A lot has been made of Governor Granholm's budget proposal over the past month, with criticisms coming in from Republicans and Democrats within the legislature. The government, facing a 2.8 billion dollar budget deficit, is divided on how to make up the difference. With the October 1 fiscal-year deadline coming up, the legislature and governor are running out of time to patch the shortfall. Below is a breakdown of the core components of the governor's proposal..
- Use 973 million dollars of federal stimulus money: This proposal is controversial, because the money was designed to stimulate job growth, not patch short-term holes in state budgets. Additionally, some are suggesting the state hold on to stimulus money for the 2010-2011 budget, which is looking as bleak as this years version.
- Tax cuts: The plan proposes 685 million dollars in newly generated revenue. Among other things, the proposal increases taxes on cigarrettes, beer, and water. Additionally, the plan decreases the tax credits available to lower income citizens.
- Local governments: Subsidies to fire and police departments would lose 74 million dollars
- School Aid: 290 million dollars in cuts each year, which amounts to about 181 dollars per pupil in Michigan.
- Smaller cuts, including 20 million dollars from the 21st Century Jobs Fund, and 12 million from road improvements
Overall, there is little chance that the governor's budget proposal will be passed in total by the Democrat-controlled Michigan house. Additionally, the Senate bill contains over 1 billion dollars in spending cuts, significantly more than governor's proposal. Whichever version of the bill passes, it will be interesting to see if both sides liberal use of federal stimulus money for this year will come back to haunt Michigan during the 2010-2011 budget debate.