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State capitol building (Associated Press/Photo by Al Goldis)

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Government | Despite facing a $2.8 billion gap, Michigan state government continues to operate with an interim budget

LANSING, Mich.-After a two-hour shutdown this morning-from midnight to 2 a.m.-Michigan Gov. Jennifer Granholm signed a continuation budget allowing state government to stay open for business until a deal to close a $2.8 billion budget gap can be completed.

In 2007, when the state legislature faced a similar deficit, lawmakers closed the gap by increasing taxes by $1.4 billion-a move called "job-killing" by the free market Mackinac Center. This year, Democratic House Speaker Andy Dillon and Republican Senate Majority Leader Mike Bishop are trying to balance the budget without raising taxes, working instead on a package that would combine cuts of $1.2 billion with more than $1.5 billion in federal stimulus funds.

Experts at the Mackinac Center point out that "despite draconian 'cuts,' somehow the bottom line is higher than the previous year." That's true, for instance, of the Department of Human Services budget. It appropriates $5.9 billion in gross spending, compared to $4.6 billion enrolled in 2008, with nearly $5 billion of that coming from the federal government.

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Representatives from the non-partisan Citizen's Research Council of Michigan worry that federal stimulus funds "create a real possibility of aggravating the ongoing structural deficit by permitting policy makers to postpone actions to bring long-term revenues and expenditures into balance." Over the past six years, state spending went from $38.5 billion in 2003 to more than $44 billion in 2009, even though Michigan was mired in recession during that period.

Although Gov. Granholm notified some state workers that they might be furloughed had the shutdown continued, state residents weren't likely to see much immediate effect, unless they were campers who had to leave state parks or convenience stores operators who wouldn't be able to sell lottery tickets.

Susan Olasky
Susan Olasky

Susan pens book reviews and other articles for WORLD as a senior writer and has authored eight historical novels for children. Susan and her husband Marvin live in Asheville, N.C. Follow Susan on Twitter @susanolasky.

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