Budget numbers improve; does it matter?

On Friday, the financial experts in the legislative fiscal agencies and the Department of  Treasury will meet to agree on a new snapshot of Michigan's economic and fiscal situation -- and the trend lines for the near future.

Based on these early House and Senate releases, the news should be quite positive -- if you think the state government needs more dollars to purchase necessities and if you see rising tax collections as evidence of a healthier state economy.

I wonder though if this revenue conference is going to create some angst in the Legislature and the halls of the Snyder administration.

If these projections hold, Michigan will generate more money in its general and School Aid funds for the 2012-13 fiscal year (which starts Oct. 1) than it expects for the current year. And, on top of that, lawmakers have $400 million in "extra" funds carried over from last year that are not already committed. By the standards of the last decade, Michigan state government will be flush for the upcoming budget negotiations in Lansing.

Now that would seem a good thing for the Republican-controlled Legislature and Gov. Rick Snyder. It's an election year. With the money at hand, lawmakers could quite easily develop a budget that raises the per-pupil foundation grant for local schools. They could announce some general fund dollars for road repairs, too. Such moves usually please voters. And pleased voters back incumbents -- and the largest share of incumbents on the ballot this year comes from the Republicans who run the House of Representatives.

Yet, if you look back at many of the statements and actions taken in 2011, I'm not so sure the House, or Senate, will be comfortable in an environment where money is "easier." The 2010 election brought in many new legislators marinated in the passions of the times: life is extraordinarily tough on citizens and it's long past time to cut, cut, cut in Lansing.

Times have been tough, but they are improving. For example, the House Fiscal Agency says personal income in Michigan rose 5.1 percent for calendar 2011. It projects increases of 3.4 percent for calendar 2012, 2.8 percent for calendar 2013 and 4.7 percent for calendar 2014. HFA expects the unemployment rate to stay around 10 percent in that span, but that's still down substantially from where Michigan was in 2009-10.

HFA also reports that Michigan remains far, far below the constitutionally set limits on how much money the government can collect:

"Total state revenue is expected to be below the state revenue limit by $6.4 billion in FY 2010-11; it is estimated to be under the limit by $7.3 billion in FY 2011-12, $8.6 billion in FY 2012-13 and $9.0 billion in FY 2013-14."

And for the first time in a decade, Michigan is projected to have a series of years with its "rainy day fund" holding at least $200 million.

Yet, with the exception of funding for K-12 education, it's entirely possible that the budget to be built in the next three months will be pretty much like the current one. The tone in town is not one of "Cut by necessity, reinvest in key areas as possible," but "Cut by necessity and ... stop."

This would be fine if Michiganresidents were truly invested in the idea of small government -- or in a legal or practical position to adopt one. That's not the case.

Budget cuts in schools across the state are not going down well with voters. Tuition at universities is rising -- and campus leaders quickly point to the Legislature's long-running cuts to state appropriations as the cause. The roads are, well, the roads. Local governments squeezed by revenue sharing cutbacks by the state are trimming people and services.

Meanwhile, the state continues to spend about 1/4 of the general fund on the Corrections Department and the need for Medicaid dollars (the majority of which are spent on the elderly and disabled) remains acute.

I haven't seen any statewide polling to indicate these trends are being cheered by the majority of voters.

But do the preferences of the majority of voters really matter?

As regular readers of this blog know, I'm a believer in the view propounded by former Senate Majority leader Ken Sikkema that Republican House members are far more worried about potential challenges in GOP primaries in August than the November general election. As long as enough GOP primary voters are happy, in this dynamic, scores of incumbents -- enough to keep the GOP in control of the House -- don't have to worry about larger trends. (And no Michigan Senate seat is even on the regular November ballot this year, so the status quo is secure there.)

Further, it's fair to assume the antipathy to any idea that pairs the words "government" with "spending" will remain the strongest in 2012 where it burned the hottest in 2009-10: among the people most likely to vote in GOP primaries.

The numbers from Friday's revenue conference should indicate there's room to maneuver on Michigan's 2012-13 budget. Just because that room exists, though, doesn't mean legislators in Lansing will use it.

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Comments

Hardvark
Tue, 01/17/2012 - 10:49am
I think the legislature better be looking at accountability from any area that wants additional funding. The days of "just give them money so they go away" are over. The voters are focused on getting value for their tax dollars and if our representatives can't develop a system to make sure 95% of appropreations goes to the actual intended purpose, then they should go home. If educators are going to price themselves out of the market, it will open the door for alternative educational opportunities. A college education is not for everyone and maybe if degrees were not offered in career choices where there is no chance of finding employment, students would be better served. There are too many grads sitting around now with less than steller opportunities because of the universities "give them what they want, not what they need" marketing hype just to build a student population. Why is the US not at the top in education of our youth (K-12)? Maybe we need a lesson from those countries that are leading the pack. We have to get over the idea that if you don't get an education when your young, then the government will take care of you for the rest of your life. It was much easier to get into this situation than it is going to be to get out but the return to the America we need and want depends on tough love.