News Ten is reporting exclusively Tuesday night that the governor and legislature are facing a huge new budget deficit going well beyond where they thought it would be.
Instead of a manageable $150 million deficit forecast a month ago, key legislative leaders and the governor are being told the number approaches $800 million. State incoming revenues are off $550 million in the state's budget and another $200 million short in the school aid fund. That is on top of a $120 million shortfall in the state's Medicaid fund.
The culprit is declining state tax collections. In September the state withholding income tax coffers were off eight-percent while the sales and use tax collections were down two-percent each.
"These are bad numbers," observes the chair of the senate budget panel. Senator Shirley Johnson warns another round of budget cuts will be painful and could every state service with exception of the $6,700 that goes for every school kid in the state.
David Hollister, the point person on the economy for the Granholm administration, warns not even the $3,000 bonus for UAW workers will help since Hollister believes they will sit on the money because of the uncertainty in the state's sluggish economy.
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