LANSING – With the 2008-09 fiscal year just nine days old, concerns are already being raised about the current budget and whether the state will be forced to make cutbacks this year. Many of the concerns are being driven by the ongoing uncertainty in the national and international economies, but state officials are saying at this point that it is far too early to speculate on changes or cuts forecast for the budget.

Clearly, though, there is nervousness overall, especially as the panic-driven investors continue to drive stock prices into bargain sub-basement prices and the economy continues to contract partly as a result of the fear. On Thursday, for example, Standard & Poors forecast a significant slowing of consumer spending through the rest of 2008 and into 2009.

Add that to newly lowered forecasts for automotive sales (stocks for both General Motors and Ford Motor Company have been placed on credit watch by major rating agencies as they have sunk to new lows), and that will likely mean additional stress on Michigan’s sales tax revenues for the fiscal year. (For the 2007-08 fiscal year that just ended, total sales tax revenues were expected to increase by just 1.5 percent. Through August it was up by 2 percent for the year.)

Leslee Fritz, spokesperson for the State Budget Office, said there is not a state budget officer in the nation not nervously watching the economy, the national credit markets and other factors.

But until there is a revenue estimating conference to determine revenues for the current fiscal year are declining, the state will not take action to cut budgets, she said. A revenue estimating conference is not scheduled until January although officials could request a special meeting if they felt it necessary.

Governor Jennifer Granholm more than a year ago issued directives to state departments limiting spending, and those remain in effect, Fritz said.

In addition, officials are hopeful that when the books close on the 2007-08 fiscal year it will leave a surplus that can be applied to the current fiscal year.

But Thursday, an article in the online section of Business Week listed Michigan was being 19th out of 20 states that anticipate the greatest fiscal problems for current fiscal year. That itself was based on research from the national Center for Budget and Policy Priorities.

However, Fritz said the potential budget deficit the Business Week article cited for Michigan is the amount the state anticipated in May 2007 it would be short for the 2007-08 fiscal year. “That problem has already been solved,” she said.

Also on Thursday, the Associated Press quoted House Fiscal Agency Director Mitch Bean as saying it was “reasonably certain” the state would have to make budget cuts this fiscal year. Based on current trends it was likely the state would have to reassess and lower its revenue estimates in January, Bean said.

According to the Business Week article, some 31 states face potential gaps in their revenues and budgets this fiscal year, which could total deficits of $53.4 billion. The worst is California, which has a potential budget gap of 22.9 percent and a potential deficit of $22.2 billion.

California already shares with Louisiana the worst credit rating of all the states. Last week, the state notified the U.S. Department of Treasury it may ask for a loan of $7 billion since it was unlikely to be able to acquire financing on the open market.

California was followed by Arizona and Florida in terms of the worse budget gaps, both at 19.9 percent. Arizona could see an estimated deficit of $2 billion, while Florida could see a potential budget deficit of $5.1 billion.

Some of the states faced relatively large deficits in percentage terms that were a drop in the bucket compared to other states. For example, Vermont was anticipated to have a budget gap of 6.8 percent but for the tiny state that amounts to a possible deficit of $83 million.

The Business Week article said that Michigan could face a budget gap of 4.8 percent with a potential deficit of $472 million, but Fritz said that figure is well over a year old.

And in other state fiscal news, Virginia, now one quarter into its fiscal year, announced Thursday that it was laying off more than 500 state workers to help keep its budget balanced.

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