State Announces Preliminary Closing of Books for Fiscal Year 2002

Contact: Kelly Chesney (517) 373-7560

December 4, 2002

State Budget Director Don Gilmer today announced that the state’s preliminary book closing figures for fiscal year 2002 reflect an unreserved fund balance of $114.5 million in the General Fund and $255.9 million in the School Aid Fund.  Director Gilmer credited controlled spending and sound planning in building up the state’s Budget Stabilization Fund (BSF) for allowing the state to maintain critical services during a tough national recession.

“Michigan, along with virtually every state in the nation, is facing tough budget challenges and difficult decisions,” Gilmer said.  “While it hasn’t been easy, Michigan is better positioned than many other states because of the efforts we’ve made in years past to limit state spending and make sure we put money aside to help through a recession.  The books for 2002 are nearly closed so we now know we have a sizeable balance available for use in the 2003 budget.”

Noting the importance of the BSF in managing through economic downturns, Budget Director Gilmer said, “Sound planning and routine deposits over the last decade into the BSF have helped Michigan maintain critical services now through three difficult fiscal years.”  He further commented that upon closing the state’s 2002 books there will be a balance in the BSF of approximately $144 million.

As required by state law, the end balance of $144 million in the BSF will trigger a delay in the scheduled roll back in the Michigan Single Business Tax (SBT), resulting in the SBT rate remaining at 1.9 percent.  To continue the rollback, the year end balance in the BSF must above $250 million or higher.  In addition, a $32 million payment will be made from the BSF to cover the Durant lawsuit bond payments in 2003, and the remaining BSF amount will be applied to critical needs in FY 2003.