News Story

Michigan Government Ranks Top Ten for Federal Money Dependency

As Michigan’s tax revenues have fallen, the state has taken on more federal dollars to fill in the gaps, according to a study done by the Mercatus Center.

Michigan was No. 9 in the nation in 2009 in terms of federal funds as a share of total spending, according to Matthew Mitchell, a research fellow at the Mercatus Center. Michigan is projected to move up to No. 8 in 2010 based on estimates, Mitchell said.

Michigan’s total budget was $45.7 billion in 2009, of which $16.5 billion came from the federal government, or about 36 percent. By comparison, in 1996 federal funding accounted for $6.2 billion, or 22.6 percent of the $27.4 billion total budget.

State generated revenue has remained generally flat the past six years, going from $29.5 billion in 2003 to $29.0 billion in 2009. During that same time, federal dollars have increased from $9.5 billion to $16.5 billion.

Mitchell said Medicaid and the federal stimulus program both were reasons for a big jump in federal spending.

“For most states, Medicaid is the fastest growing component of spending,” he said.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.