by Gongwer News Service
January 26, 2009

It has been two weeks since economists at the Revenue Estimating Conference told an audience the state is short on cash in the current fiscal year and faces a potential budget hole of $1.4 billion for 2009-10. It will be another three weeks before Governor Jennifer Granholm presents her budget to the legislature. But news came out last week regarding how money can be saved in the Department of Corrections budget, a federal stimulus package started moving through Congress and there’s word that Ms. Granholm is considering a major overhaul of state government.

The long-awaited report by the Council of State Governments Justice Center showed the state could save about $262 million over the course of five years if prisoners serving past their minimum sentence were released. Keeping all the roughly 50,000 prisoners in the system behind bars costs the state $2 billion every year.

The report focused on policy reform and did not propose any changes to the state’s sentencing guidelines, which is an avenue for savings the governor has pursued in budget years past but has yet to see any results.

However, while the report’s proposals included some savings it also emphasized the need to reinvest in some areas in order for the state to do a better job at deterring people from committing crimes in the first place and stopping the number of people returning to prison.

Michigan, according to the report, has the highest violent crime rate, but the lowest per-capita peace force.

Sen. Alan Cropsey (R-DeWitt), who chairs the Senate Appropriations Subcommittee on Judiciary and Corrections, said in the short run it’s likely the savings that would come from releasing prisoners would be eaten up by spending in prevention and anti-recidivism programs. But he noted if the report’s long-term savings come through eventually the department would cost less to run.

Meanwhile, the governor is reportedly looking at a major overhaul of state government, which could stretch into a new governor’s term in 2011. Ms. Granholm has tapped Lt. Governor John Cherry to lead the executive branch’s efforts, and it’s possible the governor could make an announcement on the subject in her State of the State address on February 3, although Ms. Granholm’s spokesperson has said it’s premature to discuss publicly what might be in the address.

Details on what an overhaul might look like are sketchy, but sources have said the effort is aimed at making government more flexible and responsive to the new economic realities. Mr. Cherry has apparently made overtures on this topic during recent interviews, saying the state’s 1950s manufacturing model of government does not reflect 21st Century realities.

Ms. Granholm and other state officials faced one 21st Century reality last week publicly when it came to light that residents across the state are having a hard time getting signed up for their unemployment benefits.

The state’s unemployment rate for December shot up to 10.6 percent, the first time unemployment has topped 10 percent since 1985.

The state has been adding some staff, phone and Internet capacity in anticipation of busy unemployment months of December and January (made busier with the announcement that the Detroit Three would be halting production for the entire month instead of the two-week holiday hiatus). But the effort apparently was not enough as residents complained of not being able to get through on the phone system.

In order to handle the increased number of claims, the state is hiring 276 more workers; call centers and the information people can file on the Internet are also being expanded. While the state is asking the federal government for assistance in upgrading its 20-year-old computer system that processes unemployment benefits, Michigan’s system has not crashed, unlike other state computers in Ohio, New York and North Carolina.

Meanwhile it looks like Michigan could see $4.6 billion under a stimulus package starting to makes its way through Congress. While that money would go to schools, infrastructure improvements and health care, a key U.S. House committee has also approved a tax-cut plan that could give $500 in tax cuts for individuals and $1,000 for couples.

While the good news is welcomed in the state right now, only time will tell how the final product of a federal stimulus shapes up for Michigan and whether any aid will come by the time the legislature starts work on next year’s budget.

For nearly 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.