As you are well aware, the economic conditions facing the citizens and government of this state have caused serious and immediate fiscal difficulties for our state budget. The revenue estimating conference held on Thursday, January 18, 2007, as provided under The Management and Budget Act, established a forecast of state revenue for the current fiscal year and for Fiscal Year 2007-2008. As a result of these forecasts and the repeal of the Single Business Tax, the State of Michigan now faces a combined projected budget deficit for these two fiscal years of nearly $ 3 billion.

On February 8, 2007, State Budget Director Bob Emerson will appear before the appropriating committees of the House of Representatives and the Senate. At that time, he will recommend actions necessary to address diminished revenue and balance the budget for the current fiscal year. Budget Director Emerson also will outline estimated revenues and proposed expenditures for Fiscal Year 2007-2008. In the interim, departments and autonomous agencies should immediately begin implementing all possible efficiencies and economies when making spending decisions.

Furthermore, given the severity of these state budget constraints, I am issuing this Directive now, which has as its objective across-the-board restrictions on spending by departments and agencies within the Executive Branch of state government. While I recognize that resources are already scarce, and that greater efficiencies already have been achieved in the administrative operations of state departments and agencies, it is critical to implement additional efforts to reduce costs and curtail spending. Accordingly, I direct:

I. RESTRICTIONS ON PURCHASE OF NON-ESSENTIAL SUPPLIES, MATERIALS, EQUIPMENT, PRINTING, OR OTHER PRODUCTS

A. For the remainder of the fiscal year ending September 30, 2007, the purchase of, or contracting for, all supplies, materials, equipment, printing using outside vendors, or other products financed with state funds shall be deferred and limited to only the most essential requirements. Products subject to these restrictions include, but are not limited to, office furniture and equipment and computer hardware or software. Purchases to meet essential requirements include any of the following:

1. A purchase or contract required by legal mandate or court order or for law enforcement purposes.

2. A purchase or contract necessary to protect the health or safety of Michigan citizens or visitors or to assist other states in similar circumstances.

3. A purchase or contract necessary to provide for the basic requirements of residents of state institutions or facilities, including, but not limited to, food, clothing, and prescription drugs.

4. A purchase or contract essential to the continued functioning of a legally-mandated program or activity of state government.

5. A purchase or contract necessary to produce budgetary savings or to increase state revenues, including protecting existing federal funds or securing additional federal funds.

6. A purchase or contract necessary to comply with federal requirements.

B. In complying with this Directive, department directors and heads of autonomous agencies should regularly review and implement measures to restrict the procurement of supplies, materials, equipment, printing using outside vendors, or other products using a procurement card issued pursuant to procedures established under Section 0510.03 of The Administrative Guide to State Government.

C. The restrictions established under this Directive apply both to new contracts and to the amendment, extension, renewal, or reauthorization of existing contracts.

D. This Directive applies to the purchase of non-essential supplies, materials, equipment, printing using outside vendors, or other products. Similar restrictions on contracts for services are imposed under Executive Directive 2007-2.

II. ENFORCEMENT

A. State department directors and autonomous agency heads are directed to closely and regularly monitor expenditures for the purchase of, or contracting for, all supplies, materials, equipment, printing using outside vendors, or other products financed with state funds to ensure close compliance with the spirit of this Directive and the efficient expenditure of tax dollars.

B. The Department of Management and Budget ("DMB") and the State Budget Office shall review department and agency expenditures on a regular basis. The DMB shall make every effort, including, but not limited to, implementing limits on the use of statewide contracts, direct vouchers, procurement cards, and employee reimbursements, to further reduce total state contractual expenditures for supplies, materials, equipment, printing using outside vendors, or other products. If the Director of the DMB determines that a department or agency has failed to demonstrate significant and continuing progress in meeting the objectives of this Directive, the DMB shall rescind procurement authority delegated to the department or agency, including, but not limited to, delegation authorized under Section 261 of the Management and Budget Act, 1984 PA 431, MCL 18.1261, or under Sections 0510.01 or 0510.12 of the Administrative Guide to State Government. The State Budget Director may recommend to the Director of the DMB rescission of delegated purchasing authority under this paragraph.

C. The Department of Management and Budget and its Office of Acquisition Services shall make every effort to further reduce total state contractual expenditures for supplies, materials, equipment, printing using outside vendors, or other products, in the best interests of this state. Other departments and agencies shall cooperate fully with the DMB in this effort.

D. In exercising general supervisory control over the functions and activities of all administrative departments, boards, commissioners, and officers of the state, and of all state institutions, as required under Section 3 of 1921 PA 2, MCL 17.3, the State Administrative Board shall monitor compliance with the requirements of this Directive.

E. Violations of the requirements of this Directive shall be reported to the Director of the Department of Management and Budget and to the Secretary of the State Administrative Board.

F. The State Administrative Board may take action to enforce the requirements of this Directive as authorized under 1921 PA 2, MCL 17.1 to 17.3.

III. MISCELLANEOUS

A. The restrictions established under this Directive apply regardless of the state fund source financing a purchase or a contract.

B. The restrictions established under this Directive apply both to new contracts and to the amendment, extension, renewal, or reauthorization of existing contracts.

C. This Directive is effective immediately and remains in effect through September 30, 2007.

I extend my sincere appreciation for your assistance and the continued hard work of state employees as we respond to the state's difficult fiscal condition.

______________________________
JENNIFER M. GRANHOLM
GOVERNOR