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State Budget News

A compromise in the budget standoff between Governor Granholm and House Republicans was reached after long negotiations. The deal calls for a delay in the reduction of the State income tax which will now go into effect in July. In addition, the compromise calls for further cuts to the Single Business Tax, as well as an additional cut of $12 million in State spending. The money for the additional $12 million in spending cuts will come from administrative savings as well as transferring unused funds from the prison vocational education program to the general fund.

These cuts come in addition to the previously announced cuts in the Executive Order which are as followed:

General Fund Reductions:

Agriculture	$1,119,800
Attorney General	$750,000
Capital Outlay	$29,000,000
Career Development	$371,726
Civil Rights	$463,042
Civil Service	$220,063
Community Colleges	$12,434,500
Community Health	$5,090,400
Consumer & Industry Services	$704,382
Corrections	$6,044,819
Education	$332,800
Environmental Quality	$3,135,525
Family Independence Agency	$32,260,400
Higher Education	$73,172,000
History, Arts and Libraries	$583,100
Management and Budget	$500,000
Michigan Strategic Fund	$2,175,791
Military and Veterans Affairs	$970,000
Natural Resources	$712,000
State	$288,249
State Police	$12,876,271
Treasury	$17,732,714
-------------------------------------------------------------
Total General Fund Reductions	$200,937,582

Special Purpose Revenue Reductions:

Career Development	$6,000,000
Education	$6,100,000
Family Independence Agency	$773,500
Higher Education	$63,000,000
Treasury	$72,025,800
--------------------------------------------------------
Total Special Purpose Reductions	$147,899,300
Total Reductions	$379,829,472

To view specific program cuts, the entire Executive Order can be viewed online here:
http://www.mi.gov/documents/EO_2003_2x_80281_7.pdf

While this puts an end to the task of balancing this year’s budget, more difficult times may still lie ahead. Michigan is facing a shortfall of $500 million to $2 billion for FY 2004-2005, and Legislators are promising that more drastic cuts to state services will be necessary.