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Suprisingly Solvent- Michigans Budget Versus the Rest of the Country PDF Print E-mail
Written by Patrick Heffner   
Tuesday, 03 March 2009 21:56

As the FY2009 budget was unveiled, Michigan's residents reacted with dismay, noting yet another year where a large budget deficit will force cuts or tax increases for fiscal year 2009. Many residents assume Michigan's budget situation is unique, and worse off than most. However, in comparison to the rest of the country, Michigan has it easy. Overall, Michigan's projected budget deficit is tied for the 4th smallest in the nation. Has Michigan's contentious budget history, including the 2007 stalemate, helped Michigan become more fiscally sound compared to other states?

The projected FY2009 budget gap is 672 million dollars. This number is significant, and additional cuts or tax increases are needed to stabilize Michigan's economy. However, this budget deficit is only 2.9% of the size of the total projected budget, a comparatively small margin. While the situation seems significant, consider California. The nation's biggest state has an astounding projected deficit of 35.9 billion dollars. That's 35.5% of the total projected 2009 budget. Various referendums have limited the options available to California lawmakers, forcing a government shutdown while the governator and others worked to build the necessary ¾ majority vote.

All together, the 50 states together will have a projected budget shortfall of one trillion dollars. Since most states have constitutions that require a balanced state budget to be passed, many are considering drastic program cuts and large tax and fee hikes to pay for the government. Why have so many states let their budgets get so bad? One possibility is thought provoking- that the 2007 budget crisis actually helped Michigan during the current economic climate.

The 2007 budget battle was an embarrassing for many Michigan citizens. Like California this year, essential state services were suspended as lawmakers went overtime clinging to core philosophies that were at odds. However, in the end lawmakers made significant concessions to balance the budget. Republicans retreated from their pledge to not raise taxes under any circumstances, and Democrats agreed to deeper cuts in state programs than originally intended. As surprising as it may seem, these divisive battles may have saved the state further pain later down the line.

Links:

http://www.cbpp.org/9-8-08sfp.htm

 

 

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