Michigan Faces Larger-Than-Expected Deficit

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LANSING -- Michigan's lawmakers seem to be running out of options.

A new report out from the nonpartisan Senate Fiscal Agency shows an estimated $1.85 billion deficit for the 2011-2012 fiscal year -- leaving some wondering, How soon until we raise taxes?

"The revenues aren't growing fast enough to keep up with the spending demands in the budget," says Craig Thiel, analyst with the Citizens Research Council of Michigan.

In fact, Michiganians are paying less in state taxes then a decade ago, and the SFA notes in its report that, "absent significant tax increases, a very significant imbalance will exist."

"It's going to come down to some very difficult decisions," says state Rep. Barb Byrum, D-Onondaga. "There are going to be some tough votes, but we are at a crossroads."

Governor-elect Rick Snyder, for his part, has yet to make a no-tax pledge, though members of his party say they're preparing to dig in their heels.

"Every possible avenue must be taken to make cuts and balance the budget without raising taxes," says state Rep. Rick Jones, R-Grand Ledge.

And yet, there is, even among some Republicans, a willingness to come to the table on some tax increases, namely expanding the state's limited sales tax.

"That would be one avenue that a lot of people would be supporting," says state Rep. Paul Opsommer, R-DeWitt. "You could look at fees for some of the departments. Again, I think that's the last item on the table."

The other option is cuts, and most lawmakers News 10 spoke to Wednesday say there's no doubt there will be reductions.

But they also note that $1.8 billion would be a massive reduction, especially for a state that has already lost 11,000 state workers in the past 10 years and cut funding for education, corrections and state revenue-sharing.

In addition to expanding the sales tax to services, some lawmakers are considering a move to close tax loopholes in the current system.

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