Monday, January 11, 2010

Fulton: Michigan Likely Saw Job Growth in 4th Quarter, Revenue Estimate Shows $1.6B Short on 2011

I'm leading with the statement from Fulton because it kind of blew my mind. We lost 278,000 jobs in 2009, the most in 70 years, but we actually saw job growth in the 4th quarter? That is pretty amazing.

The addition of about 10,000 jobs won't do much to help Michigan's highest-in-the-nation unemployment rate, which (U of M) economist George Fulton expects will remain around 15 percent through much of 2010.

But Fulton told state government economists Monday at the revenue estimating conference that a small net job gain is a welcome change from the huge job losses Michigan saw in the first half of 2009.

Now onto the revenue conference. The good news - no mid-year cuts to the schools will be necessary, FY 2010 is coming in pretty much on target. The bad news - we are anywhere from $1.62 billion (Hornbeck) to $2 billion (Christoff) short for FY 2011. Since Hornbeck has the happier number, let's go with his story:

Tax collections for the general fund and the school aid fund will be $17.36 billion this year, a 5.1 percent decline compared to a year ago and $17.44 billion next year, the semi-annual revenue estimating conference between the state treasurer and directors of the House and Senate fiscal agencies determined.

The consensus revenue numbers minus about $1 billion in federal recovery cash mean the general fund, the state's main checking account, will be $1.2 billion short and school aid will be short $423 million -- or $268 per pupil -- next year, said Gary Olson, director of the Senate Fiscal Agency.

"We're going to have to have significant changes in tax and spending policies," Treasurer Robert Kleine said.

Yes, you guys keep saying that, but somehow I'm having a hard time believing that any kind of "sane" is going to come out of this, because... well, you know. Certain people are running for certain offices and such. We will see what happens next. The Governor lays out her plan soon after the State of the State address, then the kids will stomp their feet and say "no", but they will also turn around and promise us that this will get done on time, yeah, you betcha. I'm guessing "after the primaries". If then. Or, maybe a miracle will occur, and the "Grand Bargain" will actually be made. You never know with this bunch.

You can stop laughing now.

Some interesting figures for the history books:

Olson repeated information provided by University of Michigan economists that shows the state had the 20th highest per-capita income level at the beginning of the decade and dropped to 40th when the 2009 figures are tabulated.

"From the top 20 to the bottom 10 in per-capita income -- the state needs to face the reality of that economic collapse," he said. "The last decade in this state has been unbelievable. We're not a wealthy state anymore."

Mitchell Bean, director of the House Fiscal Agency, said when adjusted for inflation the state's general fund is back to 1964 levels.

There might be some relief coming from Congress. Remember the House passed the Jobs for Main Street Act before they left for Xmas; that would bring Michigan around $950 million to put toward schools and Medicaid, freeing up money to plug in other places where it's needed.

39 states have opened deficits for FY2010, and nearly all of them are facing the same problems we are for FY2011 as the stimulus money goes bye-bye. Hope they can get that legislation through the Senate. Sure would be a shame to undermine the recovery just as it is getting started.