Gov., Michiganders discuss budget crisis

In the fourth of six broadcasted budget
“conversations,” Granholm addressed a studio audience
at WDIV-TV to explain and reflect on the state’s current
financial dilemma.

While Granholm presented diagrams and figures to shed light on
the scope of the deficit, members of the audience posed questions
as to how to alleviate it. Their concerns ranged from preserving
higher education programs to injecting money into the state economy
by repealing income-tax cuts.

“We’re in a situation now where cuts have already
been made,” Granholm said. “We’re really trying
to decide if we’re going to pay for our mother’s
prescription drugs or pay for our daughter’s university
education.”

Higher education could receive one of the largest funding cuts
of any program in the state, at $114 million.

Because of decreased state revenues during a national and
statewide economic recession, the pending cuts will be the largest
in Michigan’s history, Granholm said.

“The revenues to the state have dropped by 20 percent
since the year 2000,” she said. “We presented a budget
in July that was balanced when it was adopted by the Legislature
— but the economy still continued to plummet.”

Granholm added that during the last fiscal year, state
economists wagered the feasibility of the budget on a turnaround in
the economy. When that about-face failed to occur, the state found
itself more than $570 million short in its general fund and $350
million in its school aid fund. School aid funds K-12 education.
The general fund contains all other expenditures, such as higher
education and healthcare.

Although fee increases for certain state licenses have helped to
mitigate the deficit, Granholm said funding cuts to state programs
are inevitable. Many programs that saw reductions in last
year’s round of budget decreases — such as higher
education — will likely experience more cuts, she said.

“Today there’s no rainy-day fund — we are left
with reducing spending to meet the revenues that we take in,”
she said, adding that she wants to consider the sentiments of
residents before slashing programs. “I could be behind my
desk in Lansing behind closed doors making these decisions —
but how much better and rich has the discussion gotten having the
opinion of people who are stakeholders,” she said.

Before broadcasting the conference, audience members completed a
survey asking them to recommend programs that the government could
cut.

Audience members voted on social services such as health care
along with after-school programs and “revenue sharing”
operations with municipal governments.

Granholm and audience members wavered in their decisions to cut
or save state education programs. Although adult and higher
education services are still coping with cuts made during the last
fiscal year, Granholm said they would likely be cut further.

Referring to higher education — which consumes a quarter
of the budget and took a 10 percent reduction last year —
Granholm said, “I think you’ll see a cut, but I
don’t know if it will be as big as 10 percent.”

Twenty-one percent of the studio audience voted to make some
cuts to higher education programs, all of which would affect the
University’s budget. But according to Granholm’s
figures, scholarships to students attending private colleges and
universities could receive reductions along with public institutes
of higher education.

But Patrick Ballew, a junior at Wayne State University, said he
opposed all funding reductions to public universities, adding that
such rollbacks may increase tuition.

“It’s a commuter school and most of the students are
hard-working kids trying to pay their way through college,”
Ballew said.

Granholm said she believed the public wanted to preserve funding
for the state’s “safety nets” — programs
such as Medicaid and state police agencies. Voters proved more
receptive to cutting programs that do “not affect the
immediate well being of citizens of Michigan,” one resident
stated.

For example, 72 percent of audience members opted to release
certain parole-eligible penitentiary prisoners 30 days before their
sentences run out, while no residents voted to decrease
prescription drug coverage for senior citizens and few voted to
eliminate state inspections of day care centers.

“You can see people want to see the safety nets
protected,” Granholm said.

Other cuts that some audience members said they supported
included trimming scholarships granted to high scorers on the
Michigan Educational Assessment Program exam. Jennifer Billand, a
teacher, said she felt she did not need the test to guide her
through her lesson plans.

“I feel, as a highly qualified teacher, that I’m
able to prepare the kids for the MEAP no mater if it stays or if it
goes,” she said.

Cutting MEAP “would save about $5 million,” Granholm
said. “On the other hand, the (federal) No Child Left Behind
Act mandates that the state have its own standardized
test.”

Even if Granholm and the state Legislature agree to enact all
cost-reduction measures, the state will have “just barely
what we need to get to $920 million.” To more quickly resolve
the deficit — which, she added, will not happen this year or
the next — Granholm asked audience members if they would
support a 1 percent pause or a freeze on current income-tax cuts.
Nearly all members said they favored a pause or a freeze. The
tax-cut rollback may persuade consumers to spend more of their
income, boosting state sales-tax revenues.

Since realizing the budget deficit, Granholm has already made
$14 million in administrative cuts around state offices. The first
set of program cutbacks will take place within the next couple of
weeks, she said.