Reacting to the worstening budget shortfall projections for Michigan's fiscal year, now standing at 1.3 billion, Governor Granholm issued an executive order forcing 38,000 state employees to take six days of unpaid furlough leave in the upcoming year, and slashing over 41 million dollars in revenue sharing to local governments across the state. This order is probably the first in many tough economic measures the governor and legislature will have to enact to fill the 1.3 billion dollar hole they are faced with in the upcoming budget debates.
Central to the upcoming debates might be the use of federal stimulus money received by the state. Both parties are on the record as wanting to further long-term job creation with the funds, but with the larger than projected deficit, policymakers will be increasingly tempted to use the money to fill the short-term gap. The problem remains that there is only five months left in the fiscal year to get a finalized budget, making it difficult to find the cuts necessary to balance the budget without using the external funds. Granholms actions were necessary, but they are only the tip of the iceberg, and even if she can accomplish her goal of slashing over 300 million in general fund spending, that still leaves a deficit of 1 billion, assuming the economic situation does not get any worse. Since cuts in other areas might run up against entrenched interest groups and other supporters of those programs, it looks increasingly likely that the federal funds will be used to patch up the budget deficit the state is facing.