New Mich. governor will face $1-$1.5B deficit

AP News
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Posted: Oct 21, 2010 4:24 PM
New Mich. governor will face $1-$1.5B deficit

Michigan's next governor will have to present a fiscal 2011-12 budget within months of taking office Jan. 1. Here are some of the issues that person will have to tackle:

_The nonpartisan Senate Fiscal Agency estimates the state will have a $1 billion shortfall for the budget year that begins next Oct. 1; the nonpartisan Citizens Research Council puts the deficit at $1.5 billion.

_The gap will be caused by a number of factors, including the loss of federal stimulus dollars, higher personnel costs, tax exemptions for businesses such as the film industry, a scheduled drop in the state income tax rate and revenues diminished by the sluggish economy.

_State spending overall has risen just 3 percent in the past decade, while inflation has risen 33 percent. Many departments already have seen significant cuts.

_The state has around 8,000 fewer employees than a decade ago, but is spending 38 percent more on personnel costs, or nearly $4.8 billion _ about $86,100 for each worker's pay and benefits. A fight over compensation is likely.