House Introduced Bill 5047

HOUSE BILL No. 5047

July 15, 1997, Introduced by Rep. Profit and referred to the Committee on Appropriations.

A bill to amend 1984 PA 431, entitled

"The management and budget act,"

by amending sections 351, 352, 353, 354, 355, 358, and 367b (MCL

18.1351, 18.1352, 18.1353, 18.1354, 18.1355, 18.1358, and

18.1367b), sections 352 and 355 as amended and section 367b as

added by 1991 PA 72, section 353 as amended by 1994 PA 107, and

section 354 as amended by 1995 PA 286.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 351. (1) A countercyclical budget and economic sta-

2 bilization fund is created to assist in stabilizing revenue and

3 employment during periods of economic recession. and high

4 unemployment.

5 (2) As used in this section and sections 352 to 359: ,

6 "fund"

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1 (A) "FUND" means the countercyclical budget and economic

2 stabilization fund.

3 (B) "REAL RATE OF GROWTH" MEANS THE GROWTH IN EACH REVENUE

4 SOURCE AS REDUCED BY THE GROWTH IN INFLATION AND MODIFIED BY THE

5 CHANGE IN THE BASE OF THAT REVENUE SOURCE, AS DETERMINED BY THE

6 PRINCIPALS AT THE REVENUE ESTIMATING CONFERENCE HELD UNDER SEC-

7 TION 367B.

8 (C) "TREND LEVEL" MEANS THE REAL RATE OF GROWTH AVERAGED

9 OVER A PERIOD OF AT LEAST THE IMMEDIATELY PRECEDING 10 YEARS, AS

10 DETERMINED BY THE PRINCIPALS AT THE REVENUE ESTIMATING CONFER-

11 ENCE, ESTABLISHED AS A PERCENTAGE HELD UNDER SECTION 367B.

12 (3) As used in section 352, "current calendar year" means

13 the year that ends December 31 in which the determination of the

14 transfer into or out of the fund is being made.

15 Sec. 352. (1) When the annual growth rate is more than 2%

16 THE TREND LEVEL, the percentage excess over 2% THE TREND LEVEL

17 shall be multiplied by the COMBINED total state general

18 fund-general purpose revenue AND STATE SCHOOL AID FUND REVENUE

19 for the fiscal year ending in the current calendar year to deter-

20 mine the amount to be transferred to the fund from the state gen-

21 eral fund AND THE STATE SCHOOL AID FUND in the fiscal year begin-

22 ning in the current calendar year.

23 (2) When the annual growth rate is less than 0%, the per-

24 centage deficiency under 0% shall be multiplied by the total

25 state general fund-general purpose revenue for the fiscal year

26 ending in the current calendar year to determine the eligible

27 amount to be transferred to the state general fund from the fund

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1 in the current fiscal year. When the formula calls for a larger

2 transfer from the fund than is necessary to balance the current

3 fiscal year state general fund-general purpose budget, the excess

4 shall remain in the fund. WHEN THE ANNUAL GROWTH RATE IS LESS

5 THAN THE TREND LEVEL, THE PERCENTAGE UNDER THE TREND LEVEL SHALL

6 BE MULTIPLIED BY THE COMBINED TOTAL STATE GENERAL FUND-GENERAL

7 PURPOSE REVENUE AND STATE SCHOOL AID FUND REVENUE FOR THE FISCAL

8 YEAR ENDING IN THE CURRENT CALENDAR YEAR TO DETERMINE THE AMOUNT

9 TO BE TRANSFERRED INTO THE STATE GENERAL FUND AND STATE SCHOOL

10 AID FUND FROM THE FUND IN THE FISCAL YEAR BEGINNING IN THE CUR-

11 RENT CALENDAR YEAR.

12 (3) TRANSFERS INTO OR OUT OF THE FUND SHALL BE MADE PURSUANT

13 TO AN APPROPRIATION IN AN AMOUNT DETERMINED UNDER THIS SECTION BY

14 THE PRINCIPALS AT THE REVENUE ESTIMATING CONFERENCE HELD UNDER

15 SECTION 367B.

16 Sec. 353. (1) In a calendar quarter following a calendar

17 quarter in which the seasonally adjusted state unemployment rate

18 as certified by the director of the Michigan employment security

19 commission is 8% or more, an amount may be appropriated from the

20 fund by the legislature for the purposes listed in this section

21 in accordance with the following table:

