State Budget Practice Report Cards and Budget Resource Guide
After years in which the automobile industry’s collapse left Michigan in economic distress, budgetary evaluations by the Volcker Alliance for fiscal 2015, 2016, and 2017 showed that the state rebounded as car and truck makers and the US recovered. For 2017, Michigan was one of just three states, along with Rhode Island and South Dakota, to receive no mark below a B in any of the five categories evaluated.
Michigan’s highest grade was its A average in reserve funds. The state established policies for the Counter-Cyclical Budget and Economic Stabilization Fund as a portion of the general fund in 1977, long before most other states took similar steps. This fund had a balance of $612 million as of September 30, 2016, more than 5 percent of the state’s revenues for fiscal 2016 and about average for the US, according to data from the National Association of State Budget Officers.
The state’s B for 2016 and 2017 in the budget maneuvers category shows an improvement over 2015, when it received a C. The grade was hurt that year by Michigan’s failure to avoid one-time actions in two of the four criteria used to assess balancing maneuvers.
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 found here contain grades of the state's budgetary practices during the fiscal years of 2015 through 2017. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eleven US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.