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.

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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 2017 Volcker Alliance report, Truth and Integrity in State Budgeting: What Is the Reality? 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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