LANSING (AP) Michigan is heading into the next budget cycle with less flamboyance than in recent years.

Gone is the extra money that has made it easy in the past to hand out tax cuts, build new prisons and boost the number of state troopers.

Instead of debates over how the flood of ever-higher revenue will be spent, lawmakers and state fiscal experts will have to cope with a budget expected to increase only 0.5 percent, far less than the rate of inflation.

“It”s clear we”re going to be asking departments to begin to implement some belt-tightening measures,” said state Budget Director Mary Lannoye, who will deliver Gov. John Engler”s proposed budget at 11 a.m. Thursday to a joint session of the House and Senate Appropriations committees at the Capitol.

Lannoye said the prudent fiscal policies of the past have left the state in good shape even though revenue growth is expected to slow for the budget year, which runs from Oct. 1, 2001 to Sept. 30, 2002.

A surplus in the state”s fund for K-12 education means the state will be able to give each school $6,500 per student and stick with the education budget already in place through the 2002-2003 school year.

And tax cuts already enacted won”t be touched. The Single Business Tax will drop from 2.1 to 2.0 percent next Jan. 1, and the state income tax will drop from 4.2 to 4.1 percent.

Those are the bright spots. But money for new initiatives has disappeared.

During his annual State of the State address last Wednesday, Gov. John Engler presented no new proposals that would cost the state money other than a tax exemption for new high-tech businesses that, as of yet, don”t exist.

Lannoye already has said the estimated $50 million increase expected in new revenue will fall far short of the $300 million needed to keep up with inflation in the new $9.8 billion general fund budget. The state”s overall budget, including federal dollars and the $10 billion School Aid fund, is expected to stay close to this year”s $36.5 billion.

“We aren”t going to be able to afford any new programs,” warns longtime Senate Appropriations Committee Chairman Harry Gast (R-St. Joseph). “We”ll have to be restrained and constrained.”

Engler”s proposed budgets have grown 3 percent overall in the past decade and went up 4 percent in the current budget year. This year”s proposal is expected to grow less than 1 percent.

Even that could prove optimistic. Senior economist Robert Kleine of Public Sector Consultants, a Lansing think tank, expects slow economic growth throughout 2001 before things pick up early in 2002.

That could mean more economic pain, especially for Michigan, where December revenues from the state”s 12 major taxes dropped 9.1 percent from a year ago, according to the Senate Fiscal Agency.

The national unemployment rate went up to 4.2 percent in January and many economists now say the manufacturing sector is in a recession. Factory orders for computers, office equipment, communications products and primary metals, including steel, fell sharply in December.

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