Budget Briefing: State Budget Overview - January 2019 · Large portions of the $57.2 billion state...

Budget Briefing:State Budget Overview

Mary Ann Cleary, Director

Bethany Wicksall, Deputy Director

January 2019

Briefing Topics

o Appropriations Overview

o Economic Trends

o Revenue Trends

o Budget Trends

o Major FY 2018-19 Budget Changes

o Budget Outlook

o Budget Process

January 2019House Fiscal Agency 2

Appropriations Overview


Key Budget Terms

Fiscal Year: The state’s fiscal year (FY) runs from October to September. FY 2018-19 is October 1, 2018 through September 30, 2019.

Appropriation: Authority to expend funds. An appropriation is not a mandate to spend. Constitutionally, state funds cannot be expended without an appropriation by the Legislature.

Line Item: Specific appropriation amount in a budget bill which establishes spending authorization for a particular program or function.

Boilerplate: Specific language sections in a budget bill which direct, limit, or restrict line item expenditures, express legislative intent, and/or require reports.

Lapse: Appropriated amounts that are unspent or unobligated at the end of a fiscal year. Appropriations are automatically terminated at the end of a fiscal year unless designated as a multi-year work project under a statutory process. Lapsed funds are available for expenditure in the subsequent fiscal year.

Note: Unless otherwise indicated, historical budget figures in this presentation have not been adjusted for inflation.


FY 2018-19 State Budget

Fund Source Funding Description

Gross Appropriations $58,148,209,800 Total spending authority from all revenue sources

Interdepartmental

Grants (IDG) Revenue

918,191,700 Funds received by one state department from another state

department, usually for services provided

Adjusted Gross

Appropriations

$57,230,018,100 Gross appropriations excluding IDGs; avoids double counting

when adding appropriation amounts across budget areas

Federal Revenue 22,871,627,900 Federal grant or matching revenue; generally dedicated to

specific programs or purposes

Local Revenue 216,426,800 Revenue received from local units of government for state

services

Private Revenue 177,026,400 Revenue from individuals and private entities, including

payments for services, grants, and other contributions

State Restricted

Revenue

23,538,012,100 State revenue restricted by the State Constitution, state

statute, or outside restriction that is available only for

specified purposes; includes most fee revenue

State General

Fund/General Purpose

(GF/GP) Revenue

$10,426,924,900 Unrestricted revenue from taxes and other sources available

to fund basic state programs and other purposes determined

by the Legislature


FY 2018-19 Fund Sources

Federal$22,871,627,900

40%

State GF/GP$10,426,924,900

18%

School Aid Fund$13,785,129,000

24%

Other State Restricted$9,752,883,100

17%

Local/Private$393,453,200

1%


Discretionary GF/GP funds make up 18% of the $57.2 billion state budget (adjusted

gross). Including the School Aid Fund, which must be used for K-12 or postsecondary

education, brings the percentage up to 42%.

FY 2018-19 Adjusted Gross Appropriations

Health and Human Services

$25,488,432,700 45%

School Aid$14,844,588,800

26%

Transportation$5,009,788,300

9%

Higher Education/ Community Colleges

$2,077,948,100 4%

Corrections$2,019,056,200

3%

Revenue Sharing$1,314,405,300

2%

Talent & Economic Development

$1,260,746,100 2%

Other Areas$5,215,052,600

9%


Large portions of the $57.2 billion state budget consist of payments to health care

providers, school districts, universities and colleges, and local units of government.

FY 2018-19 GF/GP Appropriations

Health and Human Services

$4,439,614,400 42%

Corrections$1,963,841,300

19%

Higher Education$1,046,017,900

10%

State Police$493,173,800

5%

Debt Service/SBA Rent

$353,650,600 3%

School Aid/Dept of Education

$179,423,600 2%

Other Areas$1,951,203,300

19%


81% of the $10.4 billion GF/GP budget is appropriated for health and human services,

public safety, education, and debt service. The remaining 19% provides funding for 13

state departments, the Judiciary, the Legislature, and the Executive Office.

FY 2018-19 School Aid Fund Appropriations

School Aid Budget$12,876,825,200

93%

Community Colleges$408,215,500

3%

Higher Education$500,088,300

4%


School Aid Fund (SAF) appropriations totaling $13.8 billion are primarily for K-12 school

districts and other school aid purposes. In recent years, however, a portion of SAF

funds have been used in place of GF/GP funds for community colleges and public

universities.

