How large is the budget deficit and why do we have another deficit after the Governor just cut $1 billion from the current budget?
The budget deficit in the General Fund and the School Aid Fund combined is currently about $920 million. Yes, the Governor just recently approved budget cuts for the current fiscal year that totaled more than $1 billion. The main problem is that the current budget was written based on economic forecasts that showed the nation rebounding from the current economic slump sooner. The country still has not recovered, and Michigan’s manufacturing-based economy is still suffering. Michigan has lost more than 300,000 jobs since 2000, including 170,000 manufacturing jobs. When workers lose their jobs, the state loses funds from two important sources of revenue – the income tax and the sales tax.
