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Wednesday, December 14, 2011

Ho, Ho, No - $1.2 Billion Michigan Budget Surplus Spoken For

LANSING - Lest anyone think the state suddenly has $1.2 billion in extra money, Sen. Roger Kahn, the Senate Appropriations Committee chair, said Tuesday that much of that will get used up on a variety of expenses and other commitments.

Gongwer News Service reported Monday that between some $200 million in unspent funds for the 2010-11 fiscal year and $1 billion in additional unanticipated revenue to the general and School Aid funds, the state will close the 2010-11 fiscal year, which ended October 1, with about $1.2 billion in surplus funds.

And that is true, said Kahn (R-Saginaw Township). But according to a preliminary estimate done by the Senate Fiscal Agency of how the 2011-12 and 2012-13 fiscal years will end, much of that $1.2 billion already is committed, he said.

"What I'm worried about is people are just going to look at it and say, 'Yeah, we've got another billion dollars. We're in fat city,'" he said. "There is no money. That's my line."

The 2011-12 fiscal year general fund begins with an estimate $553 million balance (estimate because the state has not yet officially closed its books for the year). But the budget calls for spending $171.6 million in so-called one-time appropriations to programs that were given the money with warning not to expect it again. The budget also earmarks $255.8 million to the Budget Stabilization Fund and $140 million toward paying down the state's obligations to retired state employees.

So that $553 million to start the fiscal year falls to $297 million to end the 2011-12 fiscal year. Then, Kahn notes, that balance would fall to just $76 million at the end of the 2012-13 fiscal year because of rising Medicaid caseloads and costs totaling $200 million and other cost increases like the raise state employees will receive under the new contract. That's without continuing funding for any of the programs that received money on a one-time basis.

On the school aid side, the School Aid Fund begins the 2011-12 fiscal year with an $884 million surplus, but would end the year at just $211.6 million, according to the SFA estimate.

That's because the 2011-12 fiscal year budget calls for spending $155 million toward payments to the Michigan Public School Employees Retirement System, $154 million to provide supplemental funding to K-12 schools meeting best practices requirements, $133 million for the MPSERS Retirement Obligation Reform Reserve Fund, among other items.

The School Aid Fund would end 2012-13 with $338 million, but Kahn notes that's without the $455.5 million in one-time funding that was allocated to reduce the size of the cuts to schools.

Kahn said he is sticking by the plan from last year to support the same funding levels for 2012-13 as were enacted for 2011-12 - without the added one-time funds. Some groups would like to think of the funding as "two-time money," he said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com


Author: Staff Writer
Source: Gongwer News Service

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