FY 2018-19 School Aid Appropriations


About two-thirds of the $14.8 billion School Aid budget supports per pupil foundation

allowances used for school district general operations.

Foundation Allowances$9,431,000,000

64%

Special Education$1,414,196,100

9%

Federal Programs (non-Special Ed)$1,293,743,500

9%

MPSERS$1,258,439,000

8%

Other Programs$672,735,200

5%

At-Risk Programs$517,000,000

3%Early Childhood

Programs$257,475,000

2%

Note: Does not include Local

portion of Foundation Allowances

Economic Trends


Light Vehicle Sales

0%

10%

20%

30%

40%

50%

60%

70%

0

2

4

6

8

10

12

14

16

18

2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021

Perc

en

tage

of Tota

l

Mill

ion

s o

f U

nits

U.S. Light Vehicle Sales Big 3 Share


With the share produced by domestic automakers having stabilized, vehicle sales

increased to record levels. Sales levels, however, are now expected to decline slowly.

January 2019

Consensus

Estimates

Employment Change Since 2000

(20%)

(15%)

(10%)

(5%)

0%

5%

10%

15%

Jan2000

Jan2001

Jan2002

Jan2003

Jan2004

Jan2005

Jan2006

Jan2007

Jan2008

Jan2009

Jan2010

Jan2011

Jan2012

Jan2013

Jan2014

Jan2015

Jan2016

Jan2017

Jan2018

% C

ha

ng

e fro

m J

an

ua

ry 2

00

0

U.S. Employment Michigan Employment


Following a decade of protracted state-level job losses, Michigan employment

rebounded sharply following the great recession and has grown at about the same rate

as national employment since 2012.

Michigan Employment Changes

(300)

(250)

(200)

(150)

(100)

(50)

0

50

100

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Ch

an

ge

in

Wa

ge

an

d S

ala

ry E

mp

loym

en

t (T

ho

usands)


Job growth is projected to continue, albeit with very small increases when compared to

recent years, as the state’s unemployment rate is expected to decline to 3.9 percent.

January 2019

Consensus

Estimates

Michigan Personal Income

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mill

ion

s

Nominal Inflation-Adjusted


In nominal terms, total personal income in Michigan has risen roughly 52% since 2000.

In inflation-adjusted terms, however, personal income has been flat, up until the last four

years.

Revenue Trends


GF/GP Revenue

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Mill

ion

s

Actual Dollars Adjusted for Inflation (Detroit CPI)

Nominal GF/GP revenue is expected to exceed $10.7 billion in FY 2018-19. When

adjusted for inflation, however, GF/GP revenue is estimated to be 29.9% below the

FY 1999-00 level.

January 2019

Consensus

Estimates

January 201917House Fiscal Agency

School Aid Fund Revenue

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Mill

ion

s

Actual Dollars Adjusted for Inflation (Detroit CPI)

Nominal SAF revenue has grown steadily since FY 2011-12. In inflation-adjusted terms,

however, FY 2018-19 revenue is estimated to be 2.2% below the FY 1999-00 level.

January 2019

Consensus

Estimates


Major State Taxes as a Percentage of Michigan Personal Income

0.0%

1.0%

2.0%

3.0%

Individual Income Tax Consumption Taxes Business Taxes State Property Taxes

January 2019

Consensus

Estimates

Recent growth in state revenue has been driven by the income tax. Other major state

taxes have declined as a percentage of state personal income as a result of economic

trends or tax policy decisions.


Total State Revenue as a Percentage of Michigan Personal Income

4%

6%

8%

FY

197

9

FY

198

0

FY

198

1

FY

198

2

FY

198

3

FY

198

4

FY

198

5

FY

198

6

FY

198

7

FY

198

8

FY

198

9

FY

199

0

FY

199

1

FY

199

2

FY

199

3

FY

199

4

FY

199

5

FY

199

6

FY

199

7

FY

199

8

FY

199

9

FY

200

0

FY

200

1

FY

200

2

FY

200

3

FY

200

4

FY

200

5

FY

200

6

FY

200

7

FY

200

8

FY

200

9

FY

201

0

FY

201

1

FY

201

2

FY

201

3

FY

201

4

FY

201

5

FY

201

6

FY

201

7

FY

201

8

FY

201

9

FY

202

0

FY

202

1

January

2019

Consensus

Estimates

Proposal A shifts

approximately $4 billion in

local revenue to state level

$10.4 billion

below limit


Michigan’s constitution was amended in 1978 to set a limit on total state revenue

(including all taxes and fees) equal to 9.49% of personal income. For FY 2018-19, the

state is projected to be $10.4 billion below that limit.

