By By JOHN EBY / Dowagiac Daily News
CASSOPOLIS – House and Senate fiscal analysts reached consensus Thursday with the Granholm administration that budget revenues for the 2006-07 fiscal year that started Oct. 1 may fall $556 million short of last May's forecast.
Combined with projected increased costs for health care and prisons, the Michigan general fund could be looking at a combined deficit exceeding $800 million.
That gap will have to be closed by cutting school and government programs, increasing taxes and fees or some combination of the two.
Gov. Jennifer Granholm's budget-balancing plan is expected in early February.
Cass County's senator, Ron Jelinek, R-Three Oaks, who chairs the Senate Appropriations Committee, commented Thursday in response to the updated state revenue estimates and economic outlook, "As expected, the forecast for Michigan's economy and state budget is not what we'd like it to be. Our current revenues have fallen short of earlier estimates, meaning we are again faced with the tough and difficult task of balancing the budget with few resources. While no one likes to see cuts, it is inevitable that some will have to be made at all levels. It is our priority, however, to insure the continuation of essential services as well as ensuring quality educational opportunities for students."
"Gov. Granholm at least has a plan. So far I haven't heard one plan from the Legislature about how they're going to replace (Single Business Tax) revenue)," Commissioner Ed Goodman, D-Silver Creek Township, said at Thursday's Board of Commissioners meeting.
"Her proposal is one of those that's out there being looked at," said Chris Siebenmark, Jelinek's district aide. "There are aspects that some folks feel are fine. There are aspects that get people nervous, not the least of which was personal property tax. Schools were scared to death. I'm not going to sit here and tell you there hasn't been political gamesmanship on both sides, but it has to happen. We have to get it done, and education is going to be a huge part of that."
Siebenmark told Goodman that part of his statement (about jobs being lost overseas) "was true, but it's part of the mindset that probably needs to change. 'Michigan's a manufacturing state.' No, quite frankly, we're not. That's gone. Not entirely, but that's what needs to happen. The wringing of the hands needs to stop and we need to start doing (other) things. Agriculture and tourism are the number-two revenue streams after manufacturing. Agribusiness is huge around here … Michigan Biodiesel in Bangor. You've got the ethanol plant going to Watervliet. South Haven is looking at some kind of processing plant, but as well as we do with some of those things, we can't offset the hemorrhaging on the other side of the state."
"The state eliminated revenue sharing for counties nearly three years ago and caused us to replace that by issuing extra tax bills and shifting the collection of county taxes until the summertime," County Administrator Terry Proctor said. "One of the effects of that is on cash flow. The treasurer, deputy treasurer and CPA are working on this and will develop recommendations for the board. Imagine if you will, our fiscal year used to start in January. Then we collected half of our property tax, so we had plenty of cash for the following 12 months. Today, our fiscal year starts Oct. 1. Because of state action over three years, we will not be collecting any county taxes until July. The first nine months of our fiscal year we're going to be in a cash-poor position. To deal with that we have our treasurer, deputy treasurer and CPA working on cash-flow projections for the county for the next 12 months. Based on that, we'll come back to the Board of Commissioners with some recommendations."
Proctor said the staff is also looking at the history of the self-insurance fund where health insurance premiums came in from employees and employers into a fund from which Blue Cross is paid each week.
The goal is figuring out appropriate cash and fund balances to recommend to the county board as policy.