Michigan’s Future A Conversation with Governor Jennifer M. Granholm

Domestic Auto Market Share Falling The Big 372.4%73.7%52.2% The Big 372.4%73.7%52.2% Interntls27.6%26.3%47.8% Interntls27.6%26.3%47.8%

Michigan Manufacturing Employment More than 1 in 4 Jobs Lost Since Mid 1999 Source: U.S. Department of Labor, Bureau of Labor Statistics. Dec ,500 Jan ,900 Jul ,200 Source: Economic and Revenue Forecasting Division, Michigan Department of Treasury, 2/14/07

Inflation Adjusted FY 07 GF-GP Revenues Down 29 Percent Since FY 99 Totals exclude transfers and are adjusted to 2007 dollars using U.S. CPI-U. FY 1999 $11.7 billion FY 2007 $8.2 billion FY 2008 $6.8 billion

Decreased Taxes

Changes in How We Operate Resolved $4 billion in budget shortfalls Resolved $4 billion in budget shortfalls Nearly $3 billion in cuts Nearly $3 billion in cuts State Employees are doing more, more efficiently and serving more people than ever State Employees are doing more, more efficiently and serving more people than ever

Looking Back: Reshaping the General Fund Budget Reductions (already made) Higher Education- $275M in 4 years (13%) Higher Education- $275M in 4 years (13%) Human Services- $172M in 5 years (14%) Human Services- $172M in 5 years (14%) School Aid- $323M in 5 years (84%) School Aid- $323M in 5 years (84%) Revenue Sharing- $447M in 5 years (29%) Revenue Sharing- $447M in 5 years (29%)

Eliminating Waste & Fraud Saves Millions Saved $524 million by renegotiating contracts, ending no-bid contracts Saved $524 million by renegotiating contracts, ending no-bid contracts Nationally-recognized protections against food stamp fraud saving millions Nationally-recognized protections against food stamp fraud saving millions Bulk purchasing of prescription drugs and other cost saving steps saved $400 million Bulk purchasing of prescription drugs and other cost saving steps saved $400 million

Convergence of Fiscal Forces We Have a Train Wreck Repeal of Single Business Tax Repeal of Single Business Tax Exploding health care costs Exploding health care costs Prison costs outpacing revenue growth Prison costs outpacing revenue growth Antiquated revenue structure Antiquated revenue structure Slow economic growth Slow economic growth $3.4+ Billion Shortfall FY $3.4+ Billion Shortfall FY

Spending Req’mnts Increasing Faster Than Revenue

FY 2007 Funding for State Government $42 Billion Total Budget; Governor, Legislature Control $9 Billion

FY 2007 General Fund Only $3 Billion Shortfall Must Be Filled in $9.2 Billion Budget (86% of General Fund spending in 4 areas)

Seven years of spending cuts Seven years of spending cuts FY2007 General Fund revenues lower than in FY1996 FY2007 General Fund revenues lower than in FY1996 Nearly $7 billion in one-time resources used Nearly $7 billion in one-time resources used Reserves exhausted Reserves exhausted Weakened connection between revenue structure and the economy Weakened connection between revenue structure and the economy Spending pressures growing faster than revenues Spending pressures growing faster than revenues $3.4 Billion of Structural Deficits, And This After…

A Budget to Implement Our Economic Plan Budget is combination of cuts, reform and revenue Budget is combination of cuts, reform and revenue Over $400 million in budget cuts, protecting our priorities Over $400 million in budget cuts, protecting our priorities Prison reforms to reduce prison population, cut costs Prison reforms to reduce prison population, cut costs Local government and schools sharing services Local government and schools sharing services Reforms to keep kids safe Reforms to keep kids safe New revenue to set us on solid fiscal ground and invest in critical programs including education New revenue to set us on solid fiscal ground and invest in critical programs including education

With No Action By June 1… Cut $125 per student across the state Cut $125 per student across the state Cut Medicaid by 6% Cut Medicaid by 6% Still will have hundreds of millions in GF shortfalls to deal with this year Still will have hundreds of millions in GF shortfalls to deal with this year

With No Comprehensive Solution, Relying on Cuts Alone Requires… Eliminate All Funding for Community Colleges and Universities AND All Mental Health Services Eliminate Health Care for Seniors, Children, and Pregnant Women AND Release All State Prisoners Cut $2,000 or nearly 30% of State Education Funding for Every Student at Every School OR

Saving Everywhere We Can… Thanks for the Suggestions Telecom disconnections Telecom disconnections and server consolidations and server consolidations Eliminating Cell phones Eliminating Cell phones Turning down heat and AC Turning down heat and AC Less lighting Less lighting Common sense measures to save tax payer money… Thanks for your help in finding these solutions. Common sense measures to save tax payer money… Thanks for your help in finding these solutions.

Michigan’s Future A Conversation with Governor Jennifer M. Granholm