The state still has a structural deficit to deal with and employee layoffs will occur, even though one-time money through the federal stimulus should help things through 2010, said Budget Director Bob Emerson on Friday.

Mr. Emerson said, "We still have problems in 2011.   We are not going to grow out of this."

Making his comments during a taping of Michigan Public Television's "Off the Record," Mr. Emerson it was difficult for the administration to come up with its blend of $670 million cuts, which it announced last week.

He said if Republicans want to come up with more cuts they can propose them, but he added many lawmakers are looking to use stimulus dollars to plug administration cuts.   He said if lawmakers don't want to approve the administration's proposed reductions, they should still find other areas of the budget to trim.

However, Mr. Emerson said he'd be "very surprised" if lawmakers who say they want to fill the $1.4 billion deficit in the 2009-10 fiscal year with only cuts actually do just that.

The administration is still analyzing what the federal stimulus means for Michigan and what strings are attached to the dollars, Mr. Emerson said.   But the state does know it won't receive budget stabilization money until July 1.

But Mr. Emerson said the state's structural deficit will not go away with the federal stimulus and that is why the administration is still pursuing cuts and employee layoffs in the upcoming budget.

For instance, the governor has added members to the state parole board in order to expedite the review of prisoners serving past their earliest date of release.   That will mean more people will be let out of prison, so staff cuts to the Department of Corrections should be expected.

Unions representing state employees are meeting with the administration to discuss the proposed budget during two meetings in early March, according to union officials.

However, the governor's spokesperson Liz Boyd said this week she was unaware of any specific meetings taking place.   She did say the administration would be meeting at some point with employee unions to discuss the budget.