Michigan Government Revenues Above and Below Headlee Cap

Michigan Governor Jennifer Granholm presented her executive budget today. In it, she argues that Michigan needs to raise taxes in the over the next few years because its revenues are far below its constitutional revenue limit. She states, "The gap has grown as a result of the economic downturn and is anticipated to widen further as currently enacted tax changes take effect in the next several years."

However, the reason that Michigan has been below these limits is because the personal income includes the value of growing government payments through programs like welfare, unemployment insurance, Medicare and social security. Without these payments, Michigan is above the Headlee caps and grew closer to the limit in recent years.

For a more in depth look, please see my Viewpoint on the subject, available here.