Michigan’s budget basics

According to the National Association of State Budget Officers (NASBO), Michigan’s total expenditures in fiscal year (FY) 2022 were $80.5 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2022 were $2.9 trillion, ranging from $5.6 billion in Wyoming to $510.0 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Michigan’s combined state and local direct general expenditures were $95.7 billion in FY 2020 (the most recent year census data were available), or $9,506 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,540.

(Note: We cite data from both NASBO and Census to provide a broader picture of each state’s fiscal situation. However, these sources detail spending from different levels of government in different years, and the COVID-19 pandemic and the federal government’s response to it significantly affected these totals in different ways in different years. Please only use one source if you are looking for historical comparisons.)

Michigan’s largest spending areas per capita were public welfare ($1,940) and elementary and secondary education ($1,901). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Michigan’s combined state and local general revenues were $97.3 billion in FY 2020, or $9,666 per capita. National per capita general revenues were $10,933. Michigan uses all major state and local taxes. After federal transfers, Michigan’s largest sources of per capita revenue were charges ($1,895), such as state university tuition and highway tolls, and property taxes ($1,594).

Michigan’s politics

Governor Gretchen Whitmer, a Democrat, was elected in 2022 with 55 percent of the vote. The next gubernatorial election is in 2026.

Democrats control both the House of Representatives (56 Democrats to 54 Republicans) and Senate (20 Democrats to 18 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Michigan. All Michigan House seats are on the ballot in 2024 because representatives serve two-year terms. Senators serve four-year terms, and their seats are on the ballot in 2026.

Michigan’s budget institutions, rules, and constraints

Michigan uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Michigan also limits total authorized debt incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Michigan’s current budget

Governor Whitmer released her FY 2024 budget proposal in February 2023 and gave her state of the state address in January 2023.

Michigan enacted its FY 2023 budget in July 2022. The enacted budget included $76 billion in total spending and $15.2 billion in general fund spending.

Under the American Rescue Plan, Michigan will receive $6.5 billion in direct state fiscal aid and $3.8 billion in local government aid from the federal government. As of January 2022, Michigan had spent part of its ARP funds on public health programs, refilling its unemployment insurance trust fund, education spending, and economic development.

According to NASBO, Michigan’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2022: $12.3 billion/$80.5 billion
• FY 2021: $10.2 billion/$68.4 billion
• FY 2020: $9.0 billion/$62.3 billion
• FY 2019: $10.3 billion/$59.6 billion

For more on Michigan’s budget, see

• the Michigan State Budget Office,
  
• Open Michigan,
  
• the Michigan Department of Treasury,
  
• the Michigan Senate Fiscal Agency, and
  
• the Michigan House Fiscal Agency.

Michigan’s economic trends

Michigan’s per capita income (per the Bureau of Economic Analysis) was $56,813 in 2022, ranking 38th among the states. It was below both the national average of $65,423 and the Great Lakes regional average of $59,346. The state’s median household income (five-year estimate) was $63,202 in 2021, ranking 33rd among the states and below the national average of $69,021. Michigan’s poverty rate was 13.3 percent in 2021 (five-year estimate), above the national rate of 12.6 percent.

Although Michigan’s averages tell a story about the entire state, Michigan is composed of diverse localities. For example, the city of Saginaw’s median household income was $32,241, and its poverty rate was 35.6 percent; the city of Birmingham’s median household income was $137,907, and its poverty rate was 4.5 percent.

Michigan’s unemployment rate has historically been above the national average, particularly following the Great Recession, but in recent years has more closely paralleled the US rate.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Michigan, the average unemployment rate in 2022 was 3.6 percent for white residents, 7.4 percent for Black residents, and 4.8 percent for Hispanic or Latino residents.