What's the state of the rainy-day fund? | Michigan Radio

What's the state of the rainy-day fund?

Oct 15, 2015

The Michigan Legislature has approved $9 million to deal with the fallout from the Flint water crisis. That price tag has turned attention to how the state’s rainy-day fund is used.

Credit Steve Carmody / Michigan Radio

Gov. Rick Snyder has made replenishing that fund a budget priority since he entered office.

Jennifer White spoke to Susan Demas, publisher of Inside Michigan Politics, and Ken Sikkema, former Senate Majority Leader and Senior Policy Fellow at Public Sector Consultants about the state of the rainy-day fund.

Demas says as of the last budget cycle there's about $386 million in the fund. 

Sikkema says that number is probably higher now, closer to $500 million. However,  he thinks it would be better if the state had $1 billion to $2 billion in that reserve. He says:

We're a long way away from what I would consider to be a prudent amount in the rainy-day fund.

Almost $200 million was taken from the rainy-day fund to shore up the Detroit pension system last year. In terms of how the state decides how that money gets used, Demas says:

Once you put the money in. they [the state Legislature] tend to be pretty reticent to take it out, unless there is a situation of a severe budget hole, which is the situation we faced last decade. In cases when there are emergency situations that come up there is usually talk of tapping the rainy-day fund.

But Demas says it's not the place to get money to help pay for roads because that's a $2 billion ongoing problem, not a one-time fix.

Listen to our conversation here: