budget deficit

High school girls soccer match during the Flint Olympian Games.
Flint Olympian and CANUSA Games / flickr.com

The Flint school district is cutting funding for decades-old events to foster competition between athletes from the city and Canada.

The school board on Wednesday approved plans to eliminate funding for the CANUSA Games and the Flint Olympian Games after learning that the district's deficit grew to $21.9 million.

DPS website

For the first time in six years the Detroit Public Schools' proposed budget does not call for any schools to be closed. 

The district expects it will bring in about $50 million fewer than it planned for next year. But officials say despite that, they are planning new programs and won't close any schools. 

The idea is to keep the city's schools competitive with charters and suburban districts. 

But there is still the matter of a $127 million deficit the Detroit school district is battling. 

Staring at default

Oct 14, 2013

Many years ago, when I studied economics, I learned that every so often, Congress has to authorize an increase in how much money the nation could borrow, meaning the national debt.

One student asked what would happen if Congress didn’t authorize a debt increase. “Something that would make the Great Depression look like a picnic,” the professor said.

He explained that the world financial system was built on the soundness of the American dollar, and the global belief that our debts, like U.S. savings bonds and the $20 bill, were backed by the “full faith and credit” of the United States of America. He also told us that the odds of this nation ever defaulting were less than a nuclear war.

Well, that professor is dead and the Cold War long over. But for the first time, there seems a real possibility that we could, at least temporarily, go into default. We aren’t talking about Detroit here, but the United States of America.

User: Brother O'Mara / flickr

Detroit bankruptcy is topic of national conversation

Snyder, Detroit's emergency manager Kevyn Orr and Detroit Mayor Dave Bing appeared on Sunday morning talk shows yesterday to talk about filing bankruptcy for Detroit. Snyder said he will push to protect the retired city workers whose pensions are on the table. He said the bankruptcy filing included protections for retirees and urged them to remain calm. Orr said on "Fox News Sunday" that there are going to have to be "concessions." Bing on ABC's "This Week" said now that bankruptcy has been filed, leaders have to take a step back before making a decision on a federal bailout.

Flint school district faces more budget cuts

The Flint School Board will take up a Deficit Elimination Plan tomorrow night. The district is wrestling with a nearly 16 million dollar deficit. The Flint school district has made deep budget cuts but more cuts are likely if the district follows the plan to eliminate its deficit by June 2016. The Flint School Board has until July 31st to send its deficit elimination plan to the state.  

Lansing may end its relationship with St. Petersburg, Russia

The Lansing city council will be meeting tonight to discuss its sister city relationship with St. Petersburg, Russia. St. Petersburg recently passed an anti-gay ordinance and police there arrested people at an LGBT rally. Members say they want to send a message to St. Petersburg officials by canceling Lansing’s two decade sister cities relationship with the city.

Sarah Alvarez / Michigan Radio

To add to the woes of public education in Michigan, six new school districts are running deficits.

Forty-nine was the record, now make it 55 school districts – from the Traverse Bay Area to Wayne County – with deficits.

More from MPRN's Rick Pluta:

State Superintendent Mike Flanagan says declining enrollment is the most-common issue in the deficit districts. That’s led to a loss of state funding.

Flanagan says schools do need more resources, but most are keeping their budgets balanced. The ones that don’t, he says, are a rarity.

User: Brother O'Mara / Flickr

Detroit is worse off than we thought

"Detroit's state-appointed emergency manager is painting a bleak financial picture. Kevyn Orr's first report says Detroit's net cash position was negative $162 million as of April 26 and that the projected budget deficit is expected to reach $386 million in less than two months. That's more than the city's estimate" reports the Associated Press.

Pontiac schools might be saved; no such luck for Buena Vista

The state is expected to release a payment as soon as today that will keep the Pontiac school district from declaring bankruptcy according to a letter sent to the district last week by the state Department of Education.

"There is still no plan to get 400 kids in the Buena Vista district back to school. Buena Vista closed its doors abruptly after losing a monthly payment because the district owes the state money. " Michigan Radio's Rick Pluta reports.

A new bill would reward teacher performance

"Michigan teachers' performance in the classroom would play a bigger role in the amount they get in their paychecks under a proposal being debated in the state House. Supporters argue that rewarding teachers who perform better and moving away from a system that rewards seniority will improve teachers and benefit students" reports the Associated Press.

