Michigan braces for $300M budget cut

Granholm expected to present executive order that may trim Medicaid, state troopers

Charlie Cain / Detroit News Lansing Bureau

Lansing -- Cuts to revenue sharing to local governments and possible layoffs of State Police troopers are likely to be part of more than $300 million in executive cuts Gov. Jennifer Granholm is expected to announce Tuesday.

Prison employees could also face job reductions, and health care officials are bracing for cuts in the Medicaid reimbursements they receive for treating the poor. A record 1.7 million Michigan residents are covered by Medicaid, and any cuts will result in less treatment available to them, advocates said.

The fiscal year budget shortfall has swelled to $1.3 billion, nearly double what it was only weeks ago, as tax collections tumble and unemployment claims grow.

Granholm is finalizing the executive order she will present to the House and Senate Appropriations committees, which have to approve any cuts.

"It will be a tough executive order -- and that's just a down payment on the budget that we have to submit that takes effect Oct. 1," Granholm told reporters Friday in Auburn Hills, declining to provide any details. "These are difficult times."

Part of the budget shortfall will be filled with federal stimulus money, blunting what otherwise would be much deeper cuts. Michigan has about $1.1 billion it can spend as it chooses, and a good chunk of it will be used to backfill the budget shortfall. But the state likely will need some of the money to close an expected $1.6 billion deficit in the 2009-10 state budget year that begins Oct. 1.

Local revenue sharing -- which pays for everything from police and fire services to snow plowing and upkeep of parks -- has been a frequent target of state budget cuts. It's been cut by $3 billion over the past eight years.

"We've heard that we may be on the chopping block again, and that would be unfortunate," said Summer Minnick, director of state affairs for the Michigan Municipal League, which represents cities and villages.

She said it would be a double-whammy, since the cuts would come at the same time many communities are seeing a drop in property tax collections as home values plummet.

The State Police is bracing for cuts, too -- reportedly as many as 80 troopers could lose jobs.

Two years ago, the state was set to lay off 29 troopers, but at the last minute the Michigan State Police Troopers Association intervened and donated $400,000 to the state to keep the troopers on the streets.

Michael Moorman, president of the association, said he has not received any word about layoffs.

"According to our collective bargaining agreement, we must receive 30 days' notice prior to the implementation of layoffs, and I haven't been contacted," he said.

Layoffs would be based on seniority, potentially decimating the 83-member trooper class that graduated in December.

Shanon Akans, spokeswoman for the State Police, said the department is aware of layoff talk.

"As far as we're concerned, there is nothing final until we see the governor's executive order," Akans said. "We'll wait for the official announcement before we take any action on our end, should it turn out to be true."

Corrections officers are also fearful that the latest rounds of cuts will thin their ranks, but no official word has gone out.

"We're holding our breath," said Mel Grieshaber, executive director of the Michigan Corrections Organization.

Using stimulus money to close the budget deficit is troublesome to House Minority Leader Kevin Elsenheimer, R-Kewadin.

"I'm disappointed we're going to be using stimulus dollars to cover some of this problem. The money should have been used to pay for long-term infrastructure improvements and jobs creation," he said.

Unlike the situation in 2007 -- when the governor and lawmakers boosted income and business taxes by $1.4 billion -- there is little appetite in Lansing today for tax increases.

The Associated Press contributed to this report.