LANSING (AP) -- Michigan faces a budget deficit of at least $300 million next year and its economy will be weaker than expected, more bad news in a state that had to raise taxes last year to balance the books.
Lawmakers were briefed on the bleak financial picture Wednesday. Reasons for the projected budget shortfall include a sluggish economy, struggling housing market, the federal economic stimulus plan and newly enacted state tax subsidies luring Hollywood to make movies in Michigan, said Gary Olson, director of the nonpartisan Senate Fiscal Agency.
"There's really not much good news in the forecast," Olson told members of the Senate Appropriations Committee.
Compared with forecasts made in January, the U.S. and Michigan economies will be weaker than expected both this year and next. Inflation is expected to be higher, income growth slower and employment lower than anticipated. State tax revenues will fall $550 million short of projections for the budget that starts Oct. 1.
One bright spot is that it appears there is enough money so legislators and Gov. Jennifer Granholm can avoid having to make mid-year spending cuts to K-12 public schools and other government services in the existing budget running through Sept. 30.
"We're actually in decent shape considering where we've been in the last few years," said Sen. Michael Switalski of Roseville, the top-ranking Democrat on the Appropriations Committee.
The House and Senate fiscal agencies and Gov. Jennifer Granholm's administration will meet Friday to revise how much revenue state government can expect to collect this budget year and next.
The House Fiscal Agency was more optimistic than the Senate in its forecast released earlier in the week, estimating the state treasury next year will take in $424 million less than expected.
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