News Story

State 'General Fund' Revenue Flat? Only Because Lawmakers Shifted Money Around

Over 10 years, total state revenues grew 16% faster than inflation

At a recent press conference, Michigan’s budget director said that revenue coming into one of the state government’s revenue funds is flat.

“But with a general fund that has been flat for more than 20 years, there’s very little left to cut from state government without impacting essential services and programs,” Chris Kolb said.

But Kolb’s comment demands scrutiny. That’s because from fiscal year 2009-10 to FY 2018-19, the state government’s tax revenue increased by $9.0 billion — a 16% increase above inflation.

The state’s General Fund is controlled by the state Legislature. That means legislators can add to or take money from it at any time through legislation.

Here’s an example of that.

In 2004, the state imposed a 75-cent tax on each pack of cigarettes. Instead of putting all of that money in the General Fund, the Legislature instead transferred 75% of it to the state Medicaid Trust Fund.

In 2015, state lawmakers chose to redirect $600 million in income tax revenue from the General Fund and moved it to the State Transportation Fund.