Michigan budget trouble will continue

Michigan's bleak state budget situation likely will continue in the fiscal year that starts in October 2010.

The nonpartisan Senate Fiscal Agency projects that tax revenue will continue to fall largely because of Michigan's struggling economy. A report released Tuesday estimates that the state's general fund and school aid fund combined could be more than $1.8 billion short for the 2010-11 fiscal year.

The report says state officials will have to make "very significant" spending cuts unless state taxes are increased.

Money from the federal stimulus package and a small carry-over surplus could help officials avoid big cuts in the current budget year.

The fiscal agency estimates that the state's unemployment rate could average 16.1% in 2010.