Steve Carmody/Michigan Radio

Flint’s mayor delivers his State of the City address tomorrow.

He says he’ll map out a path for Flint to no longer need an emergency financial manager running his city.

Mayor Dayne Walling says now’s the time to begin preparing for life after an emergency manager.

The city has been under the direction of a state appointed manager since December of 2011.

The new emergency manager law that takes effect next month includes a provision that details how cities can get back to self-control.

Steve Carmody/Michigan Radio

A private company will start picking up Flint’s residential trash next month.

Emergency Financial Manager Ed Kurtz says Republic Services can handle Flint’s waste collection for a million dollars a year less than the city can itself.    The two sides signed a contract this week. 

Lansing city hall.
MI SHPO / flickr

The city of Lansing faces an $11 million budget deficit in the coming fiscal year.

City officials say the shortfall is due largely to a steep decline in property tax revenues. Rising pension, health care, and salaries are also to blame. The numbers take into account the extra money the city is taking in from a new tax levy voters approved a year ago, but the city has almost reached its constitutional limit on how much money it can raise in new taxes.  In a press release, Mayor Virg Bernero says the funding model for Michigan cities is "broken." 

Associated Press

Before giving Wayne County the go-ahead on an unorthodox deficit reduction plan, the state wants peruse the county's books.

According to John Wisely at the Detroit Free Press, Michigan Treasurer Andy Dillon is taking bids from accounting firms to perform the audit. Auditors would look at discrepancies in spending and budgeting along with the timing of certain transactions.

Officials in Lansing are on the lookout for anything fishy because the plan would involve state money.

More from the Freep:

Last month, the county proposed eliminating its deficit by sending unused state grant money, for things like roads and mental health programs, back to the state. It wants the state to return a similar amount to the county unrestricted, meaning it could be used to eliminate the deficit instead of funding the programs spelled out in the legislation.

Wayne County has a cumulative deficit of $155 million and faces declining revenues in its latest budget cycle.

-John Klein Wilson, Michigan Radio Newsroom

(photo by Steve Carmody/Michigan Radio)

Flint’s emergency manager got an earful during a public meeting last night on the budget he imposed on the city last week.

Emergency manager Michael Brown had planned to take the first half hour of a 90 minute public meeting to review his budget plan and then allow an hour for questions.

But the budget presentation had barely started, when several people in the nearly full auditorium jumped to their feet to shout down the emergency manager.

After the outburst, a parade of people took turns at the podium denouncing emergency manager Michael Brown, the law that put him in charge of Flint and the budget he introduced and imposed last week. That budget cuts the city’s workforce by about 20 percent and imposes hundreds of dollars in new fees for city water, street light and other city services.

Flint resident Carolyn Shannon questioned the expertise behind the decision to make deep cuts to the city’s police and fire departments.  

“Even a person off the street…can cut somebody’s throat," scolded Shannon.

One man, identified only as Maurice, glared at Brown as he talked about how he can’t afford to pay any more taxes.

"You want to take more from me and my daughter?" the man asked, "You ain’t no different than these people that are out here murdering our own children."  

Brown insists the budget cuts and fee increases are needed to address Flint’s  projected $25 million gap next year. That's not Flint's only financial problem. The city is also seeking the state's OK to sell more than $18 million in loans to pay off the city debts from the past few budget years.

user kconnors / morgueFile

A public school district in Oakland County imposed a ten percent pay cut on its teachers retroactive to the start of the school year.

Now it is likely the teachers will sue the district.

Teachers in the Madison Heights school district have been working without a contract for three years. In that time there’s been lots of bargaining, a fact finding mission, mediation - but to no avail.

user jdurham / morgueFile

Michigan school districts are struggling with growing budget deficits. Even relatively wealthy districts are facing unprecedented cuts.

The Ann Arbor Public School district faces a $17.8 million deficit. The district's budget for the 2011-12 school year is $183 million. 

Deputy Superintendent of Operations Robert Allen met with the district's Board of Education on Wednesday, where he laid out three possible plans to deal with the deficit in Ann Arbor – each one progressively more severe. 

All three proposals include:

  • teacher layoffs: Plan A: 32 teachers; Plan B: 48 teachers; Plan C: 64 teachers
  • closing Roberto Clemente, one of two alternative high schools in the district
  • cuts to transportation*

*Plan C calls for getting rid of high school bus routes entirely.