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1 Percent of seasonally Percent of fund avail-

2 adjusted unemployment able for economic

3 in the calendar quarter stabilization during

4 preceding the calendar the calendar quarter

5 quarter in which following a calendar

6 an amount may be quarter of high

7 appropriated unemployment

8 _________________________ _________________________

9 8.0-11.9% 2.5% of fund balance

10 as of first day of

11 calendar quarter

12 12.0% and over 5.0% of fund balance

13 as of first day of

14 calendar quarter

15 (2) The legislature may appropriate by law money from the

16 fund in the amounts as provided in this section to assist in

17 the following countercyclical economic stabilization purposes:

18 (a) Capital outlay.

19 (b) Public works and public service jobs.

20 (c) Refundable investment or employment tax credits against

21 state business taxes for new outlays and hiring in this state.

22 (d) Any other purpose the legislature may provide by law

23 which provides employment opportunities counter to the state's

24 economic cycle.

25 (3) Notwithstanding subsections (1) and (2), there is

26 hereby appropriated $40,000,000.00 from the fund for the Michigan

27 state parks endowment fund. The appropriation provided for in

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1 this subsection shall only be effective after the proceeds from

2 the sale of the accident fund have been transferred to the fund

3 as provided for in section 701a of the worker's disability com-

4 pensation act of 1969, Act No. 317 of the Public Acts of 1969,

5 being section 418.701a of the Michigan Compiled Laws.

6 Sec. 354. (1) The executive budget for each fiscal year

7 shall contain an estimate of the transfer into or out of the fund

8 required by section 352.

9 (2) The legislature shall include a final estimate of the

10 transfer into or out of the fund required by section 352 in the

11 appropriations bill which contains the revenue estimate required

12 by section 31 of article IV of the state constitution of 1963.

13 (3) Except as provided in subsection (7) (4), a transfer

14 into the fund shall be made in equal monthly installments

15 throughout the fiscal year. Except as provided in

16 subsection (7) (4), a transfer out of the fund may be made as

17 needed during the fiscal year.

18 (4) For the fiscal year ending September 30, 1995 only, all

19 general fund-general purpose balances at the final close of the

20 fiscal year are appropriated in the following order:

21 (a) Up to $22,653,100.00 are appropriated for distribution

22 to the state's 15 universities and 28 community colleges. Of the

23 $22,653,100.00 available for distribution to the state's 15 uni-

24 versities and 28 community colleges, $18,805,186.00 shall be dis-

25 tributed to universities and $3,847,914.00 shall be distributed

26 to community colleges in the manner provided in subsections (5)

27 and (6). If the general fund-general purpose balances at the

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1 final close of the fiscal year are less than $22,653,100.00, the

2 distribution to the state's 15 universities and 28 community col-

3 leges shall be reduced proportionally.

4 (b) If the general fund-general purpose balances at the

5 final close of the fiscal year exceed $22,653,100.00, the addi-

6 tional general fund-general purpose balances up to $5,000,000.00

7 are hereby appropriated for state special maintenance projects.

8 (c) If the general fund-general purpose balances at the

9 close of the fiscal year exceed $27,653,100, all remaining bal-

10 ances are hereby appropriated into the counter cyclical budget

11 and economic stabilization fund. This appropriation shall be

12 used to satisfy requirements under section 26 of article IX of

13 the state constitution of 1963.

