FeedsState revenue forecast causes budget concerns at all levels
In the light of a gloomy state economy, local officials and their lobbying firms said they hope state legislators don’t make a bad situation worse.
State economists and budget officials last week estimated the 2009 state budget could be as much as $400 million in the red, if revenue projections and expense estimates hold true. That would put in jeopardy funding increases proposed by Gov. Jennifer Granholm—and a proposed 4 percent increase in statutory state revenue sharing, according to Dan Gilmartin, executive director of the Michigan Municipal League (MML). He said he hoped legislators would not break their promise.
“Last year, the legislature said they had fixed the budget problem, but once again the state is facing deep red ink in next year’s budget,” said MML Executive Director Dan Gilmartin. “It’s time for state elected officials to solve the structural budget deficit, and it’s time they stop balancing the budget with cuts that harm public safety, drinking water, waste collection and other local services that are undeniably essential to everyday life.”
State officials have cut about $3 billion from the budget since 2002 in the form of reduced revenue sharing payments to communities. As a result, there are about 4,000 fewer police and firefighters in the state, road maintenance has taken a back seat and many municipalities are cutting all but basic services, Gilmartin said.
“Public safety and many other core government services are threatened with a decrease in revenue sharing to communities,” he said.
Local governments receive two types of revenue sharing from the state: Constitutional revenue sharing, which is required by the state constitution, and statutory revenue sharing, which is mandated by state statute. The 4-percent increase proposed by the governor for 2009 would only address statutory revenue sharing. Statutory revenue sharing calls for 21.3 percent of the first 4 percent of the state sales tax revenues to be distributed to local governments.
Gilmartin said the cuts have impacted the quality of life in Michigan, making it harder to attract new businesses—and keep young, educated people in the employment pool.
“Young people are leaving Michigan in droves. We cannot offer the amenities and services necessary to keep them in our state with continued cuts to revenue sharing,” he said.
Other state officials are asking Granholm to start over and present a new budget. State Rep. Phil LaJoy (R-Canton), said he hoped it would not include a tax increase of any kind—for residents or business owners.
“As Michigan families are struggling to make ends meet, their government should be held to the same standard of spending within their means,” said he. “We heard an old tale in the revenue estimating conference (last week) – without drastic government reform, the state will have to raise taxes.”
“I have spent my time in Lansing fighting for a long list of reforms, and am calling on the governor to review my proposals to avoid another tax increase,” LaJoy added.
The news came at a time when many municipalities are pondering their own budgets and when local officials fear the impact of the soft housing market has yet to be felt.
“We’re going to have to keep spending conservatively and looking for ways to cut,” said Wayne City Councilman Mathew Mulholland. His council approved a budget Tuesday night that called for two fewer employees and a dip into an already low undesignated fund balance.
“I think it’s going to be much more challenging next year.”
