The State Budget: Why the Wait?

The strong economy bore its fruits Tuesday as lawmakers happily allocated hundreds of millions for needs in the health and welfare budgets while passing out other money to cultural institutions around the state.

Few legislators sounded any objections to the $321.6 million general fund bill ($530.6 million from all sources) as it passed HB 4075 on an 89-13 vote, but there were some complaints about "pork-barrel" spending for pet projects.

Gongwer News Service, June 8, 1999

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By the end of June in 1999, the Michigan Legislature had adjourned for the summer, having already completed work on a state budget plan for Fiscal Year 1999-2000. By contrast, this year -- like two years ago -- Lansing politicians were unable to come to a budget agreement until after the new fiscal year had begun on October 1. Affection for the state Legislature - never high to begin with - took quite a beating both this year and in 2007 when it failed to turn its budget homework in on time.

So what happened? Special interests, term limits and self-serving politicians are just some of the many factors pointed to as the reason why today's politicians - unlike their predecessors of a decade ago - can't get their most basic work done in an expeditious fashion. But all the hints necessary to explain what has changed are in that Gongwer quote listed up top. The shirking of constitutional budget obligations by today's politicians is not the disease itself, but a telling symptom of the real problem. Ironically, the real problem was set in motion back in the days when the Legislature was getting its budget work done way ahead of schedule.

Simply put: Politicians don't fight about budgets nearly as much when there's enough money for everybody to share.

This is how it was in Michigan during the late 1990s. State spending grew to fit the strong economy and additional tax dollars that were rolling in during this period. From 1995-2002, had the Legislature restrained itself and only increased spending at a rate consistent with the growth of population and prices within the state, then state spending from state resources would have still shot up about 23 percent between 1995 and 2002.

In reality, it shot up 33 percent.

The difference by 2002 was $2 billion in extra annual spending.

By 2007, the politicians were fighting over how to fund an extra $1.4 billion in state spending that they didn't have the money for. This year, the figure was $2.8 billion. How much of this problem would not have happened at all had those Legislatures in the 1990s not set a precedent for higher spending in the first place?

They did get their budget work done months ahead of schedule back in 1999. Not coincidentally, notice also the lopsided votes in favor of those generous budgets. And for the most part, nobody was complaining, either:

A generous compromise between House and Senate leaders on higher education funding has thrilled university officials, who would see unusually large increases in state aid for 1999-2000 as a result of continuing good economic times.

Gongwer, June 9, 1999

Why would they complain? As I pointed out in a somewhat recent commentary regarding this period, there was something in this for everybody:

Was this extra spending on "essential services"? Hardly. In the summers of 1999 and 2000, "supplemental" budgets were created to spend extra tax money that was coming in as a result of the strong economy. Suddenly, $35 million was "needed" for the Detroit Symphony Orchestra, as was $60 million for a Grand Rapids convention center, $3 million for a new Aviation History Museum and hundreds of millions more for other projects. Lawmakers also spent $10 million to provide themselves with new office furniture.

A state representative seeking an extra $125 million for local roads in 1999 called the process a "food fight" over a "slush fund." The House of Representatives convened a Task Force on Government Waste, and issued a report in early 2000 blaming itself for at least $130 million of "non-essential" spending in 1999. But later in 2000, yet another supplemental budget passed with just a handful of "no" votes. Failing to secure more money for a favorite project, a veteran senator griped that the supplemental budget was all "an incredible tub of lard."

The scorn being tossed upon today's budgeteers for getting their work done late is not undeserved. It just might not have been necessary if today's critics and Michigan citizens had expressed just as much outrage ten years ago when the Legislature was getting a terrible budget job done with plenty of time to spare.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.