Constitutional Revenue Limit = 9.49%

Budget Trends


Total State Budget History

House Fiscal Agency 22

Total state budget growth of 19% since FY 2009 has been driven by both growth in

federal funds for Medicaid expansion and increasing state funds since the Great

Recession.

$0

$10

$20

$30

$40

$50

Bill

ion

s

GF/GP Restricted Local/Private Federal ARRA Federal

ARRA: Federal American Recovery and Reinvestment Act of 2009

Sta

te S

ou

rces

January 2019

Total Classified State Employees


The total number of state employees has declined by about 15,000 (24%) since

FY 2001.

0

10,000

20,000

30,000

40,000

50,000

60,000

Corrections Health & Human Services Other Departments

Source: Michigan Civil Service Commission, Annual Workforce Report

State Employee Compensation-Related Costs

Estimated FY 2018-19 Total: $6.0 billion Gross ($3.1 billion GF/GP)

o Salary and Wages: $3.4 billion

• Average salary for a full-time state employee has increased from $53,495 inFY 2007-08 to $61,680 in FY 2017-18, which equates to growth of 1.4% peryear.

o Health Insurance: $728.5 million

• Employee premium costs are paid on an 80/20 state/employee basis.

o Retirement and Other Post Employment Benefits (OPEB): $1.9 billion

• Costs have increased substantially in recent years due to unfunded liabilitiescreated primarily by investment losses in 2008. Additionally, theLegislature’s decision in 2011 to begin prefunding retiree health carebenefits (OPEB) has resulted in short-term cost increases but reduced long-term liabilities.

• Employees hired since 1997 enter a defined contribution (DC, or 401k)retirement plan, rather than a pension plan. Employees in the pension plannow pay 4% of salary into the system. Employees hired since 2012 receivea DC cash benefit in place of retiree health care benefits.


Corrections Population and Expenditures


Over the long term, corrections costs have grown consistent with prison population. The

Corrections budget would have decreased since FY 2010-11 if not for the increased

costs of paying down retirement liabilities.

$0

$500

$1,000

$1,500

$2,000

0

10,000

20,000

30,000

40,000

50,000

Mill

ion

s

Prison Population* (Left Axis) MDOC GF/GP Expenditures* (Right Axis)

*2018 data is as of January 10, 2019; 2019 figures are based on year-to-date GF/GP appropriations and budgeted prisoner counts

0

200

400

600

800

1,000

1,200

1,400

FY 2004 FY 2006 FY 2008 FY 2010 FY 2012 FY 2014 FY 2016 FY 2018

Tota

l Tro

ope

rs

Enlisted Troopers Recruit Graduates

Following several years of decreases from FY 2003-04 through FY 2011-12, FY 2017-18

trooper levels are still below FY 2003-04 levels. An additional 107 new graduates joined

the ranks as of July 2018, and the FY 2018-19 budget provides for trooper schools

totaling 155 recruits.

State Police At-Post Trooper Strength


Medicaid Expenditures by Fund Source


Since FY 2000-01, the state’s total Medicaid caseload has doubled and expenditures

have tripled due to economic trends and the expansion under the Healthy Michigan

Plan. However, GF/GP spending for Medicaid, has only increased by 26%.

$0

$4

$8

$12

$16

$20

0.0

0.5

1.0

1.5

2.0

2.5

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019Appr

Expe

nd

itu

res (

in b

illio

ns)

Ca

se

loa

d (

in m

illio

ns)

GF/GP Restricted Federal ARRA Federal

Healthy Michigan Plan

takes effect

ARRA: Federal American Recovery and Reinvestment Act of 2009

Caseload

Family Independence Program (FIP) Caseload and Expenditures


Expenditures for FIP have declined markedly (80%) due to both policy changes,

including imposition of lifetime time limits, and economic conditions.

$0

$100

$200

$300

$400

0

20,000

40,000

60,000

80,000

Expe

nd

itu

res (

Mill

ion

s)

Caselo

ad

Caseload

Revenue Sharing to Cities, Villages, and Townships (CVTs)


Per capita constitutional payments to CVTs have grown consistent with sales tax

revenue growth. Discretionary (statutory) payments remain $388 million below the FY

2000-01 peak.

