by Gongwer News Service
May 8, 2009

After weeks of waiting for lawmakers and Governor Jennifer Granholm to agree on cuts to the current fiscal year — and having the budget deficit grow from $785 million to $1.3 billion — the trigger on a $300-million executive order budget reduction was pulled this week, but the bulk of the solution to the problem relies on money coming to Michigan under the federal stimulus.

Lawmakers who used every negative adjective in the book to describe the cuts, which trimmed 100 state troopers and $41 million from local revenue sharing among other things, seemed relieved that federal stimulus dollars were available to the state so that they didn’t have to trim more from the budget ending September 30.

“It’s obvious we have to make an adjustment,” said Rep. Michael Lahti (D-Hancock). “Thank God we have the stimulus package to backfill some of that.”

But the cuts they did have to okay aren’t pretty.

Not only do they trim about 300 state employees, those remaining will be forced to take six furlough days. Practically no department was spared from the cuts, which sent health care and local government officials screaming about what the reductions will do to the services Michigan residents rely on.

And some of the cuts already have set up a battle for whether programs will be funded once again in the 2010-11 budget, which the legislature is currently working on. Already, lawmakers are eager to find money to keep those state troopers in place, but signals from key appropriations members and the administration are that next year’s budget will likely not reinstate some programs trimmed in the executive order.

On top of all this turmoil is the process of Chrysler going through bankruptcy and General Motors preparing a turnaround plan that would save it from a similar fate.

Lawmakers were eager to know whether the $304 million in cuts would be it for this year — a promise neither State Budget Director Bob Emerson or State Treasurer Robert Kleine could make, although both said they hoped the cuts and stimulus combination would be enough.

But Mr. Emerson warned the state hasn’t fully analyzed what would happen should the situation in the auto industry turn worse between now and September.

After taking action on the executive order, Mr. Emerson said that should leave the state’s piggybank with $160 million to carry over into next year, but if revenues continue to decline as much as they have been, that may not be enough of a cushion.

The good news? Mr. Kleine noted that about 65 percent of the revenues the state takes in for a year roll in by May.

While there will be stimulus dollars available to tide over next year’s budget as well, many lawmakers are concerned about using these sort of one-time dollars instead of enacting more reforms and cuts in the budget. And there are some rumblings that even with the stimulus the state should be looking to reform its tax structure, which some are taking as code for another tax increase circa 2007.

Whether or not those arguments materialize into action will be better understood after the May 15 revenue estimating conference when lawmakers really get down to the business of preparing next year’s budget.

In the meantime, lawmakers made sure they weren’t the only ones spared from the ax. Acting on a separate measure, both chambers signed off on 4-percent cuts for the legislature and judiciary that saves the state coffers about $7 million.

The Senate has already decided to mandate employees take two furlough days to help pay for its cut, while the House has yet to decide how it will shave its $1.2-million end of the deal.

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