Almost every state in the country will face a budget deficit next year and more than half will face budget shortfalls in the double digits.  An article in the current issue of Time Magazine (Inside the Dire Financial State of States, June 28, 2010) discusses how states across the country are facing staggering budget deficits for the third straight year. The billions of dollars of federal stimulus money will end this year and, so far, Congress has been unwilling to support a $50 billion emergency aid bill.  Therefore, states across the country, including Michigan, will have no other choice but to address their budget deficits head on and address several difficult issues including education, Medicaid, public employee pay and benefits, and corrections funding.  Another major issue is the long-term pension fund obligations that are not fully funded.  The Pew Center on the States estimates that state pension plans as a whole are at least $1 Trillion short.

Michigan’s budget deficit will continue to grow if we don’t adopt a long-term, comprehensive budget solution that includes tax, budget, and fiscal reforms.  If Michigan wants to be a competitive place to do business and retain, grow and create jobs, we must tackle these difficult issues sooner rather than later.

Interesting Facts from the Article:

·    The estimated collective gap between states’ income and obligation next year is $55 Billion.

·    The expected growth in the number of Medicaid recipients on average next year is 5.4%.  Anticipated funding is expected to hardly grow at all.

·     31 states are projecting a 2011 shortfall of 10% or more as a percentage of this year’s budget.

·    According to the Pew Center, half the states ran fully funded pension plans in 2000, but by 2008, that number had dwindled to four.

Learn about our Michigan Turnaround Plan, a 5-step plan to turn Michigan around, at MichiganTurnaroundPlan.com.

An observation - One of the reasons we sometimes don't feel like progress is being made is because we have a propensity to celebrate success only when something really big or controversial happens.  Yet, the state passed teacher retirement reforms that will save about 3 billion over ten years and little was heard outside the editorial pages of a few newspapers!  While more actions are needed to turnaround Michigan, this was a big step forward.  Maybe you should write your legislator if they voted for this and thank them for their courage!

For your legislator's contact information, click the "Find Your Representative" link at: http://www.michiganturnaroundplan.com/email-elected-officials.php

The Center for Michigan will be hosting a series of debates between candidates running for Governor and legislative offices. Business Leaders for Michigan is one of 20 major organizations sponsoring the debates. View the Republican primary debate which took place on Monday, May 24 at WGVU in Grand Rapids online at: http://www.thecenterformichigan.net/blog/great-debates-2010-announces-first-two-debates/.  The Democratic debate is scheduled for mid-July.

On May 17th, Business Leaders for Michigan, in partnership with The Center for Michigan and Council of Michigan Foundations, convened more than 300 leaders from across the state for our inaugural Leadership Summit. The summit featured experts from both inside and outside of Michigan who delivered a somber view of Michigan’s financial condition to business, community, education and policy leaders.

The agenda included extensive sessions on state and local government financial projections, challenges employers face competing because of them, potential solutions and a presentation by renowned governing expert Stephen Goldsmith. According to projections by fiscal experts, state and local governments, and public school systems will continue to struggle to provide public services in the face of shrinking revenues, declining population and declining job opportunities. There was a clear call for government structural reforms to enable state and local governments to function effectively to deliver critical public services.

Speaker presentations, photos, and videos from the summit are available at  http://www.businessleadersformichigan.com/leadershipsummit by the end of June.  To become engaged and active in ways to turn Michigan around, visit MichiganTurnaroundPlan.com.