Accepting that the hard budgetary medicine was the best course to take,
the two legislative Appropriations Committees approved an executive
order that will cut the 2008-09 budget by about $350 million.   State
officials said they hoped these cuts would be the last needed for the
current fiscal year, but they could not offer a guarantee that cutting
for 2008-09 is done.

By itself, the executive order cannot eliminate the estimated current
year revenue shortfall of as much as $1.5 billion.   Doing that will
require the use of federal stimulus funds, Budget Director Bob Emerson
told the House and Senate Appropriations Committees. 

The Senate Appropriations Committee approved EO 2009-22
<>  on a
15-2 vote.   The House Appropriations Committee voted 27-4 to approve
the EO.

With the executive order adopted, the state will have to shut down most
of its functions for a period of six days during the remainder of the
fiscal year.   That shutdown will be required because virtually all
workers will take six days of furloughs and the state wants to maximize
the savings the furloughs offer by closing down state offices.   When
those days will be held has not yet been determined.

The order, in addition, calls for the layoff of some 300 state workers,
including 100 State Police troopers.   Most those troopers being laid
off will be those who recently completed trooper training.   The trooper
layoffs raised some of the greatest concern among lawmakers, and as
committee members came into the House Appropriations Room they were
greeted by dozens of recently graduated troopers who stood in a silent

"There is not much good news in the state of Michigan these days.   This
executive order reflects that," Mr. Emerson said as he presented EO
2009-22.   He was not proud to offer the cuts, he said, but the cuts
were made necessary by the unprecedented severity of the economic

The severity of that crisis was highlighted by Treasurer Bob Kleine, who
said that revenues fell by 11 percent, when adjusted for inflation, in
1981, during the last cataclysmic economic recession the state endured.
In 2009, revenues, adjusted for inflation, have fallen by 23.5 percent,
he said.

The EO calls for total reductions of $349.3 million, but some of those
reductions are double-counted through transfers.   

The House Fiscal Agency noted the net general fund savings total $294.5
million, but that further legislative action will be required to
transfer restricted funding to the state's main checkbook.

The Senate Fiscal Agency noted the general fund savings, after a
negative supplemental is taken out, would total just over $200 million. 

The remaining $127.4 million will come in cuts from federal and
restricted funds. 

The furlough reductions called for in the order, which will affect most
state workers whose employment is not considered vital to state safety
and health, though officials were uncertain how many actual workers that
would be, should equate to general fund savings of about $21.7 million,
according to the Senate Fiscal Agency.

The EO does not directly cut the budgets for the Legislature and the
Judiciary (as co-equal branches of government, the Executive could not
specifically cut those budgets), though both branches will make
budgetary cuts.   Also exempted from the cuts are higher education and
community colleges, which Mr. Emerson said would threaten the
availability of federal stimulus funds.

The Department of Human Services will take the largest cut, $120.9
million total with $97.5 million in general funds.   And to criticisms
from some Republican lawmakers that the EO does not enact changes to the
structure of state government, Mr. Emerson said that the administration
is cutting and eliminating as many as 30 state programs that provide aid
to low-income residents.

"Our intent is not to restore these," Mr. Emerson said of the programs.
That demonstrates the state's determination to make structural changes
to the state's budget, he said.

But some lawmakers said while they felt they had to endorse the cuts,
they intended to fight continuing those cuts as part of the 2009-10

Presuming no more budget cuts are required, with stimulus funds the
state should end the 2008-09 fiscal year with about $160 million
surplus. Mr. Emerson said while some may argue ending the year with a
surplus means the state shouldn't be cutting as much as it is in the EO,
with the ongoing crisis in the auto industry he isn't sure the surplus
will in fact be enough at the end of the fiscal year. 

But whether the state would need to cut the budget further was a top
concern of committee members.   The revenue estimating conference is
scheduled for Friday, May 15, and members worried that at that time the
state may find itself compelled to make more cuts.

Mr. Emerson and Mr. Kleine both said they did not think the state would
have to make further cuts, but they stressed they could make no
guarantee of that.   Officials were estimating revenues very
conservatively, though Mr. Kleine acknowledged that the state's
estimates do not presume that Chrysler and General Motors liquidate.   

