State "Red Ink" Worsens

By: Associated Press
By: Associated Press

Economists delivered the expected bad news about Michigan's economy and state government finances Friday, and the outlook could get worse next year.
Legislative fiscal analysts and state Treasurer Bob Kleine agreed to lower their tax revenue estimates by $195 million, which means the state is facing a deficit of around $800 million in this year's budget when higher-than-expected spending on prisons, welfare and health care for the poor is factored in.
Because the state's fund for K-12 public schools is short $200 million, districts could see cuts of $116 per student June 1 unless Gov. Jennifer Granholm and lawmakers find a way to avoid them. Democrats say a tax increase is needed, while Republicans say this year's budget can be balanced without a tax hike.
Joan Crary with the University of Michigan estimated that domestic automakers' share of vehicles sold in the U.S. could drop below 50 percent for the first time in 2008.
"Hardly anything good for Michigan's economy can come from this," she said during a tax revenue-estimating meeting at the Capitol held by the House and Senate fiscal agencies and the Granholm administration.
Crary also said the state's average unemployment rate will be 7.5 percent in 2008, above an estimated 6.9 percent rate this year. Job losses are expected to continue through next year, but the rate of job losses should be lower than in recent years.
State economists gathered Friday morning to forecast tax revenues and gauge the Michigan economy. It had been expected that the deficit in the fiscal year that ends Sept. 30 would surpass $700 million.
Based on Granholm's proposed budget for next year, a shortfall of tax revenue could create another deficit of more than $1 billion.

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  • by Matt Location: Parma on May 19, 2007 at 12:13 PM
    This is getting just crazy, I thought Granholm promised to get us out of the red. She also promised to not cut education. She is not able to do the job elected to. She needs to be fired. Along with any senator, representitive that cannot get the situation under rap. It was quite obvious that her cutting was hurting the state when she first started it. We could see the state was bringing in less
  • by Jan Location: Albion on May 19, 2007 at 06:18 AM
    Let's see how serious the governor is about getting Michigan back on track. Let's see her not take a salary fora while and maybe even the legislators could show us how serious they are by doing the same or cutting it in half and NO out of country trips! for either the legislature or the governor.
  • by jody Location: truitt on May 18, 2007 at 08:25 PM
    id really like to see the goverment in michigan support themselves and do their jobs without having the michigan taxpayer pay for their cars ,gas children in the best private schools all their utilite bills and buy their own homes and instead of cutting our education,cut their own pay .they give themselves pay raises while the majority of the michigan residents are barely able to feed ,clothe and warm their families,they say you should lead by example,i guess some leaders are exempt from this,i see in the near future a move out of this state, as i hear so many people say the same thing,we can only allow this state and its leaders to take away so much then we must do what we have to for are families,there are no jobs for our children ,therefore there is no future for our children in michigan,and i was deeply disturbed by jennifer granholms comment on the cuts in medicaid,that she knows people will die,and i think that speaks for its self when your considering on what cuts to make and what not to,i care as a michigan resident {though temporary}that another michigan resident has to give their life so jenny can redecorate the governers house once again
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