Environmental quality ranks highly among Michigan’s core values. Citizens prize the recreational opportunities available throughout the Great Lakes and depend upon the state’s unique geography and abundant resources for their livelihoods.

A well-reasoned vote will depend, in part, on knowing how well the state has managed other bond funds.

Understandably, then, taxpayers have generously approved major spending increases for environmental programs through bond sales and endowment funds that supplement already sizable budget appropriations made annually by the Legislature to the Departments of Environmental Quality, Natural Resources, Community Health and Agriculture each year.


Table 1 – State Expenditures for Environment-related Programs

 

1994-1995

1996-1997

1998-1999

2000-2001

Conservation,
Environment,
Recreation and
Agriculture

$639,425,000

$440,656,000

$482,901,000

$617,703,000

Source: State of Michigan Comprehensive Annual Financial Report

In 1984, for example, voters approved an amendment to the Michigan Constitution dedicating royalties from the sale of state-owned mineral rights to a new Natural Resources Trust Fund, with which to acquire forestland and shoreline for recreation and conservation. In 1988, approval likewise was granted for the $660 million Environmental Protection Bond Fund, to finance the cleanup of contaminated property, improve water quality and upgrade sewer systems. Six years later, voters authorized the deposit of $10 million annually into a State Parks Endowment Fund to bankroll park operations, maintenance and capital improvements.

Most recently, in 1998, voters approved the Clean Michigan Initiative (CMI), which permitted the state to issue $675 million in general obligation bonds for environmental cleanup and natural resource protection. At the time, the state already owed $874 million in general obligation bond debt.[5]

These initiatives have made Michigan a national leader in state environmental investment, and have greatly expanded government management of natural resources. This repeated success of ballot proposals suggests that taxpayers regard their continued investment as warranted and beneficial. But whether bond programs have actually maximized environmental quality is a legitimate — and vital — policy question.

Despite these significant public expenditures, there has been little measurement of program efficiency or effectiveness. The Clean Michigan Initiative Act requires the auditor general to conduct a performance review every two years. Yet none has been conducted because, according to a department spokesman, the $389 million appropriated to date is too inconsequential an amount to justify the cost of an audit.[6] Nor have the four state agencies that administer CMI programs evaluated their success or failure.

Without such an assessment, neither voters nor lawmakers have any rational basis upon which to judge whether the state’s stewardship efforts are working; no way to tell whether Michigan’s most pressing environmental problems are being resolved. This is why the Mackinac Center for Public Policy decided to examine how CMI funds have been spent, and to assess what has been achieved. The goal of this endeavor is to enhance environmental quality for all Michigan citizens by identifying what does — and does not — constitute sound environmental policy and practice.

    The following criteria formed the basis of our examination:

  • What are the fiscal consequences of selling bonds to finance the initiative?

  • Is the distribution of funds based on environmental priorities?

  • Are CMI objectives realistic?

  • Have the funds allocated to date achieved CMI goals?

A study of how taxpayers’ money is being spent takes on added importance in this election season. Michigan voters will be asked on the November ballot to approve another major environment-related bond measure. This time the Legislature is seeking $1 billion with which to upgrade sewer infrastructure. A well-reasoned vote will depend, in part, on knowing how well the state has managed other bond funds, as well as understanding the consequences of Lansing’s increased reliance on borrowing to finance environmental programs.

This study is based on a careful reading of all relevant statutes and regulations, as well as inspection of hundreds of documents relating to CMI administration and expenditures. Officials of the Department of Environmental Quality (DEQ) and Department of Natural Resources (DNR) cooperated in providing staff expertise and agency records. More than a dozen interviews with environmental and budgetary experts were conducted.

A chronicle of how the Clean Michigan Initiative was created is presented in Section II. Section III details how CMI bonds are sold and the overall funding formula of the initiative. Section IV describes the goals of the initiative and the theoretical framework upon which those goals are based. Section V discloses how CMI funds were appropriated for the years 1999-2001, as reported by the state, and measures the results against stated objectives. Section VI summarizes our conclusions regarding whether the Clean Michigan Initiative is delivering the results promised, and offers recommendations for improvement.