January 2019

Consensus

Estimate

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

Mill

ion

s

Constitutional Statutory

County Revenue Sharing


Reserve fund payments temporarily replaced state revenue sharing for counties. After a

period of underfunding, funding to counties was restored to full funding relative to the

reserve fund mechanism beginning with FY 2014-15, and increased above full funding

beginning in FY 2016-17. Total funding is at approximately the FY 2001-02 level.

$0

$50

$100

$150

$200

$250

Mill

ion

s

State Payments County Reserve Fund Payments Reduction from Full Funding

Public University Appropriations


State support for public universities operations has increased by $249.7 million (21%) since

FY 2011-12, but remains $158.6 million (10%) below the FY 2001-02 peak of $1.6 billion.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Mill

ion

s

GF/GP School Aid Fund

Community College Appropriations


FY 2018-19 state appropriations for community college operations are approximately flat

from the FY 2002-03 peak. Increased funds have been allocated in recent years to offset

growing retirement costs.

$0

$50

$100

$150

$200

$250

$300

$350

$400

Mill

ion

s

GF/GP for Operations SAF for Operations GF/GP for MPSERS SAF for MPSERS

January 2019

School Aid Funding History – State Funds


Since FY 2011-12, $1.3 billion has been added to hold districts harmless from increasing

retirement liability costs. Total funding for foundation allowances and other operational

costs exceeded the previous FY 2006-07 peak for the first time in FY 2018-19.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

FY2005

FY2006

FY2007

FY2008

FY2009

FY2010

FY2011

FY2012

FY2013

FY2014

FY2015

FY2016

FY2017

FY2018

FY2019

Mill

ion

s

GF/GP SAF SAF for MPSERS

Foundation Allowance HistoryGrowth Since Proposal A

$4,200

$7,316

$7,871

$5,000

$6,500

$8,489$8,409

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

Minimum Basic State Gauranteed Maximum


The FY 2018-19 foundation allowance for schools at the Minimum level is $555 above

the previous FY 2010-11 peak. For schools at the State Maximum level, it remains $80

below the FY 2010-11 peak. The “equity gap” between the two (excluding local hold

harmless funds) is down to $538 per pupil.

Retirement Liabilities


Total unfunded liabilities for MPSERS had declined by $12 billion since FY 2010-11, due

primarily to the decision to begin prefunding retiree health benefits and its related

accounting assumptions, but increased in FY 2015-16 due to the reduction in the

assumed long-term investment rate of return from 8.0% to 7.5%.

$0

$10

$20

$30

$40

$50

$60

FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Bill

ion

s

MPSERS Pension MPSERS Health

Transportation Appropriations

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Mill

ion

s

Restricted Federal GF/GP Other


Dedicated state funding for transportation purposes was relatively flat until the 2015

Road Funding package began phasing in increased state restricted revenue in FY 2016-

17. Additional GF/GP support has been added in recent years.

January 2019

Budget Stabilization Fund Balance


The estimated balance at the end of FY 2018-19 will be approximately $1.2 billion—

about 4.7% of combined GF and SAF appropriations. The balance is also expected to

grow in FY 2019-20 due to interest and annual repayments.

$1

,26

4

$9

94

$1

45

$8

1

$3

65

$5

06

$3

86

$4

98

$6

12 $

71

0

$1

,00

6 $1

,15

0

$1

,19

8

Mill

ion

s

$0

$500

$1,000

$1,500

$2,000

$2,500

Mill

ion

s

Budget Stabilization Fund General Fund School Aid Fund

Combined Ending Balances


Large GF and SAF year-end balances accumulated from FY 2010-11 through FY 2017-

18 as revenue growth outpaced projections, allowing for substantial one-time

expenditures. Deposits into the BSF starting in FY 2011-12 have brought the balance to

$1.2 billion in FY 2018-19.

HFA

Estimate

January 2019

Major FY 2018-19 Budget Changes


Flint Water Emergency FundingTotal Appropriations for FY 2015-16 through FY 2018-19$ in Millions

Category Gross

Attorney General $7.1

Education 36.3

Environmental Quality 179.6

Health and Human Services 78.5

Licensing and Regulatory Affairs 2.2

Military and Veterans Affairs 2.5

Natural Resources 0.3

School Aid 25.1

State Police 13.9

Treasury 73.7

TOTAL $419.1


Notes

1) Table excludes federal match funds expended by FEMA.

2) Excludes deposits into the Disaster and Emergency Contingency Fund which could be

expended in Flint.

3) Current drinking water emergency reserve fund balance equals $0.

