CHICAGO — Michigan lawmakers Wednesday were expected to wrap up the final $46.7 billion all-funds budget for 2011 as the state heads into a new fiscal year Friday.
The spending plan erases a $484 million deficit but leaves in place a structural deficit heading into 2012.
The Legislature needs to have a 2011 budget in place by midnight Thursday to avoid the third government shutdown since 2008.
The process this year was eased by an influx of federal money and a $200 million surplus in the school aid fund.
The $46.7 billion budget increases spending by 2.6%, or $1.2 billion, over 2010 — though the size of the budget has declined since 2008.
Like other states, Michigan has relied on federal funds over the last several years to offset falling revenues. Federal money, including from the American Recovery and Reinvestment Act of 2009, has increased by $6.6 billion since 2004, according to the House Fiscal Agency.
The 2011 $8 billion general fund budget relies heavily on one-time measures, including $980 million of federal money. The state plans to save $117.2 million of debt-service payments scheduled for next year by restructuring a chunk of its debt.
The general fund structural deficit heading into 2012 could total $1.6 billion, according to House Fiscal Agency director Mitchell Bean.
“We’ve got about $1.6 billion of issues, which is about 20% of the general fund budget,” said the longtime HSA director. The loss of nearly $1 billion of federal funds will combine with other expected revenue declines, such as an income-tax reduction set to take effect next October, Bean said.
“We’ve got the money for this year but don’t have it for next year.”
The $11 billion school aid budget relies on about $184 million of ARRA funds, he said.
“In my view, the school aid fund is not as much of a problem,” Bean said. “Relative to the whole budget, [the 2011 one-time money is] relatively small.”
The Senate late Wednesday was expected to sign off on a $3.2 billion transportation bill that has been held up largely due to a debate over a proposal to build a publicly owned bridge over the Detroit River.
The final spending plan, passed by the House Tuesday, would restrict MDOT to spending only $750,000 through May for continued study of the $5 billion proposal. The budget does not allow the state to enter into a public-private partnership to build the span, a key element of the plan that has been pushed by top state officials and the Michigan Department of Transportation.
The transportation budget also includes authorization for MDOT to issue roughly $40 million of one-year debt, a move that would allow the state to secure half of the $84 million in local funds that are necessary to avoid losing $475 million in federal highway funds.
Universities will see their state aid clipped by 2.8% under the final 2011 higher-education budget.
Lawmakers were expected to finalize a general government budget, which includes revenue aid to local governments, by Wednesday evening.
Meanwhile, lawmakers are expected to vote after the November election on a capital budget that would be supplemental to the 2011 budget. The general fund capital bills in the House and Senate include proposed projects totaling roughly $1 billion, with the state paying for less than half of the total.
Lawmakers crafted the 2011 budget amid an election season that will see the turnover of all Senate seats and more than half of House seats. Only a small handful of House representatives will have more than two years worth of legislative experience as the next session begins in January, said one state official.
