Lansing Update: May 1, 2009

In this issue of Lansing Update:

  1. State Budget Deficit Rockets to at Least $1.2 Billion

State Budget Deficit Rockets to at Least $1.2 Billion

Last week legislative leadership was preparing to announce plans to address the state’s $785 million deficit for the current fiscal year, but this week it became public that the shortfall had risen some $500 million to at least $1.2 billion. Some estimates have pegged the deficit at as much as $1.7 billion.

Governor Jennifer Granholm has announced that on Tuesday, May 5, in order to deal with the worsening economic condition, an Executive Order would be issued cutting approximately $300 million out of the 2008–09 budget, while the remaining balance will be plugged with federal stimulus dollars. Approximately $1.15 billion in stimulus funds are available to the state this year according to the non-partisan House Fiscal Agency.

While details of the proposed cuts have yet to be made public, Speaker of the House Andy Dillon (D-Redford) has stated everything is on the table except for the K-12, Higher Education and Medicaid budgets. Speculation has circulated that the Department of History, Arts and Libraries [Link no longer available —Ed.] will be closed and that every one of the recently graduated 81 state troopers will be laid off. Individual members of the legislature have also stated that there will be “painful” cuts to state departments, which may include “significant” layoffs.

On Friday, May 15 the state’s Revenue Estimating Conference will meet to disclose the disparity between expected and realized revenue. Senate Republicans have stated more cuts may be necessary once those numbers are announced. The House and Senate Appropriations Committees will have ten days to approve the governor’s budget cutting Executive Order.