Budget order: Troopers and revenue cut

LANSING, Mich. (AP) - A hundred state troopers will be laid off at the end of June, local governments will see revenue sharing slashed and less will be available for community health services and those treating Medicaid patients under the latest round of budget cuts.

Gov. Jennifer Granholm's executive order cuts $349 million from the current state budget. Of that, $304 million will be cut from the general fund, the state's main checkbook.

State budget director Bob Emerson presented the order Tuesday to a joint session of the House and Senate appropriations committees.

"I'm not here to tell you that there is any good news in this executive order," Emerson said. "This is a horrible thing that I present you today."

State universities and community colleges won't see cuts because decreasing the amount of money they get would cost the state about $1.6 billion in federal recovery money, Emerson said. The order doesn't further cut the corrections budget, since more prison closings and prison employee layoffs already are planned this fiscal year, which ends Sept. 30.

Legislative leaders and the Granholm administration have been scrambling to find a way to patch a budget shortfall that has grown to $1.3 billion in recent weeks. The appropriations committees must accept the executive order within 10 days for it to take effect.

The state will tap about $1 billion in federal stimulus money to fill the revenue gap. But that will leave it in an even more precarious situation heading into the budget year that starts Oct. 1 since it won't have any more stimulus money to draw on.

"So, we're going to be right back here at this again, year after year, until we put together the structural and fundamental changes of how we fund services to the state," said representative Dave Hildenbrand, R-Lowell. "I don't know whether it's a function of politics or term limits or what it is but I thin we need to get back to long term thinking in this state."

Still, Emerson said he didn't think the state had any choice. He said the state had no way to cut $1.3 billion from the state budget with only five months left in the budget year.

"Some would argue that we ought not to use the stimulus. But after meeting with members of the Legislature, I think this $304 million was as much as anyone could swallow" in general fund cuts, he said.

"Clearly there are cuts here that I took no pride in making, and you take no pride in voting for," Emerson said. "The cuts here are devastating.

"While these are harmful cuts, even tougher decisions are being made every day by your constituents."

The executive order also includes furlough days for state employees, but leaves it up to the departments on how to reach the savings needed.

The doctors, hospitals, nursing homes and other health care services that treat Medicaid patients will see a 4 percent cut, and representatives of those industries have warned that will force cuts in services and further destabilize the state's health care industry.

The state would save $16 million from the cuts, but it also would lose tens of millions in federal matching dollars that go toward reimbursing those serving Medicaid patients.

The plan also includes $40 million in cuts to local governments, much of which is used to pay for police and fire protection. And it cuts money for community mental health boards that provide mental health and substance abuse treatment.

Emerson warned that more bad news could plunge the state into an even bigger hole. The state has seen a 21 percent drop in its general fund revenues this year over last, which could cost the state around $1.8 billion by the end of the fiscal year. But revenues could fall even further if General Motors Corp. heads into bankruptcy as Chrysler LLC did last week.

"We may need to cut more than that," he said, referring to the $304 million. "There is not much good news going on in the state of Michigan right now."

Said Sen. Michael Switalski, D-Roseville: "It's very tough. Look, 30 years without laying off people, we're doing that ... and that's very difficult."

Some say another executive order could be necessary after the May 15 revenue estimating conference, since revenues likely are to keep falling. But Emerson said he hopes that won't be needed.

"We don't stop here," said Sen. Mark Jansen, R-Gaines Township. "I mean, to me, this is a down payment. The beginning of a process."

24 Hour News 8 reporter Rick Albin contributed to this story.