We’re still feeling it – state politicians and the governor had a long battle, but as it’s said – they won the battle, but not the war. The battle of the budget slid over the time continuum right into 2008.

The Deficit – while it may not be as great as in 2 ot 7, we may find history repeating itself as politicians tug this way and that to deal with Michigan’s expected shortfall.

Economic gurus from different camps are making statements about the future - some are negative predicting a deficit as great as $500 million by this time next year. Others are using a lighter color in painting Michigan’s future. What they see is a deficit of the general fund as low as $34 million by 2009. They even see a potential $300 million surplus in the School Aid Fund that pays for public schools.

While we like the rosier picture, the Citizens Research Council of Michigan isn’t as confident. Their belief is that revenues won’t improve, and since the governor has pledged that she won’t raise taxes on several occasions, they see the focus turning to spending cuts & long term reforms such as reducing the number of criminals sent to prisons – which is costly.

Hope is on the horizon as the holiday shopping season has just ended, and the numbers are still coming in. It could mean more sales tax revenue for the state which would be good news.

According to MSU’s Professor Charles Ballard, there’s a structural problem because the state costs continue to rise – particularly for health care and public employees. The fixes in place mainly apply to consumer goods which are static, and not to services which are increasing.

A new bi-partisan panel is already at work trying to find more efficient ways to streamline state government and avoid the chaos we experienced in the development of last year's budget
and hopefully eliminate the huge annual deficits Michigan has seen in recent years.