Don't let the blue skies fool you; it was a dark day at the Capitol Friday, as the state's financial bosses announced a $470 million deficit for the upcoming fiscal year.

"It's not a very good day, but the numbers are still manageable," says state treasurer Robert Kleine.

Manageable? Maybe.

But after years of devastating deficits, consultant Bill Rustem of Public Sector says news like this is a punch in the stomach for the state.

"We're past the fat, into the muscle and headed for the bone in terms of cuts that have to be made," Rustem says.

And he says deficits like these will continue to happen until major changes are made to Michigan's financial infrastructure. Rustem says we have not diversified our economy, not kept up with bringing new jobs to the state and keeping our young workforce here.

But how did we get to this particular point?

Everyone we speak to at the Capitol involved in the budget says they just didn't plan for the national economy to nose-dive like it did. But now, that misplanning has lead to a $470-million deficit."

That anemic economy, mixed with a horrible housing market and consumer uncertainty will now lead to another tough year.

"It won't be easy to find cuts when we've done it year after year after year after year," Rustem says.

Treasurer Kleine disagrees.

"I don't think we'll have any Draconian budget cuts."

Only time will tell as we start slicing to save money.