What the Governor’s Talking about
Today
Wednesday, August 18,
2010
Governor’s Budget
Recommendations Solve Deficit, Protect Critical Priorities
The governor today detailed her latest recommendations
to address the budget shortfalls for the current year and fiscal year 2011
budgets. The governor’s proposal provides fiscal stability while
continuing to protect the state’s critical priorities — including job creation
efforts, schools, and health care — from additional devastating
cuts.
For fiscal year 2010, the governor is recommending
shifting funding for the state’s 28 community colleges to the School Aid Fund
where the surplus funds can cover the $208.4 million appropriation. The
state also will receive an additional $94 million in federal funding due to
changes in the way the federal government funds prescription drug coverage for
seniors eligible for both Medicare and Medicaid. Together, these changes
address the $302.7 million shortfall in the current year.
For fiscal year 2011, the governor is recommending a
combination of additional spending cuts and one-time, non-tax revenue to address
the existing shortfall resulting from increased spending pressures, legislative
refusal to consider corrections reform and a physician-provider assessment, and
lower-than-expected federal funding through the Federal Medical Assistance
Percentage (FMAP).
Among the cuts recommended are a 3 percent
administrative reduction for all state agencies, $50 million cuts in the
Departments of Community Health, Human Services and Corrections, and
restructuring of the state’s long-term debt obligations, reducing spending by
$77.3 million. Combined with the cuts proposed in the executive budget
recommendation in February, the governor has recommended more than $602 million
in general fund spending reductions for the fiscal
year.
The governor’s budget recommendations also include three
one-time, non-tax revenue proposals to provide needed revenue in the wake of
lower-than-expected federal funding. The proposals — a tax amnesty period
for Michigan taxpayers, reform of the state’s abandoned property laws, and
changes to the liquor regulation and distribution system — will provide $304.8
million for the fiscal year 2011 budget.
To further facilitate cost-cutting and service-sharing
among the state’s public school districts, the governor also is recommending $50
million of School Aid Fund revenue be used to incent additional service-sharing
through a grant competition to be administered by the state Department of
Education (MDE). School districts would be able to use the one-time grant
funds to reduce long-term costs by combining or consolidating services. In
fiscal year 2010, school districts were offered additional budget flexibility if
they entered into a memorandum of understanding with MDE to develop a services
consolidation plan. Two hundred and twenty-four districts across the state
are participating in the program.
Finally, the governor’s proposal recommends a $100
million deposit into the state’s Budget Stabilization Fund to provide greater
stability for future budgets.
Key
messages:
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