Michigan Governor Jennifer Granholm announced her latest budget plan last week. So what’s the big deal? Why should you care? Because no matter how you think the government should spend your tax dollars (whether it be social programs, education, criminal justice, environmental protection, a return of those dollars to you through tax cuts, or any other purpose) every cause is being squeezed from all sides.
The governor’s budget is a map to her strategy for governing. The budget is one barometer of where we’re headed as a people. It gives glimpses of our competitive strengths and weaknesses. It’s a window into the state’s future.
Today’s Fresh Thoughts For Michigan’s Transformation newsletter seeks to give citizens, in 10 minutes or less, a quick understanding of the governor’s budget plan and her priorities. The governor proposes then the Legislature disposes. It will be months before the horse trading is over and the budget is finalized.
The governor’s number one budget priority is to take care of state residents living in poverty. That’s the clear conclusion from the governor’s detailed 2009-10 budget proposal.
Forty percent of all dollars spent by the state of Michigan in the governor’s plan will be spent on social programs, including health care coverage for the poor, cash assistance, food assistance and other programs totaling $17.5 billion in state and federal funds.
Perhaps you believe a society is best judged by how well it serves a moral duty to take care of those most in need. Perhaps you believe a welfare state can never transform itself into prosperity. Whether you’re at either of those extremes or somewhere in between, there’s no denying the numbers… the number one government strategy in the governor’s budget plan is to take care of those in poverty.
Michigan’s governor and legislators essentially deal with two budgets:
1) An overall $44 billion budget that is a mix of state and federal funds and specially earmarked taxes (like sales taxes and lottery revenues for schools and gasoline taxes for roads).
2) A $9 billion discretionary “general fund” – the main pot of money over which legislators can actually exert control and exercise priorities. The general fund is folded into the overall $44 billion budget.
In the overall $44 billion budget, every $100 your family or business pays in taxes goes to these priorities:
And, in the discretionary, $9 billion general fund, every $100 your family or business pays in taxes goes to these priorities:
For more details on how we derived these pie charts, click here for a quick glance at state government spending in each department under the governor’s proposed budget.
A couple key themes behind the numbers:
1. REVENGE DOESN’T PAY: The knee jerk sentiment to “boot ‘em all out of office,” or “cut the pay of the legislators” doesn’t amount to squat in savings. You could close the legislature for good and the annual savings would be enough to run the rest of state government for about four and a half days. Playing on the margins won’t solve the state’s chronic budget trouble.
2. INCONVENIENT TRUTHS: The governor is fond of saying she’ll go anywhere and do anything to recruit new economic development to Michigan. But even by our inclusive definition, only about 11 percent of state spending is in direct support of economic development. Likewise, funding for education is a constant plea from educators and parents alike, but, in total, education receives a healthy slice of the budget pie – more than one out every three dollars in the state budget. Finally, while many Michigan residents are proud of their local communities and quality of life, as a people we directly invest four out of every 100 dollars in the state budget on such distinctive and competitive assets as local communities, recreation, and protection of natural resources. And the governor proposes to zero out grants to local arts and culture programs.
3. THE COST OF SOCIAL ILLS IS THE ELEPHANT IN THE STATE CAPITOL: The combined costs of prisons, social programs, courts and state police account for seven out of every ten dollars in the discretionary general fund budget. One out of every six Michigan residents is now on Medicaid, the government health care coverage for the poor funded by both state and federal taxes. Likewise, one out of every eight Michigan residents receives food assistance. You could fill Michigan Stadium three times over with the increased number of Michigan Medicaid recipients just since 2004. This year’s budget includes $354 million in new spending on Medicaid – that one-year increase is more than we taxpayers will spend in total on every community college in the state. What is less clear is the state’s plan to deal with these costs over time. Nor is there full recognition of potential reforms and savings in the politically sensitive budget area of social services. For example, a state audit last year found $230 million in undocumented and potentially fraudulent payments for child care assistance for the poor. The governor’s budget made no mention of that highly questionable spending and instead offered $10 million in potential savings in the child care program.