Ann Arbor School Board president Deb Mexicotte says the cuts are "reaching the bone," and "if you keep cutting, you’re going to reach the place where you can no longer maintain what you do well."

Mexicotte blames the state for what she says its chronic under-funding of education:

"This is not the story of our smallest districts or our districts that have struggled because of their tax revenue package. We’re talking about districts that people generally think are insulated from these kinds of things." She adds, "we’re all in this together."

(photo by Steve Carmody/Michigan Radio)

The Flint city council tonight will do something it hasn’t done in a while.  Actually meet.   

One of the first things Flint’s emergency manager did after he took over city hall last December was to suspend the pay for city council members.  He also canceled council meetings.

He later reinstated some of their pay and he directed the city council members to meet with their constituents.

Detroit Mayor Dave Bing says 1,000 job cuts are planned by early next year to help deal with the city's budget crisis.

The mayor's office said in a statement Friday that layoff notices will be delivered the week of Dec. 5. He says the cuts represent 9 percent of the city's about 11,000 employees and will save about $12 million.

On Wednesday, Bing said the city faces a $45 million cash shortfall by the end of its fiscal year in June.

Bing said the positions will be eliminated by Feb. 25. He said additional 2,000 positions have been eliminated since he took office in 2009.

Bing also ordered an immediate hiring freeze for all civil service positions except the Detroit Water and Sewerage Department.

(photo by Steve Carmody/Michigan Radio)

 Postal workers delivered a message at more than a dozen rallies across Michigan today.   

Postal workers say they have a solution to the multi-billion dollar budget deficit that is threatening the future of the U.S. Post Office.  Postal officials say they are looking at closing hundreds of local post offices and mail processing centers as a way to reduce the red ink.  

Lindsey Smith / Michigan Radio

Congressman Fred Upton is looking for your ideas on how to reduce the federal budget deficit.

Upton is one of twelve lawmakers selected to serve on a special Congressional committee that will try to come up with a compromise on long-term spending.

Seven of the twelve lawmakers on the special committee will have to agree on a proposal in order to get it to the full Congress for approval. Last month, Upton called it “an enormous task.”

(photo by Steve Carmody/Michigan Radio)

Michigan Senator Carl Levin wants all sides to give up trying to tie increasing the federal debt ceiling to a major cut in federal spending. The budget talks have stalled as President Obama and Congressional Republicans have been unable to agree on closing tax loopholes.

Levin says tying budget cuts to increasing the debt ceiling has been a bad idea.  

“Frankly never should have been combined.  We have no choice but to raise the debt ceiling.  We ought to reduce the deficit.  And we will.   But, whether we can do that in time to avoid a real calamity here which will occur if out debt ceiling is not raised is just anybody’s guess.”  

Congress has until August 2nd to agree to increase the federal government’s debt ceiling. After that, the government could possibly risk going into default.

Lindsey Smith / Michigan Radio

Grand Rapids Public Schools is facing a $22 million dollar budget deficit for next school year. That’s the largest shortfall Michigan’s third biggest school district has faced.

The plan to close the gap includes eliminating close to 140 positions and use $5 million in savings. Despite that, no one showed up to speak at a public hearing on the school budget Thursday night.

Allan Cleaver / Flickr

Governor Rick Snyder says he may want to bank the money from an unexpected improvement in tax collections – if the windfall exists.

Early revenue projections suggest Michigan may collect $500 million more than anticipated.

But Governor Snyder says he’s not ready to count that money as part of his budget plans.

He says the state may be better off putting it into savings.

“I’m bullish that we’re on a positive economic path, but to say we’re going to see just an upward curve without a few bumps, I would be careful about speculating that given the challenge of gasoline prices and such.”

Democrats want to use any windfall to scale back proposed cuts to schools. The next official revenue estimate comes in mid-May.

The House and Senate are continuing to work this week on budget proposals with an eye toward finishing before June first.

User thinkpanama / Flickr

The Detroit Public School district received a $231 million dollar loan from the state. 

The loan will help the district with "employee payroll and vendor payments," according to Steve Wasko, a spokesman for the district. He says the loan won't help with any of the district's long term financial problems:

  1. $327 million budget deficit.
  2. $161 million dollars in budget cuts if Governor Rick Snyder's proposed education cuts go through.

Michigan Radio's Sarah Cwiek filed a story for NPR about the district's $327 million budget deficit. Here's an excerpt:

With Detroit's public school district facing a $327 million budget deficit, the state-appointed Emergency Financial Manager has proposed closing half the district's schools and putting up to 60 kids in a classroom.

