Most of 2011 surplus already accounted for in 2012 budget

It was recently reported that the state “found” one billion dollars in extra money, leading many to believe that the state is now flush with money to spend.

Both notions are incorrect. We do not have a billion dollars lying around. The confusion with the number is that it combined projected increased revenue with year-end revenue that was already accounted for in our current budget.

The unexpected positive balances come from money that the state budgeted for but did not spend and projections of greater revenue from increased economic activity.

Both of these are positive results. More revenue due to a rebounding economy is excellent news that the steps we are taking to turn Michigan around are working. Economic and job growth are also key reasons for the state spending $200 million less than was budgeted. While some of these savings were achieved through frugal, dollar-wise decisions by the state, the reduction in the number of people needing state assistance as unemployment declined was a significant factor.

It is also important to point out that when we approved the 2012 budget earlier this year, we had anticipated much of the 2011 budget year surplus. To avoid having to cut money in the middle of the year as in past years, we were cautious in budgeting and looked ahead two years.

The result is that most of the reported surplus has already been accounted for in the current budget and planned for in the 2013 budget framework.  In fact, if we just keep the 2013 spending the same as 2012 spending we will have about a $350 million dollar shortfall.

If we continue enacting reforms to reduce the short- and long-term pressure on the state budget, spending taxpayer dollars as efficiently as possible and making further strides to improve Michigan’s economy and create jobs; we may achieve budget surpluses that will give us options. We are on the path to accomplishing that goal, but we aren’t there yet.

The most important factor to that equation is getting people back to work. More people working means less money the state needs to spend on assistance and more state revenues from sales and income taxes.

It was recently announced that Michigan’s unemployment rate is now below 10 percent for the first time in three years. It was good news, but more work must be done.

As your senator, I will continue to work hard to create jobs by making Michigan more business friendly. Those efforts include transforming your state government into one that we can afford and that doesn’t burden job providers and future generations with regulations and debt.

Darwin L. Booher
State Senator – 35th District