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For Michigan the Question Is: To Spend or Not to Spend?

February 9, 2012

As we near what many believe to be the end of the “great recession,” Michigan finds itself in a place that many states are envious of, a surplus.  The New York Times has reported that while Michigan has been in an economic downturn longer than most states they now find themselves with a $57 million surplus.  The National Conference of State Legislatures noted that state revenues are improving, however state’s are unsure as to what their next move should be.  Is the recession over and is it safe to start spending again? Or should states, like Michigan, save their surplus for rainy days to come?

In the case of Michigan, the state has made so many cuts that each government agency and department is fighting for a piece of the pie.  Furthermore, the states largest city, Detroit, is in dire financial straits.  Michigan is contemplating whether the state should take over the City’s finances, although their poor economic situation is expected because often cities recover slower from recessions than states.  On top of all this, Michigan’s employment rate has been lower than most states due to the influence of automobile manufacturers in the state, who are now hoping to receive surplus funds.

States are going to have to make tough decisions as the recession ends and states are realizing budget surpluses, a sight that has not been seen by many for years.  An official from the Michigan Chamber of Commerce was quoted by the Times as saying “While our members have a confidence and renewed optimism, we’ve also seen a decade of real turmoil in our state.”

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