What forced the state to lower its estimates on revenues for 2008-09 was
a disastrous April revenue picture, Mr. Kleine said, with sharp drops in
income tax and Michigan Business Tax collections.   April is a unique
month, because 65 percent of all state revenues for the year have been
collected by that time, so it should not face a monthly revenue decline
as bad for the rest of the year, he said.

THE ORDER'S SPECIFICS:  Cutting Michigan's state troopers is possibly
the most visible of the cuts ordered, though Mr. Emerson said the
Michigan State Police is not taking proportionately as large a cut as
other departments.

In fact, Mr. Emerson told reporters State Police initially called for
more layoffs, and state officials asked them to recalculate total cuts. 

The department will take a total cut of $15.2 million, all of it in
general funds. 

The cut for troopers alone will amount nearly $4.8 million.   State
Police Director Peter Munoz issued a statement saying that all the
trooper layoffs will occur no later than July 1 and under contractual
rules those troopers with the lowest seniority will be affected.   No
post closures are anticipated because of the cuts, he said, though the
layoffs may affect shifts at some posts.

The order also calls for savings of $3.8 million in laboratory
operations though that cut should be supplemented with a transfer from
the State Services Fee Fund.

Another $2.2 million will come in fleet leasing.   While most of that
will accrue from savings in fuel costs, Mr. Munoz said the state will
institute mileage restrictions on vehicles that could affect some patrol

The state did apply last month with the federal Department of Justice
for a COPS grant to help finance as many as 200 state troopers.
However, a spokesperson for the department said more departments
nationwide have applied for the grants than there is funding, and the
state might not hear about its application until September 30, so even
if the state gets the grants it would likely not affect the current
fiscal year.

Besides the cuts to the State Police, the other cuts that received the
greatest attention were to revenue sharing and the Department of
Community Health.

The state is cutting $41.5 million in revenue sharing.   Under the cut,
each locality will receive essentially the same revenue sharing payments
they received in the 2007-08 fiscal year.

Mr. Emerson said the cut in revenue sharing could actually have a
greater overall effect on public safety than the cuts to the State
Police because of the effect it would have local police and fire

After Human Services, DCH will see the largest overall cut at $57.7
million, $53.1 million in general funds.   Including the imposition of
furlough days, the department will see 55 specific cuts.

The largest cut will be $10 million to community mental health
non-Medicaid services.

Following that, the next largest series of cuts will affect 4 percent
reductions in payments to Medicaid health care provides, which will
total more than $5 million, as well as $7.6 million in an adjustment to
the Medicaid Health Plan Services.

The cuts to providers have been blasted by the medical and hospital
community, and Mr. Emerson said that the cuts do mean the state will
lose out on some federal funds.   

The Medicaid cuts also come at an exceedingly difficult time as the
economy is forcing as many as 11,000 more families a month onto
Medicaid, he said.   But he said there is no way the state can continue
to pay for all Medicaid services.

Under the federal stimulus, the state could not affect basic eligibility
for Medicaid, but it could make cuts to optional services. Cuts to the
optional services will total $3.3 million and include cuts the
chiropractic services, podiatric services, non-emergency services,
optometric services, hearing aids and dental services.

In addition, the EO cuts $3.8 million from the state's Healthy Michigan
Fund, as well as cutting $2.1 million in the state's four single point
of entry programs.   Also cut is $1.1 million in health information
technology initiatives funding, $1.5 million in local public health
operations and $1.5 million in community substance abuse prevention

In the Department of Human Services the largest total cut is $23.4
million to reflect the general fund reductions as part of overall
federal program reductions.

Also cut is $16.7 million to reflect savings from the stimulus child
support payments. 

Another $14 million is cut from the jobs, education and training plus
program, $10.4 million in employment and training programs, $9.9 million
in Supplemental Security Income payments, $5.7 million in child day care
quality assurance savings, $4 million in the community protection and
permanency program, almost $4 million in the subsidized guardianship
program,. $3 million in the Bureau of Child and Adult Licensing, $2.3
million in reduced local office allocations, $2.2 million in before and
after school grants, $2 million in the strong families/safe children,
$1.8 million in family independence program incentives, $1.7 million in
food stamp reinvestments, $1.65 million in a 1.25 percent child day care
rates, $1.3 million in teenage parent counseling, $1.1 million in family
preservation administration, slightly more than $1 million in indigent
burials and cuts of $1 million in adoption support services.

In other cuts: 

*	Energy, Labor and Economic Growth will be cut $27.1 million,
$13.1 million in general funds, with a $7.8 million cuts to No Worker
Left Behind. 

