As Michigan lawmakers Lansing grapple with the state government budget, let’s evaluate whether it’s sustainable for Michiganders and the state’s fiscal health.

Lawmakers often focus on the short term as they face a deadline to pass the next fiscal year’s budget. The long-term health of the prosperity of Michiganders who pay for the state’s budget depends on putting government finances on a sustainable path. Right now, they’re not.

While the current state budget looks healthy, bolstered by temporary federal pandemic relief funds and volatile revenue spikes, it’s vulnerable. It relies on fleeting funding sources to support ongoing expenses — a dangerous position that makes residents and even government workers vulnerable to funding shortfalls.

Policymakers must reassess the state’s budgetary practices and put the budget on solid ground.

Consider this excerpt from a recent news story: “Gov. Gretchen Whitmer delivered her budget proposal two months ago. Her plan for the 2024-25 fiscal year weighs in at $80.7 billion and includes universal pre-kindergarten, two-years of tuition-free community college and a state tax credit for home caregivers.”

Many people may think these are good proposals. The governor’s plans, however, have many underlying issues. To start with, they build on a history of excessive government spending.

A recent Mackinac Center report found that taxpayers could be paying $6.5 billion less in taxes this year had lawmakers enacted sustainable budgets since fiscal year 2019. A sustainable budget grows no more than the rate of population growth plus inflation. If Michigan had adopted sustainable budgets, the income tax could have been cut in half. By contrast, unsustainable spending costs the typical household an extra $1,600 annually.

Public choice economics, which focuses on the tradeoffs and incentives politicians face when making decisions, offers valuable insights into the state’s budgetary challenges. In short, political incentives and lawmakers’ self-interest often lead to outcomes that do not align with citizens’ needs.

Like Michigan governors before her, Gov. Whitmer has called for increasing the government’s budget to expand many programs and create others. Doing this can put the budget in a precarious position and undermine economic factors for long-term growth. Tax collections are slowing, limiting how much the budget can grow.

Aligning officials’ political incentives with citizens’ long-term interests is important. This means embracing a more disciplined approach to budgeting that ensures spending is sustainable and delivers meaningful results. Zero-based budgeting, independent efficiency audits, and a strong spending limit would help.

Michigan can create a more dynamic and resilient economy by removing barriers to work, including reducing regulations and taxes. Doing this would enhance economic freedom and increase the state’s attractiveness, driving more prosperity and higher tax revenue.

News accounts report that policymakers are focused on budgets for infrastructure and education. These are important areas of spending, and lawmakers should examine them with a critical eye. But it is even more important for policymakers to enact the budgetary reforms mentioned above.

As legislators consider the next budget, they should incorporate the lessons of public choice economics, steer clear of short-sighted policies, work toward a budget that recognizes government can’t expand to satisfy every desire, and cut tax rates.

The journey toward a more prosperous Michigan requires a sustainable budget approach. If we apply the insights of public choice economics, we can navigate the complexities of fiscal policy with a clear vision, providing a better path to human flourishing.

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