Maintain Financial Stability
Coming out of the Great Recession, Michigan’s fiscal health was poor and required a decade of hard work and tough choices to improve. As Michigan’s economy continues to recover, it remains essential for the state to: (i) effectively and efficiently manage its resources, and (ii) ensure the hard-fought gains result in a sounder financial foundation with less volatility and uncertainty for taxpayers.
While the state has seen steady economic gains in the last decade, Michigan’s economy is held back by severe pension and other post-employment benefit (OPEB) liabilities at the local level. Michigan also has far more units of government than most other states, which requires more tax dollars to support the overhead costs of operations.
Michigan must continue to identify and implement fiscal best practices, including long-term strategic planning and multi-year budgeting. These changes will encourage cost-effective service delivery and promote financial stability at the state and local levels. These policies also will ensure the state maintains and improves its fiscal health, which is critical not only for sustainable growth, but also for protection against the negative impacts of any future economic downturn.
- Maintain sound state fiscal best practices by continuing to:
- Propose performance-based and multi-year budgets.
- Complete budgets by July 1.
- Adopt a long-term strategic plan, fiscal notes that estimate the cost of proposed legislation, and a citizen-friendly balance sheet.
- Continue paying down state unfunded liabilities:
- Shift local government and school system retirees 65 and older to Medicare and early retirees to health care exchanges with stipends to maintain promised heath care benefits.
- Reduce state and local corrections costs:
- Adopt evidence-based practices that reduce recidivism and lengths of stay of non-violent offenders, such as treatment courts, medical parole and vocational training.
- Strengthen local fiscal best practices:
- Prevent local fiscal emergencies by precluding local governments from offering defined benefit retirement plans and retiree health care benefits to new hires.
- Enhance certification and professional development requirements for local government finance staff and provide state support for training.
- Encourage and expand local government service sharing.