BY JAKE NEHER
Michigan Public Radio Network
Lawmakers in Lansing are beginning the months-long task of approving a budget for the next fiscal year.
Almost as soon as Governor Rick Snyder released his proposed budget, legislators on both sides of the aisle started questioning a plan to add money to the state's savings account.
A lot of people have a lot of other ideas on how to use that money.
Picture this. You've got a little bit of extra cash, and you're thinking about putting it in your savings account.
You've got some debt, some bills to pay, things you've needed to take care of for a while. Money's been tight. Let's also assume that you have a family with other opinions about how to use that money.
So this is sort of what's happening in Lansing right now.
It's not a perfect comparison. Government is not a family. And you're not going to be voted out of your family for your ideas about what to do with the cash.
But the point is, saving money isn't easy or fun for anyone.
That brings us to Michigan's Budget Stabilization Fund, or as it's more commonly known, the "Rainy Day Fund."
It's the state's savings account.
Governor Rick Snyder wants to add 75 million dollars to it this year. There's about half-a-billion dollars in the fund right now.
When Snyder took office, the account was almost empty. We're talking around two million dollars. According to economists, that's like having five dollars in your savings account.
The governor has been trying to build up the fund. He said that would help improve the state's credit rating. Michigan would get better interest rates. And there would be money on hand to protect against huge budget cuts in case of an emergency.
The state can add to the account or take money out of it for pretty much any reason if the governor and lawmakers can agree on it. And that's where things get tricky.
"It's been raining in our schools ever since this governor took office, and we have a responsibility to put that money in our schools now." Snyder said.
That's Democratic state Representative Brandon Dillon. He and many other Democrats said the money should be put back into education.
Some of the more conservative Republicans in the Legislature like Tom McMillin have a different idea.
"I mean, if we've got extra money sitting around, I'd prefer to pull up an upcoming tax cut three months earlier or six months earlier and get it out." McMillin said.
McMillin said government has a responsibility to return money it doesn't spend on programs to taxpayers.
"It's a matter of whether the money should be sitting in a bank or sitting in our citizens pockets." McMillin said.
And then there's another plan backed by Republicans like state Senator Geoff Hansen.
"We need to transfer funds from the Budget Stabilization Fund into a dredging grants program." Hansen said.
With Great Lakes water levels at an all-time low, Hansen said the state's shipping industry faces an emergency. He said the state needs 30 million dollars to dredge harbors so ships can get in and out. His plan would take most or all of that money from the Rainy Day Fund.
But Governor Snyder's budget chief, John Nixon, said that money should not come out of the state's savings.
"A lot of these issues that are being talked about, while they're valid to bring up, we feel that there's really an opportunity to address some of those in other areas in the budget, and that we really should be protecting that rainy day fund for real structurally unsustainable situations." Nixon said.
Mitch Bean is an economist and former director of the nonpartisan state House Fiscal Agency. He said it's typically a challenge for governors to keep or add dollars to the "rainy day" fund.
"When you get a pot of money and there's, honestly, a bunch of politicians, everybody and their brother thinks there's these wonderful things it just absolutely has to be spent for." Bean said.
Bean points to the last year-and-a-half of Governor John Engler's administration in the early 2000s. He said a relatively light recession forced the state to spend over three billion dollars in surpluses in 18 months.
Now remember, with Governor Snyder's budget proposal, the Rainy Day Fund would be worth less than 700-million dollars.
Bean said that won't go far at all if there's a budget crisis.
"As we've seen, you can blow through a billion dollars in no time. And we've cut a lot of services already. And next go around if we've got to cut a billion dollars, it's going to be even harder." Bean said.
And Bean said a lot could be riding on how politicians in Washington handle the possibility of sequestration. Michigan could lose a lot of money if across-the-board spending cuts become a reality.
Bean and John Nixon said that's the sort of financial crisis that would justify raiding the state's piggy bank.
Copyright 2013, MPRN