Deep budget cuts might continue next fiscal year

Students might have a harder time securing financial aid and state scholarships after this year’s state budget cuts, but experts fear next year could be even worse.

With dwindling revenues because of a statewide recession and the loss of stimulus funds, cuts to state departments could be as deep as 20 percent next year, Gov. Jennifer Granholm warned earlier this week.

This year, higher education cuts were cushioned by stimulus funds and MSU Trustee Donald Nugent said he’s concerned about state funding for the university without these extra dollars.

“I’m certain we are going to see another cut,” Nugent said. “We also already know there is a huge amount we have to make up … because what we got this year was some stimulus funds and those won’t be there.”

The state was able to fill this year’s $2.8 billion deficit with about $1.9 billion in spending cuts and $1 billion in federal stimulus dollars. The $1.6 billion spent on the higher education budget used about $68 million in stimulus funding.

University operations received a 0.4 percent state cut this year, but without stimulus funds, it could have been about 0.6 percent, MSU assistant political science professor Matt Grossmann said.

Grossmann said the Legislature relied too heavily on stimulus dollars.

“There was a strange dynamic where everyone agreed we shouldn’t use the stimulus money, but then … pretty much the only area of agreement by the end of the year was to use stimulus money,” Grossmann said.

This year, state departments lost about 10 percent of their budgets and Liz Boyd, a spokeswoman for Granholm, said the governor’s prediction of a 20 percent cut next year is a “worst case” prediction.

“We are anticipating a very difficult budget year in 2011 because of declining revenues, the loss of federal recovery dollars and increasing demand for state services,” Boyd said in an e-mail. “We want to be prepared for the worst.”

Some lawmakers are dedicated to finding new revenue sources before next year to avoid deeper cuts.

“There are a number of potential revenue sources,” state Rep. Mark Meadows, D-East Lansing, said. “The House right now is looking at every type of tax or revenue that we have in the state of Michigan in developing a tax reform that we hope will be embraced by our senate colleagues.”

Boyd said the state is predicting a $1.4 billion deficit next fiscal year.

Matt Marsden, a spokesman for Senate Majority Leader Mike Bishop, R-Rochester, said the Senate is working on reforms to produce state savings, but there still will be cuts.

“The fact of the matter is that reductions are going to be necessary,” Marsden said. “We will work to make long-term reforms to deal with the Michigan we have today, which is one with less revenue.”