Major FY 2018-19 GF/GP Program Increases

o $84.1 million for indigent defense reimbursement grants.

o $25.0 million for school safety grants.

o $20.3 million for annualization costs associated with the 2018 State Police trooper school.

o $16.0 million for payments to unlicensed relative foster care providers.

o $15.0 million for additional Child Protective Services (CPS) staff.

o $14.7 million GF/GP ($41.4 million Gross) for the expansion of the all-inclusive care for the elderly program.

o $13.2 million for transition of prison food service from private to state run.

o $11.9 million ($7.8 million one-time) for a 2019 State Police trooper school.


Major One-Time Allocations of GF/GP Funding for FY 2018-19

o $300.0 million for roads allocated through PA 51 formula to the State, county road commissions, and cities and villages.

o $113.5 million for Michigan enhancement grants.

o $20.0 million increase to business attraction and community revitalization grants.

o $13.6 million ($20.0 million Gross) for statewide broadband.

o $5.5 million for non-Medicaid mental health services hold-harmless payment.

o $5.0 million for a medical resident loan repayment program.


FY 2018-19 Revenue Sharing Changes

o An estimated increase of $44.9 million from the final FY 2017-18 level in constitutional revenue sharing payments to cities, villages, and townships based on estimated sales tax collections.

o Continued $5.8 million (one-time) discretionary revenue sharing payments to cities, villages, and townships (CVTs) for the expanded pool of 101 local units.

o Continued $6.2 million (one-time) supplemental payments to CVTs to receive a payment under Section 952.

o $116,000 (one-time) supplemental payments to CVTs that received payments under Section 950(2) of 2009 PA 128 between $1,000 and $4,500.

o $5.3 million increase for payments to counties to provide full funding to three additional counties that will have exhausted their reserve funds in FY 2018-19, a 2.0% increase above full funding, and an additional $1.0 million designated as supplemental revenue sharing.


Major FY 2018-19 School Aid Budget Changes

o Overall School Aid budget increased by $181.2 million or 1.2%.

o Foundation Allowances – Includes $312.0 million for Foundation Allowance increases ranging from $120-$240 per pupil using the 2x formula.

o Foundation Allowance Costs – Includes $100.3 million in state savings from declining pupils and increased local school operating revenues.

o MPSERS Liabilities– Provides $111.1 million increase (bringing total to $1.0 billion) for the increased costs associated with the reduction in the long-term investment rate of return assumptions from 8.0% to 7.5%. This is the 2nd of a 2-year phase-in.

o MPSERS New Plan Costs – Provides $14.5 million increase (bringing total to $37.6 million) to reimburse MPSERS employers for the increased normal costs associated with both the new Hybrid plan and the new Defined Contribution (DC or 401k plan) enacted under PA 92 of 2017.

o MPSERS One-Time Payment - Section 147c (2) – Eliminates $200.0 million from a one-time added payment in FY 2017-18.

o Special Education - Includes $32.0 million in special education reimbursement cost increases, approximately 3.3%


Budget Outlook


May Consensus Revenue EstimatesMillions of $

FY 2018-19

Estimate

FY 2019-20

Estimate

FY 2020-21

Estimate

FY 2021-22

Trend

FY 2022-23

Trend

GF/GP Revenue $10,700 $10,718 $10,853 $11,200 $11,516

$ Change ($245) $18 $135 $348 $316

% Change (2.2%) 0.2% 1.3% 3.2% 2.8%

SAF Revenue $13,551 $13,927 $14,264 $14,653 $15,063

$ Change $211 $377 $338 $389 $410

% Change 1.6% 2.8% 2.4% 2.7% 2.8%


GF/GP Revenue

o Minimal growth in FY 2019-20 and FY 2020-01 due to individual income tax transfer for road

funding, continued Michigan business tax credits, and diversion of use tax revenue for

personal property tax reimbursement.

o Stronger growth projected for FY 2021-22 despite increased individual income tax transfer for

road funding.

SAF Revenue

o Moderate growth projected for the next several years based on sales tax and individual

income tax growth.

Transportation Funding

o Transportation package enacted in 2015 did the following:

• Increased motor fuel taxes from 15 cents per gallon (for diesel) and 19 cents per gallon (for gasoline) to 26.3 cents per gallon on January 1, 2017 (raises roughly $400 million per year).

• Increased vehicle registration taxes by 20% beginning January 1, 2017 (raises roughly $200 million per year).

• Increased Homestead Property Tax Credit by altering various parameters: creates estimated GF/GP loss of about $206 million per year beginning in FY 2018-19.

