Michigans Future

1
Michigans Future

• A Conversation with
• Governor Jennifer M. Granholm

2
Domestic Auto Market Share Falling

• 1986 1993 2007
• The Big 3 72.4 73.7 52.2
• Interntls 27.6 26.3 47.8

3
Michigan Manufacturing Employment
More than 1 in 4 Jobs Lost Since Mid 1999
Jul 1999 908,200
Jan 1992 775,900
Dec 2006 637,500
Source U.S. Department of Labor, Bureau of
Labor Statistics.
Source Economic and Revenue Forecasting
Division, Michigan Department of Treasury, 2/14/07
4
Inflation Adjusted FY 07 GF-GP Revenues Down 29
Percent Since FY 99
FY 1999 11.7 billion
FY 2007 8.2 billion
FY 2008 6.8 billion
Totals exclude transfers and are adjusted to 2007
dollars using U.S. CPI-U.
5
Decreased Taxes
6
Changes in How We Operate

• Resolved 4 billion in budget shortfalls
• Nearly 3 billion in cuts
• State Employees are doing more, more efficiently
  and serving more people than ever

7
Looking Back Reshaping the General Fund Budget

• Reductions (already made)
• Higher Education- 275M in 4 years (13)
• Human Services- 172M in 5 years (14)
• School Aid- 323M in 5 years (84)
• Revenue Sharing- 447M in 5 years (29)

8
Eliminating Waste Fraud Saves Millions

• Saved 524 million by renegotiating contracts,
  ending no-bid contracts
• Nationally-recognized protections against food
  stamp fraud saving millions
• Bulk purchasing of prescription drugs and other
  cost saving steps saved 400 million

9
Convergence of Fiscal Forces We Have a Train
Wreck

• Repeal of Single Business Tax
• Exploding health care costs
• Prison costs outpacing revenue growth
• Antiquated revenue structure
• Slow economic growth
• 3.4 Billion Shortfall FY2007-08

10
Spending Reqmnts IncreasingFaster Than Revenue
11
FY 2007 Funding for State Government
42 Billion Total Budget Governor, Legislature
Control 9 Billion
12
FY 2007 General Fund Only
3 Billion Shortfall Must Be Filled in
9.2 Billion Budget (86 of General Fund
spending in 4 areas)
13
3.4 Billion of Structural Deficits, And This
After

• Seven years of spending cuts
• FY2007 General Fund revenues lower than in FY1996
• Nearly 7 billion in one-time resources used
• Reserves exhausted
• Weakened connection between revenue structure and
  the economy
• Spending pressures growing faster than revenues

14
A Budget to Implement Our Economic Plan

• Budget is combination of cuts, reform and revenue
• Over 400 million in budget cuts, protecting our
  priorities
• Prison reforms to reduce prison population, cut
  costs
• Local government and schools sharing services
• Reforms to keep kids safe
• New revenue to set us on solid fiscal ground and
  invest in critical programs including education

15
With No Action By June 1

• Cut 125 per student across the state
• Cut Medicaid by 6
• Still will have hundreds of millions in GF
  shortfalls to deal with this year

16
With No Comprehensive Solution, Relying on Cuts
Alone Requires
Eliminate Health Care for Seniors, Children, and
Pregnant Women AND Release All State Prisoners
Cut 2,000 or nearly 30 of State Education
Funding for Every Student at Every School
Eliminate All Funding for Community Colleges and
Universities AND All Mental Health Services
OR
OR
17
Saving Everywhere We Can Thanks for the
Suggestions

• Telecom disconnections
• Email and server consolidations
• Eliminating Cell phones
• Turning down heat and AC
• Less lighting
• Common sense measures to save tax payer money
  Thanks for your help in finding these solutions.

18
Michigans Future

• A Conversation with
• Governor Jennifer M. Granholm