*	Agriculture will be cut $11.1 million, $3.4 million in general
funds, with $3.8 million cut from the Office of Racing Commissioner and
$2.4 million cut to the Agriculture Equine Industry Development Fund.
Also cut will be $1.5 million from the bovine TB program. 

*	Corrections will be cut $10.5 million, all of it general funds.
Mr. Emerson said with the aggressive series of budget cuts the
department would undergo in the 2009-10 fiscal year, in terms of
prisoner releases, prison closures and workforce reduction, it was
decided not to accelerate those.   Instead all but $1 million of the cut
will come from employee furloughs. 

*	K-12 school aid will be cut $7 million in general funds in the
21st Century Schools Program that Ms. Granholm had wanted to begin the
process of creating newer, smaller high schools. 

*	In Transportation, $12 million in restricted funds will be cut
in the Transportation Economic Development Funding. 

*	Besides revenue sharing, which is paid through Treasury, the
department will see $22 million in transfers from the 21st Century Jobs
Trust Fund to the general fund. 

*	While college operational funding is not cut, $5 million in
Michigan Promise Grant funding will be transferred to DCH. 

*	Ms. Granholm's executive office will have to lay off as many as
five workers as that office will cut spending by $279,200. 

*	The Legislature will make reductions totaling $3.5 million,
which will likely include some layoffs. 

*	The judiciary will make total cuts amounting $2.8 million. 


There were not many positive adjectives thrown around Tuesday to
describe the budget cuts under the governor's executive order. 

Faced with at least a  $1.3 billion deficit in the current fiscal year,
lawmakers on the Appropriations Committees said voting on the EO was one
of the toughest they've taken - some said even worse than the budget
stalemate of 2007 that led to a tax increase - but those who supported
the measure countered it was a "necessary" step to take in order to
balance the budget.

But anger over the move ranged from local governments upset over "11th
hour" cuts to revenue sharing to lawmakers opposing the EO because it
didn't make enough cuts and relied heavily on federal stimulus dollars. 

The Michigan Municipal League started out the day by holding a press
conference where local officials said the $41 million in revenue sharing
cuts would further devastate communities trying to compete for residents
and jobs. 

There was no estimate as to how many layoffs would occur at the local
level because of the revenue sharing reduction, but many officials said
layoffs already are part of their budget balancing initiatives and the
state cut would likely add to that. 

Lansing Mayor Virg Bernero said the EO doesn't solve the budget problem,
but simply kicks the issue down to the locals to clean up the mess. "We
have been in the trenches," he said. 

Mr. Bernero didn't have a prediction for how the city would handle its
revenue sharing cut, but a Huntington Woods official said they would
likely have to scale back their workforce another 5 percent to deal with
the revenue sharing reduction, which would come on top of the 10 percent
staff layoffs the city already expected. 

Eric DeLong, interim city manager for Grand Rapids, said they expect a
$925,000 cut under the executive order. He said the city already has cut
300 positions, including 65 police and about 20 firefighters, but with
the EO there will likely be another 20 to 30 reductions in the city's
labor force. 

Kentwood Mayor Richard Root told reporters, "The next cut in my
community should be the answering machine because nobody is going to be
there to listen to it." 

And Dan Gilmartin, executive director of the MML, said the executive
order amounts to "more of the same" by managing the decline of the state
and not implementing state reforms such as creating a 21st Century tax

There seemed to be no popular cuts in the executive order, but while
many lawmakers voiced concerns that they felt "backed into a corner" and
forced to make the reductions, many said they knew the measure had to be
enacted soon or the problem would only get worse.

Senate Appropriations Committee Chair Sen. Ron Jelinek
(R-Three Oaks) said every day, Michigan residents are being forced to
make "unpleasant decisions" and the Legislature is obligated to "set an
example of trying to live within our means."

"All across the state, families are sitting down at the kitchen table to
make tough decisions about the cuts they have to make to their household
budget, and we're faced with the same tough decisions to make due with
less in the state budget," said House Speaker Andy Dillon
(D-Redford Township) said in a statement. "At the heart of Michigan's
budget crisis is the economic downturn that is being felt worldwide. The
answer to this crisis is to continue working hard to create jobs and
revitalize Michigan's economy." 

