Mich. deficit could near $800M as revenues falter

Lansing, MI – Lansing, MI (AP)

State economists say Michigan is looking at a potential $785 million shortfall that won't be entirely erased with money from the federal recovery act.

A spokesman for Senate Majority Leader Mike Bishop of Rochester said Friday the general fund shortfall has lawmakers and Gov. Jennifer Granholm's administration looking for places to cut the budget.

Matt Marsden says the state would lose hundreds of millions of dollars in federal recovery funds if it cuts Medicaid spending, so cuts are likely to come in other state programs.

He says K-12 schools are safe from budget cuts this year for the
same reason as Medicaid.

But he warns they could be affected next fall since the state likely faces an even bigger shortfall in the budget year that starts Oct. 1.