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Raise the curtain.

Breaking: Michigan Budget Deficit Jumps 50%, Now At $1.2 Billion!

By Theblogprof, Section News
Posted on Wed Apr 29, 2009 at 05:52:08 PM EST
Tags: Granholm, jobs, Michigan, taxes, unemployment (all tags)

(Promoted by Nick...)

cross-posted at theblogprof

I hate to say it, but I TOLD YOU SO! In a post not long ago (MI staring at nearly a $3 Billion budget hole next year) I predicted a worsening financial outlook and at least a $1 billion deficit this year. Unfortunately, that number was (appropriately enough) on the conservative side. News is breaking now that the projected deficit this year is $200 million more than my estimate. From the Detroit News: State budget deficit balloons to $1.2 billion.

Legislative leaders and administration officials were informed Tuesday night by Budget Director Bob Emerson that the shortfall in revenue for this budget year, estimated at $785 million only a couple of weeks ago, has climbed more than 50 percent, sources said.
The estimates were adjusted based on dismal April revenues. The national recession and the collapsing auto industry continue to take a heavy toll on state tax receipts.

Gov. Jennifer Granholm will issue executive order cuts next Tuesday. It's not known how much of the widening deficit will be addressed with budget cuts and how much will be filled with federal stimulus money. Negotiations had been focusing on cuts in the $230 million-to-$270 million range.
Because there are only five months remaining in this fiscal year, the governor and Legislature don't have many options for balancing the books. The worsening revenue picture also will affect the 2009-10 budget, which projections had indicated was nearly $2 billion in the red.

This doesn't factor in, as best as I can tell, the impact of the coming job losses including the more than 160,000 from GM (not all in Michigan, mind you. <span style="font-style: italic;">THAT </span>would have been bad) and almost 1,000 at American Axle. Why are we perpetually in such an employment situation? L. Brooks Patterson visited NORC in February and part of what he talked about was why Michigan is perpetually in the hole. Here is his talk (starts at the 2:00 mark regarding Oakland County's AAA bond rating and then extends it to the state level):

Let's just take a walk down memory lane and check out Granholm's budget numbers. Here are the budget numbers for each year of the Granholm administration via RightMichigan:

2003 Total Budget: $38,546,223,200
2004 Total Budget: $39,236,530,900
2005 Total Budget: $40,224,217,400
2006 Total Budget: $41,672,547,100
2007 Total Budget: $42,791,804,000
2008 Total Budget: $43,827,383,200
2009 Total Budget: $44,200,000,000 (proposed)

Jobs have been disappearing every single year, because of these increasing budgets while Michigan has been in a recession every one of those years, thereby necessitating tax increases. Here are the employment numbers during the Granholm/Cherry administration (actual job numbers are even more dismal):

2003: -63,800

-3,100

-28,100

-79,500

-67,300

-81,000 (not yet official)

-108,000 (projected) -300,000 (unofficial Granholm projection)

-24,000 (projected)

This morning on the Frank Beckmann show, Frank let out some information from someone close to Granholm indicating that the job projection for this year is going to be 300,000 jobs - lost. Gone. Disappeared into the wind, from which a turbine is supposed to drive a diverse economy. Maybe the governor will stop it with the tax increases since they obviously have worsened, not helped, the state economy and go the other way. I'm not holding my breath just yet. Incidentally, the Governor is supposedly working on the budget right now as I write this, looking to make a $200 million 'cut' to fill a projected $1.2 billion hole. Looks like we're heading for a new holiday similar to Festivus. But this one is called "Stimulus.' As in "stimulus for the rest of us." As in, backfill that budget hole! So next week when she makes public her executive order, listen for that repetitive beeping sound as the stimulus truck backs up towards the budget hole. From the AP today via MLive:

Michigan Gov. Jennifer Granholm said Tuesday that she plans to issue an executive order next week laying out cuts to resolve a multimillion dollar budget shortfall.
The Democratic governor sent a letter Tuesday evening to the chairmen of the House and Senate Appropriations committees saying her executive order will be presented to a joint meeting of their committees at 11 a.m. May 5.
But Granholm has said budget cuts will be needed even with the recovery act cash. Leaders of the Republican-controlled Senate and Democratic-controlled House have been meeting with administration officials on drawing up a list of what's expected to be more than $200 million in cuts and adjustments.

Yup - the kick the can strategy. So next year, more stimulus backfill. After that, Granholm is gone and the next administration will be immediately strapped with the mother of all systemic budget deficits. That you sir, may I have another?!?!

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