Robert Bobb admits that his deficit elimination plan could be disastrous for students — he calls it "draconian" — but he may have no choice but to implement it.

In January, he gave the plan to the state of Michigan, warning that it's the only way for Detroit Public Schools to "cut its way out" of its deficit. The state's department of education says that's exactly what Bobb should do.

"We're working through some very difficult and challenging budget situations," Bobb said last week. He backed away somewhat from one of the plan's most staggering provisions: 60 kids in some classrooms. But he says class sizes will go up as the district closes about half its schools.

The plan also calls for replacing individual school principals with regional ones, and cutting all general bus service.

Lots of Michigan districts take out short term loans in August to help pay employees and vendors because districts' fiscal year is out of sync with the state’s fiscal year. The Detroit Public Schools district borrows twice a year for cash flow purposes - in August and March.

User mtsn / Flickr

Governor Rick Snyder (and Budget Director John Nixon) presented the 2011 budget to a joint session of the Michigan legislature yesterday.

Michigan Radio's Jennifer White hosted a call-in show, “Funding Our State,” to take a look at the state of the state’s budget, which is currently facing a 1.8 billion dollar budget deficit for the new fiscal year that begins October 1st.

To find out what this budget means for educators, for finances, for business, and for you, click the link below.

Report: "Fireworks" over part of Snyder's Budget Plan

Chris Christoff, the Lansing Bureau Chief for the Detroit Free Press, says Governor Snyder plans to "eliminate Michigan's generous income tax exemptions for retiree pensions and IRA withdrawals as part of his budget plan" to be released tomorrow. Christoff wrote "a source familiar with the plan" says doing away with the tax exemption could generate more than $1 billion in revenue. From the Free Press:

Many expect Gov. Rick Snyder to set off political fireworks Thursday when he unveils a budget and tax revision plan he says will be simple, fair and efficient...Perhaps nothing will boom louder than a plan to tax pensions and other retirement income the same as all other income -- at 4.35%.

A Snyder spokesperson would not comment on the "speculation." Doug Pratt, a spokesman for the Michigan Education Association, told the Freep that Snyder will "will hear from a lot of retired employees in this state that are not going to be happy with that one." And an aide to republican State Senator Jack Brandenburg said the plan is "a nonstarter."

The Associated Press writes that Michigan's benefits for retirees are one of the most generous in the country:

The Washington-based Center for Budget and Policy Priorities says Michigan's benefits are twice as generous as those of second-place Kentucky. A retired couple in Michigan can have more than $100,000 of income without having to pay any state income tax...

Political pressure in the past has made it hard to reduce senior tax breaks to help the state's bottom line, even as Michigan steadily loses more to the tax breaks as the number of older taxpayers grows.

Governor Snyder will release his budget plan tomorrow.

Prison staff fear privatization is coming

Almost everything in the state is on the chopping block. There has been talk of privatizing parts of the prison system as a way to save money. The Associated Press says the Governor's budget plan will look at cutting around 10 to 20% out of the state's corrections budget.

State workers in prisons fear that will mean privitization. The Associated Press spoke with United Auto Workers Local 6000 spokesman Ray Holman:

The Prison support staff fear the governor may outsource their jobs to private companies to save money.

"If you're cutting $400 million ... you're going to have to go after something," said Holman, whose union represents tens of thousands of state workers, including prison support staff. "We stand to take a substantial hit." 

Former GM exec may return as advisor

The Detroit News says former GM executive Bob Lutz may return to the company as an advisor. From the Detroit News:

General Motors Co. has been in talks with former product chief Robert Lutz about bringing him back as a paid consultant, The Detroit News has learned.

The details were unclear Tuesday, but the 79-year-old Lutz continues to have a close relationship with GM, and the two have been in discussions about formalizing an advisory role, according to sources familiar with the discussions.

Lutz was known as a plain speaking executive at GM who was skeptical of the commercial appeal of electric cars and hybrids. As the Guardian reported when he retired in 2010, Lutz once described global warming "as a total crock of shit."

The Guardian writes that Lutz "predicted the internal combustion engine would reign supreme for at least a further decade, and that it would be "years and years" before alternatives make up even a tenth of the market."