14 (5) The appropriation for the state's 15 universities appro-

15 priated in subsection (4) shall be allocated to the universities

16 as follows:

17 Central Michigan university.....................$ 1,350,000

18 Eastern Michigan university..................... 1,000,000

19 Ferris state university......................... 625,000

20 Grand valley state university................... 250,000

21 Lake Superior state university.................. 250,000

22 Michigan state university....................... 900,000

23 Michigan technological university............... 750,000

24 Northern Michigan university.................... 500,000

25 Oakland university.............................. 700,000

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1 Saginaw valley state university................. 505,186

2 University of Michigan - Ann Arbor.............. 8,000,000

3 University of Michigan - Dearborn............... 250,000

4 University of Michigan - Flint.................. 250,000

5 Wayne state university.......................... 3,000,000

6 Western Michigan university..................... 475,000

7 (6) The appropriation for the state's 28 community colleges

8 appropriated in subsection (4) shall be distributed to the col-

9 leges in direct proportion to the 1995 fiscal year unrestricted

10 operating appropriations as follows:

11 Alpena community college........................$ 63,009

12 Bay de Noc community college.................... 53,818

13 Delta college................................... 182,277

14 Glen Oaks community college..................... 26,991

15 Gogebic community college....................... 56,841

16 Grand Rapids community college.................. 251,450

17 Henry Ford community college.................... 276,759

18 Jackson community college....................... 168,689

19 Kalamazoo valley community college.............. 124,895

20 Kellogg community college....................... 110,996

21 Kirtland community college...................... 41,612

22 Lake Michigan college........................... 61,471

23 Lansing community college....................... 400,092

24 Macomb community college........................ 433,324

25 Mid Michigan community college.................. 49,144

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1 Monroe county community college................. 46,534

2 Montcalm community college...................... 41,908

3 Mott community college.......................... 197,936

4 Muskegon community college...................... 115,122

5 North central Michigan college.................. 37,650

6 Northwestern Michigan college................... 107,757

7 Oakland community college....................... 289,677

8 St. Clair county community college.............. 90,922

9 Schoolcraft college............................. 147,844

10 Southwestern Michigan college................... 68,966

11 Washtenaw community college..................... 138,360

12 Wayne county community college.................. 235,233

13 West Shore community college.................... 28,637

14 (4) (7) For the fiscal year ending September 30, 1996

15 only, all general fund-general purpose balances at the final

16 close of the fiscal year are hereby appropriated and shall be

17 transferred to the fund. Notwithstanding section 352, the total

18 amount transferred to the fund under this subsection shall be

19 considered to be the amount transferred to the fund for purposes

20 of section 352 for the fiscal year ending September 30, 1996

21 only.

22 (5) (8) For the fiscal year ending September 30, 1996

23 only, there is appropriated FROM THE FUND $391,300.00 to the city

24 of Detroit to fund the Detroit crime lab and the Detroit police

25 special events unit.

26 Sec. 355. (1) The transfer into or out of the fund as

27 provided in section 352 for each fiscal year beginning after

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1 September 30, 1978, may be adjusted in light of revision in the

2 annual growth rate for the calendar year upon which that transfer

3 was made. The adjustment, if made, shall be directly propor-

4 tional to an increase or decrease in the annual growth rate, but

5 the adjustment shall not be in excess of 1% multiplied by the

6 total general fund-general purpose revenue of the fiscal year

7 upon which the transfer was based. The basis for an adjustment

8 shall be a change in the personal income level for that calendar

9 year as determined by the bureau of economic analysis of the

10 United States department of commerce in the last report it makes

11 before April 30 of the fiscal year in which that calendar year

12 ended. The adjustment, if made, shall be effective on June 1 of

13 the fiscal year in which the transfer is made.

14 (2) An appropriation from the fund as provided in section

15 353 may be adjusted for a change in the unemployment rate statis-

16 tics for the 4 quarters immediately preceding the quarter in

17 which the appropriation is to be made, as long as an adjustment

18 has not already been made in an appropriation from the fund

19 because of a prior change in the unemployment rate statistics for

20 1 or more of those 4 quarters. A change in the unemployment rate

21 statistics shall not be made until that change is certified by

22 the director of the Michigan employment security commission.

23 (3) An adjustment made pursuant to subsection (2) shall not

24 be made unless the change in the unemployment rate statistics

25 would have provided for a different percent of the fund to be

26 appropriated under section 353. If the adjustment creates a

27 state general fund liability, that liability shall be offset

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1 against future appropriations which would have been made under

2 section 353.