• Diverts income tax revenue currently allocated as GF/GP funds to transportation purposes beginning in FY 2018-19.

─ FY 2018-19: $150 million (increased to $264 million by 2018 PA 588)

─ FY 2019-20: $325 million (increased to $468 million by 2018 PA 588)

─ FY 2020-21: $600 million

o In sum, when the fully phased in the package will:

• Increase dedicated resources for Transportation purposes by about $1.2 billion per year.

• Lower GF/GP resources by about $800 million per year.


Medicaid Spending Pressures

Traditional Medicaid Program

o Michigan’s federal match rate has begun to decline due to both relative growth in personal income and phase down of enhanced match rate. Projected FY 2019-20 GF/GP funding increase of $70 million.

o Medicaid cost adjustments for medical utilization and inflation are projected to increase 2% annually. Projected FY 2019-20 GF/GP funding increase of $60 million.

Healthy Michigan Plan

o Current state match rate obligation of 7% will increase to 10% on January 1, 2020 requiring additional GF/GP funds of roughly $80 million for a total GF/GP match cost of $187 million in FY 2019-20.

Medicaid Psychiatric Disproportionate Share Hospital Disallowance

o Possible federal repayment for psychiatric hospital claims made on Medicaid from FY 2000-01 to FY 2008-09 – Total $195 million with repayment over 3-years.

House Fiscal Agency 48 January 2019

Major School Aid Budget Issues

School Aid

o FY 2018-19 budget relies on $363 million in one-time SAF balance and $43 million in GF/GP funds designated as one-time.

o Baseline costs are expected to decline by $94 million based on declining pupils, growing local property tax values, and rising special education costs.

o MPSERS costs for FY 2019-20 will increase by $95 million, due mainly to use of dedicated gains policy to reduce long-term interest rate assumptions from 7.5% to 7.05%.

o MPSERS experience study revised mortality and other assumptions which will increase FY 2020-21 costs by another $236 million.

o A foundation allowance increase like that adopted for FY 2018-19, ranging from $120-$240, would cost approximately $304 million.

House Fiscal Agency 49 January 2019

Budget Process



First Revenue Estimating

Conference

Second Week of January

Governor’s Budget

Recommendation

Early February

Budget Schedule Set

Late January

Subcommittee

Deliberations

February and March

Appropriations Committee

Action

April

Floor Action

Early MaySecond House Review

Early May

Second Revenue

Estimating Conference

Third Week of May

Leadership Targets

Mid-/Late May

Conference Committee/

Final Floor Action

Late May/Early June

Governor’s Review/Line

Item Vetoes/Signature

June

Michigan’s

Budget

Process

Reports, Review, Prepare for

Next Budget

July thru January

Supplemental/Transfer

Adjustments

Throughout Year

The House Fiscal Agency (HFA)o Agency personnel provide confidential, nonpartisan expertise to the House Appropriations Committee

and all other members of the House on all legislative fiscal matters.

o Fiscal Analysts

• Review the Governor's budget recommendation and assist legislators in developing budget alternatives;

• Review and prepare budget bills, supplemental appropriations, and certain transfer requests;

• Provide fiscal impact statements on legislative proposals;

• Monitor state and national situations that may have budgetary implications;

• Research and analyze fiscal issues;

• Prepare reports and documents to assist legislative deliberations; and

• Prepare special reports at the request of Representatives.

o Economists

• Analyze legislation related to tax and revenue issues;

• Respond to Representatives' inquiries regarding state tax revenue, revenue sharing, and other economic issues;

• Monitor state revenue; track state and national economic conditions; and

• Prepare reports on revenue and other economic issues.

o Legislative Analysts

• Prepare concise, nonpartisan summaries and analyses of bills. Summaries, completed prior to committee deliberations, describe how a bill would change current law, including any fiscal impact. Analyses are prepared for bills reported to the full House from committee and include, with the summary information, a description of the problem being addressed, arguments for and against the bill, and positions of interested organizations.


For more information about thestate budget:


HFA website

http://www.house.mi.gov/hfa/

Contact Information

Mary Ann Cleary, Director: [email protected]

Bethany Wicksall, Deputy Director: [email protected]

(517) 373-8080

http://www.house.mi.gov/hfa/

mailto:[email protected]

mailto:[email protected]

Budget Briefing: State Budget Overview - January 2019 · Large portions of the $57.2 billion state...

Documents

Transcript of Budget Briefing: State Budget Overview - January 2019 · Large portions of the $57.2 billion state...