Convinced that the revenue numbers are that bad, House Appropriations
Committee chair Rep. George Cushingberry Jr.
(D-Detroit) said the cuts are necessary at this time, but he was keeping
some options open by pushing forward a negative supplemental next week
that could allow some EO cuts to be swapped out for other unknown

Most of the negative supplemental's focus would be on cuts made to the
departments of Human Services and Community Health, although some were
skeptical a cut swap would actually happen. State Budget Director Bob
Emerson said the administration is willing to look at cuts both chambers
agree on, but he warned that alternative reductions "won't be any
easier" than what the administration proposed. 

Mr. Cushingberry said health care cuts were wrong when that industry is
growing jobs and the state is set to receive more than $2 billion over
the next two years for health care programs through the federal stimulus

Rep. Dudley Spade
(D-Franklin Twp.), who heads the DHS budget, said there were some cuts
discussed in EO negotiations that did not ultimately make it into the
budget cutting measure and he would push for those to be part of a
negative supplemental. While he would not name specific cuts, he said
the changes would take care of some of the reductions to DHS that were
part of the EO. 

And some lawmakers such as Sen. Deborah Cherry
(D-Burton) said they would be fighting to bring back eliminated programs
in the upcoming fiscal year budget. 

   "I don't know that I have any easy answers. I'm worried we are
getting rid of a safety net. I understand we don't have lots of choices
but we have to try to address those issues as best we can with what we
have," Ms. Cherry said. 

Medical officials repeated Tuesday what they had said Monday: the cuts
to Medicaid will mean less access to health care for not only the poor
but for all residents.

"The condition of Michigan's economy forces our elected officials to
make difficult choices, but the health of our citizens should always
come first," said Dennis Paradis, executive director of the Michigan
Osteopathic Association.   "Not only will all citizens find it more
difficult to access health care, but the physician shortage in our state
will be exacerbated."

"More physicians will be forced to limit the number of Medicaid patients
they can treat in order to keep their doors open to all patients," said
Richard Smith, president of the Michigan State Medical Society.
"Medicaid cuts will make it harder for many Michigan children, the
elderly, and the disabled to access health care, and that is

Spencer Johnson, president of the Michigan Health and Hospital
Association, said hospitals would continue to accept all patients but
that many would have to lay off staff to make up the state funding

"Patients who need to relieve oral pain will be left with no options to
receive care. When a Medicaid patient visits the emergency room for oral
health care, the cause of the problem is not treated," said William
Wright, president of the Michigan Dental Association.

Rep. Richard Hammel
(D-Flushing), one of the first Democrats to speak up in support of the
EO said every lawmaker has their favorite programs and that it's not
easy to cut any of those, but the "pain" is being shared pretty equally
across the board, an argument that was disputed by various interest

"I hope we can get folks to understand this is not a simple thing (that)
we have time to work on. The longer we wait the more the deficit piles
up," he said.

Rep. Richard LeBlanc
(D-Westland) said he hoped the serious reductions in both State Police
and local law enforcement spur a movement toward identifying a dedicated
revenue stream to pay for public safety. 

"This is worst vote I've taken during our time here. I shook every hand
over the weekend hoping to get swine flu and avoid this," he said. 

And Rep. Shanelle Jackson
(D-Detroit), who was one of four House members to oppose the EO and one
of three lawmakers from Detroit to dissent, said she hoped the measure
would be a catalyst for a serious discussion about raising more state

Ms. Jackson said she opposed the move because of the $7 million in
revenue sharing cuts to the city of Detroit, as well as the cuts to
health departments and police. She argued when the "bleeding begins"
from the EO then there will be the political will to move on tax

The Michigan Chamber of Commerce said the order appeared to be the
precursor to a push for a tax increase, though Governor Jennifer
<>  has
said she would not approve any tax increases for the current or coming
budget years because of expected opposition.

"It is extremely irresponsible for the Governor and Legislature to rely
so heavily on one-time federal monies to fund ongoing operations of
state government instead of making the dramatic changes that are needed.
Everyday across Michigan job providers are forced to tighten their belts
to keep their businesses afloat and they expect elected officials to
also make the tough choices.   The Executive Order approved today does
not go nearly far enough or fast enough to right size our government.
It is disheartening that the action taken today is more appropriately
viewed as a marketing plan for a tax increase and not a blueprint for
economic recovery," the group said in a statement. 

