by FPL* (2013)				Median annual income (2011-2013)	Unemployment rate		Total GSP (2013)†
	Under 100%	100-199%	200-399%	400%+		Sept. 2013	Sept. 2014
Michigan	15%	19%	30%	37%	$49,902	8.8%	7.2%	$432,573
Illinois	13%	17%	31%	39%	$54,083	9.1%	6.6%	$720,692
Indiana	12%	23%	31%	35%	$48,178	7.3%	5.7%	$317,102
Wisconsin	11%	15%	31%	42%	$54,205	6.6%	5.5%	$282,486
United States	15%	19%	30%	36%	$52,047	7.2%	5.9%	$16,701,415
* Federal Poverty Level. "The U.S. Census Bureau's poverty threshold for a family with two adults and one child was $18,751 in 2013. This is the official measurement of poverty used by the Federal Government." † Median annual household income, 2011-2013. ‡ In millions of current dollars. "Gross State Product is a measurement of a state's output; it is the sum of value added from all industries in the state." Source: The Henry J. Kaiser Family Foundation, "State Health Facts"

Budget process

State documents and agenciesBelow are links to official Michigan budget and financial documents. The first is the state's Comprehensive Annual Financial Report (CAFR). A CAFR is a detailed presentation of a government entity's financial condition. This includes fiscal activities and balances for a fiscal year. The second link is to the state's relevant budget agency or office. Michigan CAFR Michigan budget agency

The state operates on an annual budget cycle. The sequence of key events in the budget process is as follows:

1. Budget instructions are sent to state agencies in August of the year preceding the start of the new fiscal year.
2. State agencies submit their requests to the governor in October.
3. The governor submits his or her proposed budget to the state legislature in February. Newly elected governors are allowed an additional 30 to 60 days after the legislature convenes.
4. The legislature typically adopts a budget in June. The fiscal year begins October 1.

Michigan is one of 44 states in which the governor has line item veto authority.

The governor is constitutionally required to submit a balanced budget proposal. Likewise, the state legislature is required to pass a balanced budget.

Agencies, offices, and committees

The following standing committees in the Michigan Legislature deal with budget and finance matters:

1. Appropriations Committee, Michigan House of Representatives
2. Appropriations Committee, Michigan State Senate
3. Finance Committee, Michigan State Senate
4. Tax Policy Committee, Michigan House of Representatives

The Michigan Auditor General, as stated in Article 4, Section 53 of the state constitution, is responsible for conducting post-financial and performance audits of state government operations. Michigan's audit reports are published online.

Public Interest Research Group 2016 report

The U.S. Public Interest Research Group, a consumer-focused nonprofit organization based in Washington, D.C., released its annual report on state transparency websites in April 2016. The report, entitled "Following the Money," measured how transparent and accountable state websites were with regard to state government spending. According to the report, Michigan received a grade of A+ and a numerical score of 100, indicating that Michigan was "Leading" in terms of transparency regarding state spending.

Budget and finance ballot measures

Voting on state and local government budgets, spending, and finance
Policy
Budget policy
Ballot measures
By state
By year
Not on ballot
Local City budgets County budgets Spending limits School budgets

See also: Spending and finance on the ballot and List of Michigan ballot measures

Ballotpedia has tracked the following ballot measures relating to state and local budget and financial matters in Michigan.

1. Michigan Proposal 1, Use of State and Local Park Funds Amendment (2020)

Budget and finance legislation

The following is a list of recent budget and finance bills that have been introduced in or passed by the Michigan state legislature. To learn more about each of these bills, click the bill title. This information is provided by BillTrack50 and LegiScan.

Note: Due to the nature of the sorting process used to generate this list, some results may not be relevant to the topic. If no bills are displayed below, no legislation pertaining to this topic has been introduced in the legislature recently.

Recent news

The link below is to the most recent stories in a Google news search for the terms Michigan budget. These results are automatically generated from Google. Ballotpedia does not curate or endorse these articles.

Michigan state budget and finances - Google News

Contact information

Michigan State Budget Office
111 South Capitol Avenue, 6th Floor
Lansing, Michigan 48913
Telephone: 517-373-7560

See also

• Historical Michigan budget and finance information
• Tax policy in Michigan
• Michigan government sector lobbying
• Michigan public pensions
• Governor of Michigan
• Michigan State Senate
• Michigan House of Representatives
• Michigan State Legislature