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Michigan’s budget basics
According to the National Association of State Budget Officers (NASBO), Michigan’s total expenditures in fiscal year (FY) 2021 were $72.5 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 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 $93.4 billion in FY 2019 (the most recent year census data were available), or $9,351 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 $10,161.
Michigan’s largest spending areas per capita were public welfare ($1,903) and elementary and secondary education ($1,871). 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 $94.4 billion in FY 2019, or $9,457 per capita. National per capita general revenues were $10,563. Michigan uses all major state and local taxes. After federal transfers, Michigan’s largest sources of per capita revenue were charges ($1,854), such as state university tuition and highway tolls, and property taxes ($1,524).
Governor Gretchen Whitmer, a Democrat, was elected in 2018 with 53 percent of the vote. The next gubernatorial election is in 2022.
Michigan has a divided government. Republicans control both the House of Representatives (55 Republicans to 51 Democrats) and Senate (22 Republicans to 16 Democrats). All Michigan House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve four-year terms, and their seats are on the ballot in 2022.
Michigan’s budget institutions, rules, and constraints
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
Michigan’s current budget
Michigan enacted its FY 2022 budget in September 2021. The enacted budget included $67.1 billion in total spending and $11.4 billion in general fund spending. The latter was a 7.5 percent increase over FY 2021.
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 2021: $11.0 billion/$72.5 billion
FY 2020: $9.0 billion/$62.3 billion
FY 2019: $10.3 billion/$59.6 billion
For more on Michigan’s budget, see
Michigan’s economic trends
Michigan’s per capita income (per the Bureau of Economic Analysis) was $55,551 in 2021, ranking 34th among the states. It was below both the national average of $63,444 and the Great Lakes regional average of $59,346. The state’s median household income (five-year estimate) was $59,234 in 2020, ranking 33rd among the states and below the national average of $64,994. Michigan’s poverty rate was 13.7 percent in 2020 (five-year estimate), above the national rate of 12.8 percent.
Although Michigan’s averages tell a story about the entire state, Michigan is composed of diverse localities. For example, the city of Hamtramck’s median household income was $29,230, and its poverty rate was 47 percent; the city of Birmingham’s median household income was $126,601, and its poverty rate was 4.7 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. (See how COVID-19 is affecting state employment and earnings data.)
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Michigan, the average unemployment rate in 2021 was 4.8 percent for white residents, 11 percent for Black residents, and 7.1 percent for Hispanic or Latino residents. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)