Michigan Government Grows Despite State Budget Woes

While Lansing plays out the current chapter in the perpetual shortfall between how much it would like to spend vs. how much it expects to collect, new evidence reveals that the total revenues and spending of Michigan’s state and local governments have never been higher.

Specifically, the U.S. Census Bureau’s state and local finance reports are considered the gold standard for the magnitude of government spending — showing the value of government actions at states, special financing authorities, schools, state-owned universities and all levels of municipal government — and the latest report shows that, when adjusted for inflation, revenue and spending by all units of government in Michigan grew from $84.4 billion in 2000 to $92.5 billion in 2007, as measured in 2007 dollars.

Other indicators within the Census figures also show government revenue growth during this decade, at least through 2007. If federal money is excluded, the total revenue of all units of government in Michigan still rose 6 percent after adjusting for inflation. If state universities are excluded, real revenue growth for the rest falls to 5 percent.

Total spending by all units of government in Michigan rose by 9 percent since 2000, even after adjusting for inflation. Eliminating state universities from the calculation shows real spending up 10 percent.

State government budget figures are the ones featured in most news headlines, but they are just one piece of the overall government tax-and-spending picture. That one piece may indeed be subject to higher spending demands and lower revenue growth, even in the face of a decade-long decline in state employment, but overall, governments in Michigan have never obtained or spent more money.

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.