State budget troubles projected to continue

The directors of the two non-partisan fiscal agencies that advise the legislature on budget matters agreed at a conference put on by Business Leaders for Michigan on Monday that even if the economy recovers as expected, the state will still face systemic budget deficits over the next few years due to the continuing loss of revenue. The Detroit News reports:

Gary Olson, director of the Senate Fiscal Agency, projected with annual growth at 3 percent, the state will face a $1.2 billion, or 13 percent imbalance, in the 2012 budget year; a $1.6 billion, or 17 percent shortfall, in the 2103 fiscal year; and a $1.8 billion, or 19 percent deficit, in the 2014 budget year.

“What is clear to me is the current budget is not sustainable,” Olson said. “There must be massive changes to the revenue side of the equation and spending side as well.”

Added Mitchell Bean, director of the House Fiscal Agency: “Even in moderate recovery, we will still have to cut the budget or find revenue somewhere else.”

The article also notes that both the House and Senate will be mostly new this year due to term limits, meaning the problems are being dropped in the laps of legislators who don’t have any experience in budget matters. There needs to be a systemic fix on the revenue side because the state simply cannot continue to balance the budget solely through cuts in services that are needed now more than ever.