Lester Graham / Michigan Radio

Reactions are coming in after some intense--maybe radioactive is a better word?--comments made by Lieutenant Governor Brian Calley on the governor's budget proposal, which will come out next week.

On Tuesday, Calley compared next week's budget announcement to an atomic bomb. Calley's comments, from WKZO:

"Here's why I think that our message on the 17th of February is going to be dropping an atomic bomb on the city of Lansing: We're going to do an all-cuts solution to our budget deficit."

Sara Wurfel, Governor Snyder's press secretary, claims that Calley misspoke. From the Detroit News:

"This was an extremely unfortunate choice of words," she said.

"It certainly doesn't take into account the very difficult decisions that are being made and the extensive efforts we are taking to help protect citizens and ensure we leave no one behind. We are doing everything we can to address the state's fiscal crisis and trim spending in all areas of the budget, but also to help preserve critical services."

Also, "this is not an all-cuts budget," she said.

Governor Snyder will roll out a citizen’s guide to the financial troubles facing the state, local governments, and school districts before a meeting of business leaders in Lansing this afternoon.

The governor is a retired investor and certified public accountant. He says the guide will give the public an easy-to-grasp outline of the condition of government finances in Michigan.

Governor Snyder says the state’s official financial report runs more than 200 pages and is too big and complicated, and it’s filled with too much bureaucratic jargon for most people to understand.

Snyder says his administration has picked what he considers the most critical information, such as the state’s revenue-to-expenditures, its reserves, and long-term obligations such as pensions, and put it into an easy-to-follow 13-page briefing:

“So I think this will be a big help in terms of the stage for a more-informed discussion, where all the public can participate because we’ll all have better facts to work off of and we’ll see how far beyond our means we’ve actually spent.”

Estimates peg the state’s budget shortfall for the coming fiscal year at about $1.8 billion.

The governor will present his plan to balance the budget later this month.

Lansing mayor Virg Bernero delivered his sixth state of the city address last night.  He had a lot to say about past accomplishments,  but said next to nothing about the city’s projected $15 million budget deficit. 

Look around and see for yourself, it’s happening in Lansing.

Lansing mayor Virg Bernero told the audience during his state of the city address.  To that end, Bernero  spoke a lot about recent business investment in the capitol city.

He didn’t speak directly to Lansing’s projected $15 million budget deficit. He did suggest part of the budget problem can be found across the street from Lansing city hall at the state capitol. 

City budgets across Michigan are on life support.   The loss of property tax values means the loss of property tax revenue.  High unemployment means the loss of income tax revenue.  And the continued failure of state government to manage its own budget problems has cost of tens of millions in state shared revenues.

Bernero also said Lansing needs to work with its neighbors to deal with a variety of regional problems.

Lester Graham / Michigan Radio

The state could be headed toward a two-year budget cycle.

Governor Rick Snyder and many lawmakers say they need to start thinking farther into the future when putting together a budget.

However, creating a two-year budget cycle would require an amendment to the Michigan Constitution. The Legislature would have to put it on the ballot for voters to approve.

State Senator John Proos says that could and should happen, but it will take time. He says in the meantime lawmakers can create a two-year projection:

"That’s something that every year instead of scrambling to fix a budget hole and not really telling the whole story about what our budget will look like out into the future, this will give us the time instead to say our revenue picture and expenditure picture is going to look like X. Once we’ve made that determination, then we can say are we actually getting value for the tax dollars that we’re spending."

Proos is expected to introduce a measure that would amend the constitution to create a two-year budget cycle as well as a part-time Legislature.

Proos says for now it’s important to complete work on the budget by Governor Snyder’s May 31st deadline.

Nikonmania/FLICKR

The city of Pontiac is one step closer to shutting down its Police Department and having the Oakland County Sheriff's Office take over the city's patrols.

Pontiac faces a projected $9 million budget deficit and Michael Stampfler, Pontiac's state-appointed emergency financial manager, has asked the Oakland County Sheriff Department to take over policing the city.

The Detroit Free Press reports:

A committee of the Oakland County Board of Commissioners voted 4-3 Wednesday to approve the $10-million contract. The county's Finance Committee will consider the plan today, and the full board is to vote on it Dec. 9... Undersheriff Mike McCabe said the department is expected to hire more than 60 of the Pontiac department's 70 employees and operate out of the city's headquarters in downtown Pontiac.

If approved, the Oakland County Sheriff Department would takeover on January 1st, 2011.