Michigan

State Budget Practice Report Cards and Budget Resource Guide

Michigan stands out among the five states in the East North Central region for its absence of budget maneuvers: Its three-year top A average in the category for fiscal 2017 through 2019 was matched only by Indiana. During the three years, Michigan did not defer expenditures, accelerate revenues, fund recurring spending with debt, or use other mechanisms, such as asset sales, to maintain budgetary balance. 

In budget forecasting, Michigan’s B average was the region’s highest. The state used a consensus revenue estimating process, provided information to back up projections of revenue growth, and relied on long-term revenue forecasts that looked three years into the future. Its average B in transparency was held down by Michigan’s absence of budgetary reporting on deferred infrastructure maintenance costs.

The state received a C average, its lowest grade, in legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care. Its pensions were 63 percent funded in 2018, 7 percentage points below the total for all states. Michigan made the full actuarially determined contributions for pensions throughout the evaluation period but not for OPEB. The state’s 2018 comprehensive annual financial reports showed contributions below actuarially determined amounts in three of its four OPEB plans. 

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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