Michigan News
State looks at worst-case budget cuts
AP
LANSING (AP) — Michigan’s governor warned Tuesday of a possible 20 percent cut in state spending next year, a draconian step after billions in cuts since 2003 have already dented police and fire services, pushed schools toward insolvency and reduced oversight of prison inmates.
The request from Gov. Jennifer Granholm is a further blow to health care providers, state police, universities and others dependent on public money in a state where revenues, adjusted for inflation, are at about the same level as in 1965.
Double-digit cuts likely mean double-digit university tuition increases, for example.
‘‘I’m certainly having to take a job to find extra income to offset some of these (scholarship) cuts,’’ said Mitch Rivard, a 19-year-old Michigan State University junior from Bay City. ‘‘We’re going to see a very big gap in terms of who is be able to attend college if these cuts continue.’’
The state filled a deficit in the budget year that started Oct. 1 by cutting nearly $1.9 billion from spending and relying on about $1 billion in federal stimulus money that won’t be available next year. Most departments lost 10 percent from their budgets. So Granholm is laying out a worst-case scenario, asking departments to lay out proposed cuts twice as deep as what they are now absorbing.
Granholm’s office said state budget director Bob Emerson is predicting next fiscal year’s deficit could hit $1.4 billion — with little remaining federal recovery money to cushion the blow.
While many states are having fiscal woes, few have struggled as mightily as Michigan. Less revenue is rolling in from income, sales and property taxes, while the highest-in-the-nation 15.3 percent jobless rate has spurred demand for food stamps, health care and unemployment checks.
Even California, which notoriously had to pay its bills with IOUs earlier this year, managed to raise taxes to help get its finances back on track. At least 20 states are fighting to find enough money to pay for the programs they agreed to earlier this year.
Michigan’s revenue falloff of about 12 percent isn’t as sharp as in Alaska, where a drop in oil prices was expected to lower state revenues in the current fiscal year by 45 percent, according to the National Conference of State Legislatures.
The request from Gov. Jennifer Granholm is a further blow to health care providers, state police, universities and others dependent on public money in a state where revenues, adjusted for inflation, are at about the same level as in 1965.
Double-digit cuts likely mean double-digit university tuition increases, for example.
‘‘I’m certainly having to take a job to find extra income to offset some of these (scholarship) cuts,’’ said Mitch Rivard, a 19-year-old Michigan State University junior from Bay City. ‘‘We’re going to see a very big gap in terms of who is be able to attend college if these cuts continue.’’
The state filled a deficit in the budget year that started Oct. 1 by cutting nearly $1.9 billion from spending and relying on about $1 billion in federal stimulus money that won’t be available next year. Most departments lost 10 percent from their budgets. So Granholm is laying out a worst-case scenario, asking departments to lay out proposed cuts twice as deep as what they are now absorbing.
Granholm’s office said state budget director Bob Emerson is predicting next fiscal year’s deficit could hit $1.4 billion — with little remaining federal recovery money to cushion the blow.
While many states are having fiscal woes, few have struggled as mightily as Michigan. Less revenue is rolling in from income, sales and property taxes, while the highest-in-the-nation 15.3 percent jobless rate has spurred demand for food stamps, health care and unemployment checks.
Even California, which notoriously had to pay its bills with IOUs earlier this year, managed to raise taxes to help get its finances back on track. At least 20 states are fighting to find enough money to pay for the programs they agreed to earlier this year.
Michigan’s revenue falloff of about 12 percent isn’t as sharp as in Alaska, where a drop in oil prices was expected to lower state revenues in the current fiscal year by 45 percent, according to the National Conference of State Legislatures.
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