Tagged: state revenue sharing

“Painful” cuts to Lansing’s city budget are being predicted by the man heading a task force studying the capitol city’s budget problems.

David Hollister leads the mayor’s Financial Health team. He appeared before the Lansing City Council last night to update them on his committee’s work.

Hollister didn’t mince words telling the council that “painful” choices will have to be made to eliminate a projected nine million dollar budget shortfall next year.

Michigan's budget will have about $300 million more this year than state economists predicted in January.

That money is the result of a combination of higher-than-expected tax payments and fewer people receiving Medicaid and other state services.

That came from today's revenue estimating conference in Lansing.

State budget director John Nixon says he thinks much of the extra money may go into the state's rainy day fund. Or it may be set aside in case the state loses legal fights over collecting income taxes on public pensions or having state workers pay more of their pension costs.

“What we’ll do is with the one-time money, we’ll look for one-time expenditures," said Nixon. Budget Stabilization Fund is obviously a piece, a good place to put one-time money, as well some of the other spending pressures we have in the budget.”

Officials also estimate the state will have about $100 million more to spend in the budget year that starts Oct. 1.

Nixon says he doesn't think that will mean radical shifts in the budget bills lawmakers hope to finish by month's end.

The budget news accompanies forecasts that Michigan’s economy will continue to grow at a slow pace – with many of the new jobs coming from higher-paying fields. Michigan’s unemployment rate dropped again in April, hitting 8.3 percent.

When people who have quit looking for work are counted, as well as ­part-time workers who’d like to be full-time, Michigan’s rate of unemployment and under-employment is 17.8  percent.

265 Kalamazoo City employees are eligible for the early retirement incentive. According to the city’s Human Resources Director Jerome Post, 191 of them have already signed up. “I have to admit I’m a little surprised at the number of people,” Post said the number is higher than he expected.

 “It’s been a little bit anxiety ridden for us but at the same time we’ve been very excited about the opportunity this presents for us to restructure virtually every department in the city,” Post said.

Critics and allies alike say Detroit Mayor Dave Bing's proposal to get the state to pay the city more than $200 million faces an uphill battle.

It’s one of the ideas the Mayor has outlined to keep the city from going broke.

In 1998, Detroit lowered its city income tax in exchange for guaranteed levels of state revenue sharing. But city officials say the state reneged, and shorted Detroit about $220 million it was promised.

Bing says that would be enough to erase the city’s structural deficit, and the $45-million shortfall the city expects this year.