I read this and all I can do is shake my head in bewilderment! Who elected these people? On 9/12/07 8:07 AM, "Redmond, Rudy (DLEG)" <[log in to unmask]> wrote: > > Olson Presents All Cut Options ‹ Adds Fuel To Debate > Senate Fiscal Agency (SFA) Director Gary OLSON today told the Senate > Appropriations Committee that the worst thing they could do is to do nothing. > > "Defaulting on bonds is an option," Olson explained after noting that the > state will need to make some $37 million in debt service payments in early > October and without some sort of passed budget, there is no legal authority to > make those payments. "But, it would take years if not decades [for the state] > to recover." > > Olson made his remarks while presenting cuts outlined by Senate Majority > Leader Mike BISHOP <http://www.mirsnews.com/leg_bio.php?lid=120> > (R-Rochester). Recall that last Friday Bishop announced he was proposing $1 > billion in cuts and spending reforms. > > In that press release, the Senate Majority Leader promised that the SFA would > also present other cut options to the Senators, which is exactly what Olson > did (See "Bishop Proposes $1B In Cuts > <http://www.mirsnews.com/capsule.php?gid=822#12854%20> ," 09/07/07). > > Essentially, the SFA chief began by explaining the following budget reality: > > - That combined, lawmakers essentially punted on a $1.3 billion budget deficit > from the current fiscal year by borrowing against the state's tobacco > settlement dollars and other one-time fixes and borrowing gimmicks > > - That $1.3 billion has now moved over into the Fiscal Year 2008 budget year > column. However, added to that column to maintain the so-called "continued > services" budget are economic increases for workers funding for rising > caseloads and other items ‹ meaning the budget hole grows to some $1.75 > billion. > > - To date, the House-passed budget bills have overspent the so-called > "continuation budget" by $235 million. The Republican Senate-passed budgets > have come in $176.2 million below the $10.08 billion General Fund continuation > services budget. > > - The SFA and the House Fiscal Agency have been doing research on continuation > budgets and see no constitutional challenge to continuing the budget > resolution for one-week, two weeks, one month or longer. However, he warned > that the longer the state overspends into the fiscal year, the harder cuts are > to make. > > - That right now, revenue estimates are holding firm and that a continuation > budget would be pegged to existing budget revenues. > > Olson also outlined a series of cuts that could be used to further balance the > budget (Bishop's plan brings the budget deficit down to $656.4 million). > Included in those additional cut options are: > > - Eliminating of statutory revenue sharing, saving $398.7 million > - Redirecting $75 million in 21st Century Jobs funds to the General Fund > - Cutting $25 million from the Healthy Michigan Fund > - Not pay the skipped higher education $138 million payment from the current > year > - Cutting state aid to libraries by $12.1 million > - Cutting Fire Protection Grants by $10.9 million > - Cutting $77 million in School Aid Fund categorical spending > - Cutting $14 million in secondary road patrol grants from the State Police > - Eliminating Michigan Promotion Funding, saving $5 million > - Cutting Comprehensive Transportation Fund Grants (non-constitutional), > saving $78 million > - Changing in state law to release prisoners earlier or change sentencing > guidelines and the shuttering of three to four prison facilities > > The list was long and clearly rattled some of the Democratic members on the > panel. > > "I'm speechless," said Sen. Liz BRATER > <http://www.mirsnews.com/leg_bio.php?lid=121> (D-Ann Arbor). "I hope I can > frame these questions, but after the picture you painted here, I'm even more > distressed about this budget picture than I was before." > > At one point, under questioning by a Republican member, Olson gave the GOP at > least some cover politically for a tax increase. He argued that statistically, > there's not much impact on the state's economy by either raising or cutting > the sales tax by one-penny. > > "Yes, a tax increase or a tax reduction is going to take money out of > someone's pocket or into someone's pocket, but it's also going to impact state > and local government ability to deliver services," Olson added. "I think in an > overall sense, and we've got to understand when we talk about tax increases at > the state level it's a very small percentage of our state's economy." > > Sen. Irma CLARK-COLEMAN <http://www.mirsnews.com/leg_bio.php?lid=125> > (D-Detroit) asked, "If we move forward with the Bishop proposal, with all of > these draconian cuts, what does this do to our bond rating?" > > "What the rating agencies are looking for is the fundamental ability of state > and local governments to pay their obligations," Olson added that it's because > the state's used one-time spending solutions that its credit rating has been > souring. > > "I do believe if fundamental decisions are made to reduce spending that will > not be detrimental to our bond rating," he added. "It may have other political > fall out." > > He then reminded Clark-Coleman and the other members present that such > decisions are "decisions that you as elected officials, not me, not others, > have to make to get to a fundamentally balanced budget." >