Michigan

1
Michigans Budget Crisis
Governor Jennifer M. Granholm 138th Annual Winter
Convention February 2, 2007
2
The 07/08 Budget Picture
MI Faces Nearly 3B Deficit
FY 2007 862 M FY 20082 B
3
Why the Shortfalls?

• Challenged economy less revenue
• Loss of SBT revenue
• Growth in Medicaid caseloads
• Growth in Human Service caseloads
• Growth in prison population

4
FY 2007 Funding for State Govt
42 Billion Total Budget State Controls 9
Billion
5
FY 2007 General Fund Only
9.2 Billion Total (3 Billion Shortfall)
6
Potential Cuts to Solve the Shortfall
Emergency Financial Advisory Panel
Eliminate Health Care for Seniors, and
Children AND Release All State Prisoners
Cut 2,000 Of Education Funding for Every Student
at Every School
Eliminate All Funding for Community Colleges and
Universities AND All Mental Health Services
OR
OR
7
Doing More With Less
Cuts Every Year

• Resolved 4 billion in budget shortfalls
• Nearly 3 billion in cuts
• Fewer state employees today than at any time
  since 1973

8
State Government is Smaller
9
Domestic Auto Market Share Below 50
Source Center for Automotive Research.
10
Auto Industry Restructuring

• GM buyout offer accepted by 13,500 Michigan
  employees 4 Michigan facility closings announced
  so far.
• Ford buyout offers have been expected by 38,000
  nationally wants to cut 14,000 salaried jobs
  (4000 have taken buyout)
• 18,500 Delphi workers have taken buyout 5000
  returning to GM 4000 legacy workers remain.

11
Revenue at Extreme Historic Lows
12
General Fund Revenue Down From 1996
Note Nominal Net Revenue. Totals exclude
transfers and savings from adjusting statutory
revenue sharing payments to local governments.
2008 drops due to SBT repeal.
13
Revenue Down 30 Percent Since 1999
Totals exclude transfers and are adjusted to 2006
dollars using U.S. CPI-U.