3 (4) For the fiscal year ending September 30, 1991 only, the

4 mid-year adjustment to be used to calculate the amount to be

5 transferred from the fund to the general fund pursuant to

6 section 352(2) shall be based on the following estimates:

7 Dollars in

8 Millions

9 1990 1991

10 Michigan personal income.................. $ 170,534 $ 175,484
11 Less: Transfer payments.................. (26,866) (28,932)
12 Subtotal............................ $ 143,668 $ 146,552

13 Divided by: Detroit C.P.I. for 12 months
14 ending June 30 (1982=1.00).............. 1.253 1.317

15 Equals: Real adjusted Michigan personal
16 income.................................. $ 114,659 $ 111,277

17 Percentage decrease....................... (2.95)%

18 Multiplied by: Estimated GF/GP revenue in
19 FY 1990-91.............................. 7,120

20 Equals: Transfer from countercyclical
21 budget and economic stabilization fund
22 for the fiscal year ending September 30,
23 1991.................................... $ 210

24 (5) In accordance with the economic stabilization transfer

25 allowed under section 353(1) there is appropriated from the fund

26 for the fiscal year ending September 30, 1991 the sum of

27 $20,000,000.00 determined as follows:

28 Fund Balance
29 Calendar as of First Maximum Dollar
30 Quarter Day of Calendar Maximum Allowable Amount of
31 Beginning Quarter Withdrawal Withdrawal

32 4/1/91 $400,000,000 2.5% of the fund $10,000,000
33 balance as of first

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1 day of quarter

2 7/1/91 $398,000,000 2.5% of the fund $10,000,000
3 balance as of first
4 day of quarter

5 (6) The total transfer from the fund to the general fund for

6 the fiscal year ending September 30, 1991 pursuant to subsections

7 (4) and (5) shall be $230,000,000.00.

8 Sec. 358. (1) The legislature may make an emergency appro-

9 priation from the fund subject to all of the following

10 conditions: (a) The maximum appropriation from the fund for

11 budget stabilization as provided in section 352(2) has already

12 been made for the current fiscal year. (b) The IF THE legisla-

13 ture has approved the emergency appropriations bill by a 2/3

14 majority vote of the members elected to and serving in each house

15 . (c) The AND THE emergency appropriations bill becomes law.

16 (2) The additional transfer from the fund may be made only

17 for the current fiscal year.

18 Sec. 367b. (1) A revenue estimating conference shall be

19 held in the second week of January and in the last week in May of

20 each year, and as otherwise provided in this act.

21 (2) The principals of the conference shall be the director

22 of the department of management and budget, the director of the

23 senate fiscal agency, and the director of the house fiscal

24 agency, or their respective designees.

25 (3) The conference shall establish an official economic

26 forecast of major variables of the national and state economies.

27 The conference shall also establish THE TREND LEVEL AND a

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1 forecast of anticipated state revenues as the conference

2 determines including the following:

3 (a) State income tax collections.

4 (b) State sales tax collections.

5 (c) Single business tax collections.

6 (d) Total general fund/general purpose revenues.

7 (e) Lottery transfers to the school aid fund.

8 (f) Total school aid fund revenues.

9 (4) The conference's official TREND LEVEL AND forecast of

10 economic and revenue variables shall be determined by consensus

11 among the principals.

12 (5) The TREND LEVEL AND forecasts required by this section

13 shall be for the fiscal year in which the conference is being

14 held and the ensuing fiscal year.

15 (6) The official conference TREND LEVEL AND forecast shall

16 be based upon the assumption that the current law and current

17 administrative procedures will remain in effect for the forecast

18 period.

19 (7) THE OFFICIAL CONFERENCE FORECAST SHALL INCLUDE A DETER-

20 MINATION OF THE TREND LEVEL, OF THE REAL RATE OF GROWTH, AND of

21 how much money should be transferred into or out of the counter-

22 cyclical budget and economic stabilization fund, as provided in

23 section 352.

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