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A Legislator's Guide to Michigan Budget Process

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A Legislator's Guide to Michigan Budget Process A Legislator’s Guide to Michigan’s Budget Process Mary Ann Cleary, Director January 2019 HOUSE FISCAL AGENCY GOVERNING COMMITTEE Shane Hernandez Jon Hoadley Lee Chatfield Christine Greig Triston Cole Yousef Rabhi MICHIGAN HOUSE OF REPRESENTATIVES APPROPRIATIONS COMMITTEE Shane Hernandez, Chair Mary Whiteford Aaron Miller, Vice-Chair Jeff Yaroch Thomas Albert Jon Hoadley, Minority Vice-Chair Sue Allor Sarah Anthony Ann Bollin Julie Brixie Tommy Brann John Cherry Annette Glenn Abdullah Hammound Phil Green Rachel Hood Mark Huizenga Sheryl Kennedy Larry Inman Leslie Love Sara Lightner Kristy Pagan Matt Maddock Ronnie Peterson Bradley Slagh Terry Sabo Scott VanSingel Joe Tate Greg VanWoerkom STATE OF MICHIGAN HOUSE OF REPRESENTATIVES HOUSE FISCAL AGENCY MARY ANN CLEARY, DIRECTOR GOVERNING COMMITTEE P.O. BOX 30014 LANSING, MICHIGAN 48909-7514 SHANE HERNANDEZ, CHAIR JON HOADLEY, MVC PHONE: (517) 373-8080 FAX: (517) 373-5874 LEE CHATFIELD, VC CHRISTINE GREIG www.house.mi.gov/hfa TRISTON COLE YOUSEF RABHI January 2019 TO: Members of the House of Representatives A Legislator’s Guide to Michigan’s Budget Process explains the annual process for enacting the budget for the State of Michigan, providing information on: Constitutional and statutory provisions that guide the budget process The consensus revenue estimating process The Legislature’s role in the budget process Appropriation bill format How enacted appropriations are adjusted during the fiscal year Terminology relating to the budget process and appropriation bills is explained in a glossary and throughout the publication. The final section of the guide discusses the mission of the House Fiscal Agency, noting the statute and policies governing the nonpartisan status of and confidentiality adhered to by House Fiscal Agency employees. Note that the legislative budget process has seen a number of changes over the most recent four- year period, including simultaneous consideration of all budget areas by the House and Senate and the use of omnibus budget bills. This report describes the budget process as it has been conducted in the immediate past, recognizing that additional changes may be made to the process in future years, within constitutional and statutory bounds. Bethany Wicksall, Deputy Director, coordinated the updating of this report. Kathryn Bateson, Administrative Assistant, prepared the report for publication. Please don’t hesitate to contact us if you have questions regarding its contents. Mary Ann Cleary Director GLOSSARY STATE BUDGET TERMS Private Revenue Revenue from non-government entities: rents, royalties Line Item or interest payments, payments from hospitals or Specific funding amount in an appropriation bill which individuals, or gifts and bequests. establishes spending authorization for a particular program or function. State Restricted Revenue State revenue restricted by the State Constitution, state Boilerplate statute, or outside restriction that is available only for Specific language sections in an appropriation bill which specified purposes; includes most fee revenue; at year- direct, limit, or restrict line-item expenditures, express end, unused restricted revenue generally remains in the legislative intent, and/or require reports. restricted fund. Lapse General Fund/General Purpose (GF/GP) Revenue Appropriated amounts that are unspent or unobligated Unrestricted general fund revenue available to fund at the end of a fiscal year; appropriations are basic state programs and other purposes determined by automatically terminated at the end of a fiscal year the Legislature; unused GF/GP revenue lapses to the unless otherwise provided by law. General Fund at the end of a fiscal year. Work Project Account authorized through statutory process which MAJOR STATE FUNDS allows appropriated spending authorization from one fiscal year to be utilized for expenditures in a succeeding General Fund fiscal year or years for a specific project or purpose. The state’s primary operating fund; receives state revenue not dedicated to another state fund. APPROPRIATIONS AND FUND SOURCES School Aid Fund (SAF) A restricted fund that serves as the primary state funding Appropriations source for K-12 schools and Intermediate School Authority to expend funds for a particular purpose. An Districts. Constitutionally, SAF revenue may also be appropriation is not a mandate to spend. used for postsecondary education. Gross: Total of all applicable appropriations in an Budget Stabilization Fund appropriation bill. The Countercyclical Economic and Budget Stabilization Fund (also known as the “rainy day fund”); the Adjusted Gross: Net amount of gross appropriations Management and Budget Act provides guidelines for after subtracting interdepartmental grants (IDGs) and making deposits into and withdrawals from the fund. intradepartmental transfers (IDTs). Interdepartmental Grant (IDG) Revenue Funds received by one state department from another state department—usually for service(s) provided. Intradepartmental Transfer (IDT) Revenue Funds transferred from one appropriation unit to another within the same departmental budget. Federal Revenue Federal grant or match revenue; generally dedicated to specific programs or purposes. Local Revenue Revenue received from local units of government for state services. TABLE OF CONTENTS Introduction ..................................................................................................................... 1 Constitutional and Statutory Provisions ........................................................................ 3 Constitutional Provisions............................................................................................... 3 Statutory Provisions ...................................................................................................... 5 The Budget Process ........................................................................................................ 7 Consensus Revenue Estimating Conferences .............................................................. 9 Budget Presentation to the Legislature ....................................................................... 11 Legislative Deliberation and Passage ......................................................................... 13 House and Senate Appropriations Subcommittees ............................................ 13 House and Senate Full Appropriations Committees ........................................... 14 House and Senate Floor Consideration ............................................................. 14 Target Meetings .......................................................................................................... 14 Conference Committees ............................................................................................. 15 Executive Approval and Enactment ............................................................................ 16 Appropriation Bill Format ............................................................................................. 19 Part 1: Line-Item Appropriations ................................................................................. 20 Part 2: Provisions Concerning Appropriations ............................................................. 23 Total State Spending From State Resources ..................................................... 23 Standard Boilerplate .......................................................................................... 25 Contingency Funds Authorization Boilerplate ..................................................... 26 Department-Specific Boilerplate ......................................................................... 27 Adjustments to Enacted Appropriations ..................................................................... 29 Supplementals ............................................................................................................ 29 Transfers .................................................................................................................... 30 Administrative Transfer .......................................................................................... 31 Legislative Transfer ............................................................................................... 32 Contingency Funds Transfer .................................................................................. 33 Emergency Reductions ............................................................................................... 33 Work Projects ............................................................................................................. 34 House Fiscal Agency Role and Responsibilities ......................................................... 37 Nonpartisan Status ..................................................................................................... 38 Confidentiality ............................................................................................................. 39 Budget Process Tools ................................................................................................. 39 FIGURES Figure 1 The Michigan Budget Process ................................................................... 8 Figure 2 Consensus Revenue Estimating Process ................................................. 9 Figure 3 Example: Appropriation Summary Unit .................................................. 20 Figure 4 Example: Appropriation Unit ..................................................................
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