Published: August 15, 2009 07:50 pm      

Op-Ed: Scary times as deficit looms

LANSING -- For those who understand state government, these are terrifying times in Michigan.

What nobody yet knows is this: Next year, how will the state pay its bills? Run the prisons? Fund education? Provide foster care?

The money to do all those things -- at least the way the state has always done them -- just isn't going to be there.

What may be puzzling is why the state's leaders don't appear more concerned. If a balanced budget isn't passed by Sept. 30, state government could, literally, shut down.

Democrats and Republicans have been meeting behind closed doors trying to work out a deal, but balancing this year's budget is likely to be harder than ever before.

Here's why: Last week, the latest projection put the likely budget deficit for the fiscal year starting Oct. 1 at $2.8 billion. Then, Tuesday, more bad news: Michigan tax revenues had fallen a further $50 million in July from already downsized projections.

The biggest question facing Michigan: How will the state pay its bills? For perspective, about $1.8 billion of the shortfall is in the state's general fund, which was supposed to have about $7 billion.

That's the money used for prisons, higher education and to finance a host of programs such as Medicaid. (The rest of the deficit, about $1 billion, represents about a tenth of the money that was supposed to be in the school aid fund, which provides the lion's share of elementary and high school education funding in the state.)

The reasons Michigan's budget deficit is ballooning out of sight are simple: the economy and the massive downsizing of the auto industry, which has pushed unemployment to 15 percent.

Figuring out what to do about it is not so simple. The rainy day fund is long since used up. Early on, lawmakers figured much of the deficit could be covered by the remaining federal stimulus "Obama bucks." But then the deficit went through the ceiling.

According to the Senate Fiscal Agency, there is only $973 million that can be used for budget-balancing next year, which means perhaps $2 billion in cuts, revenue increases or most likely both. And that may not be all the money needed; the deficit figure has continued to rise, month after month.

When it comes to sacrifices, everybody and every interest group agrees that everyone should sacrifice -- except themselves.

We do know that lawmakers have discussed raising the tax on beer, which hasn't been raised since 1966, and on cigarettes, which are, as someone once said, the only product that when used as directed, is bound to eventually kill you.

But when word of those discussions leaked out this week, they were promptly denounced by lobbyists for those groups. Yet even if the state did double the beer tax and slap a quarter on each pack of cigarettes it would bring in less than $100 million a year -- less than one-twentieth of what the state needs to close the budget gap.

Speaker of the House Andy Dillon (D-Redford) has presented the only major, long-term budget savings idea -- a proposal to pool all state employees into one health care plan.

But though he said he thought this should be done immediately, he hasn't offered a specific bill. Nor has he done much to defend his proposal, which has come under attack from various unions.

Some are worried that those negotiating the deal itself have too little at stake. Thanks to term limits. Dillon, Gov. Jennifer Granholm and Senate Majority Leader Mike Bishop (R-Rochester.) will all be out of office at the end of 2010.

Then there are some legislators who seem to have other priorities. With the worst budget crisis in state history at hand, nine lawmakers left this week to go on a junket to Israel.

The trip was at least partly paid for by the United Jewish Foundation of Metropolitan Detroit. The trip, according to the Michigan Information and Research Service, was designed to "provide the Israeli government and business officials with information regarding the State of Michigan and its assets." Based on the latest news, that must have been a long series of depressing conversations indeed.

Back to kindergarten?

Meanwhile, back in Lansing, Majority Leader Bishop had to referee a childish dispute between two senators, Roger Kahn (R-Saginaw Township) and Irma Clark-Coleman (D-Detroit.) She said he yelled at her and "made her feel threatened" during an argument over, of all things, mental health funding. He said, did not. She said, did too. Essentially, Bishop said there was insufficient evidence to discipline anybody. Clark-Coleman said she would "take it to the next level."

These are people, incidentally, who are supposed to be adults.