Michigan Sees Budget Gap Twice as Big as Last Recession’s

(Bloomberg) -- Michigan is facing a revenue shortfall twice what it suffered during the Great Recession because of the abrupt shutdown of much of the U.S. economy due to the coronavirus pandemic.

The state said Friday revenue will fall about $3.2 billion short for this fiscal year and $3.1 billion in fiscal 2021. The $6.3 billion combined deficit -- its largest ever -- is higher than the low-end estimates of $5 billion that the state had been projecting.

Michigan’s revenue loss is much deeper than what the state dealt with during the 2008 financial crisis, Eric Bussis, director of the state’s office of revenue and tax analysis, said during a Friday budget meeting. For fiscal year 2009 and 2010, the state had to contend with a $3 billion revenue shortfall, he said.

In response, Governor Gretchen Whitmer is already taking steps to cut government spending. This week, she announced the scale back the work schedules of about 64% of the state’s workforce, or 31,000 people, through mandatory unpaid days off.

The move is expected to cut state payroll costs by $80 million, and it comes after the state implemented a round of temporary layoffs of about 3,000 employees.

Michigan officials said they will revisit the revenue estimates one more time in late August or early September, because of late tax filings, to ensure accuracy. That’s a departure from its typical biannual revenue check process.

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