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Putting an End To Crisis Management A Michigan Snapshot

Putting an End To Crisis Management A Michigan Snapshot. John E. Nixon, CPA State of Michigan Budget Director GOVERNING Outlook Conference Panel: New Administrations and Priorities January 31, 2011. My focus today: Michigan’s Game Plan.

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Putting an End To Crisis Management A Michigan Snapshot

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  1. Putting an End To Crisis ManagementA Michigan Snapshot John E. Nixon, CPA State of Michigan Budget Director GOVERNING Outlook Conference Panel: New Administrations and Priorities January 31, 2011

  2. My focus today: Michigan’s Game Plan • Inside look at Michigan’s economic and budgetary climate • Our forward-thinking strategy • Partnering for success The challenges facing the Great Lakes state are great…

  3. An inside look at Michigan’s weaknesses $1.8 BillionMichigan’s estimated budget hole for Fiscal Year 2011. This marks the state’s 9th consecutive year of budget reductions.

  4. An inside look at Michigan’s weaknesses State’s rainy day fund dries up The rule of thumb for a budget reserve balance is to maintain a fund equal to at least 5% of expenditures. Budget Stabilization FundFiscal Year End Balance (in Millions) Source: State Budget Office, OFM - LM, 10/13/2010

  5. An inside look at Michigan’s weaknesses State’s unemployment rate 47th in the nation Michigan 11.7% Percent United States 9.4% Source: Bureau of Labor Statistics - January 2010 Source: U.S. Dept. of Labor December - 2010

  6. An inside look at Michigan’s weaknesses General Fund revenues down substantially (Millions) May 2010 Estimates Note: Totals exclude transfers and savings from adjusting statutory revenue sharing payments to local governments. 6 Source: Office of Revenue and Tax Analysis, Dept. of Treasury, 10/21/10

  7. An inside look at Michigan’s weaknesses Programs outgrow sustainability • Michigan Medicaid caseload at record level • Up almost 828,000 since 2000 • Number of full time state caseworkers remained relatively flatfrom 2001 to 2010 (329 to 366 employees) October 1998 through November 2010 7 Source: OHHS, MA Team 1/10/11

  8. But Michigan has some things in its favor, too

  9. An inside look at Michigan’s strengths Expenditure growth lowest among states Source: Office of Revenue and Tax Analysis, Michigan Dept. of Treasury, 12/30/09 (Based on NASBO State Expenditure Surveys 2001 and 2008)

  10. An inside look at Michigan’s strengths Pension reform alters tax obligation for taxpayers • Pension eliminated for new hires (1997); 401(k) plan established • Thirteen years later… • 21,000 active workers eligible for state pension • 55,000 retirees receiving state pensions • 29,000+ employees (54%) enrolled in 401(k) plan

  11. An inside look at Michigan’s strengths Consolidated IT environment Enables efficiencies and self-service • 357 online services • 70 email systems to 2 • 37 data centers to 3 • 64 percent reduction in contractors • Security controls implemented • 10,928,702 Web browser based attacks blocked (2010) • Michigan earns “A” in • 2010 Digital States Survey

  12. Michigan’s forward-thinking strategy Michigan’s plan to move forward “The can has been kicked far enough.”

  13. Michigan’s Plan The Challenge for Michigan:Structural Balance Michigan must get back to its core principles. • Address structural deficiencies • Address long-term liabilities • Right-size government programs Revenue Expenditures

  14. Michigan’s Plan Our plan is to put an end to crisis management • Two-year budgets • Long-term plan • Performance metrics to assure value for money • Additional accountability thru transparency • Goal: Get back to a AAA credit rating.

  15. Government cannot do this alone. • Government needs: • Innovators • Business-minded thinkers • Collaborators This is your call to action…

  16. Partner with government The business community is the key to moving states forward • Come to the table! • Offer ideas • Provide solutions • Share data • Bring best practices • Collaborate • And help advance initiatives

  17. Questions John E. Nixon, CPA State of Michigan Budget Director StateBudgetOffice@michigan.gov (517) 373-4978

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