But Sharon Parks, president of the Michigan League for Human Services,
said the executive order would not be the last of the cuts to safety net
programs unless the state revises its tax structure to keep up with the
need for services.

"There was a lot of talk today about the reluctance to make these tough
cuts, but this is our future unless we address the underlying problems.
We can't keep cutting programs and services and expect to be a vibrant
and competitive state,'' Ms. Parks said.

In addition to physicians choosing not to see Medicaid patients and
those recipients losing some of their benefits, Ms. Parks said the
proposed furlough days would also make it difficult for recipients to
have questions or concerns about their cases addressed in a timely

Sen. Irma Clark-Coleman
(D-Detroit), another opposing vote on the EO, said, "After learning the
depth of the cuts and their impact on Detroit I could not, in good
conscience, approve Governor Granholm's EO. I support the Governor and
appreciate the hard task before her; however, the impact on Detroit, the
nation's poorest city, will be grave."

Using $1 billion in federal stimulus dollars was a blessing or a curse
depending on which lawmaker was speaking. 

"It's obvious we have to make an adjustment. Thank God we have the
stimulus package to backfill some of that," said Rep. Michael Lahti

Rep. Gary McDowell
(D-Rudyard) said the stimulus dollars are available because the world is
in an economic downturn and the money will "give us the time to see how
we want to fund the state. Let's use this opportunity." 

The Grand Rapids Area Chamber of Commerce said the plan relies too much
on the federal stimulus.   "Using one-time money to plug the budget hole
is not the answer," said Chamber President Jeanne Englehart.   "We are
exacerbating the problem for next fiscal year."

"The Granholm/Cherry Administration continues to let the people of this
state down," said Michigan Republican Party Chair Ron Weiser.  "Instead
of taking responsibility for failed policies and inaction, the
Granholm/Cherry Administration opts to cut services that impact the
health and safety of our families and is not making necessary structural
cuts to the government bureaucracy.   Instead the administration is
depending on the federal government to bail us out."

House Minority Floor Leader Dave Hildenbrand
(R-Lowell) said while it's tempting to pick apart the EO and find cuts
that each lawmaker doesn't like, the larger problem is the "precedent
that we are using one-time money to pay for ongoing expenses is

Mr. Hildebrand said there is no long-term plan for getting the budget
back on track when the stimulus money runs out. 

"We're going to be right back at this year after year," he said. 

While he supported the EO, Mr. Spade also argued that if the state knows
there will be a budget problem down the road, then it should just deal
with the whole problem now.

Rep. Bob Genetski II
(R-Saugatuck) and Rep. Kevin Green
(R-Wyoming), both of whom opposed the EO, said its reliance on federal
stimulus was wrong. Mr. Green said the federal funding was meant to spur
economic growth, not to plug state operations. 

The two legislators also had other reasons for opposing the measure: Mr.
Genetski said he couldn't support cuts to public safety when a political
State Police headquarters in downtown Lansing is still moving forward
and Mr. Green said the cuts to health care providers would shift more
problems to those providers and worsen the uninsured crisis in the

Rep. Rick Jones
(R-Grand Ledge), a long-time opponent of the new State Police
headquarters, said he wanted construction on the facility to halt in the
wake of 100 troopers losing their jobs.

In addition to state layoffs, Wayne Wood, president of the Michigan Farm
Bureau, said the cuts would mean program, and potential farm job, losses
in the state.

"The latest round of budget cuts erodes Right to Farm program funding,
effectively eliminating the ability of (Department of Agriculture) staff
to continue the on-farm inspections essential to the program.   The
Michigan Farm Bureau finds this unacceptable and will work to restore
this funding in some shape or form," he said.

When asked about the cut by legislators, Mr. Emerson said the night
before the department had come up with other ideas to make the needed
budget cuts without affecting Right to Farm programs, so those proposals
could be put into the mix.

There was some debate over whether it will take a separate act for the
federal stimulus money to indeed plug the remaining hole in the current
fiscal year budget. Sen. Cameron Brown
(R-Fawn River Twp.) questioned whether the Legislature would in fact
have to pass a supplemental for the stimulus.

But Mr. Emerson said most of the flexible money being used comes from
enhanced Medicaid rates that is freeing up general fund dollars that
already have been appropriated. He said the administration believes most
of the stimulus can therefore be spent through departmental transfers as
opposed to a supplemental. Transfers are approved by the Appropriations