Fewer stimulus funds available for 2010-11 year

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Dwindling stimulus dollars mean Gov. Jennifer Granholm and Michigan lawmakers will have a tough time balancing the state’s 2010-11 fiscal year budget.

More than $3.3 billion of federal stimulus money has been used in the past two years to balance the state’s budget, but this year Granholm and state lawmakers need to eliminate a projected $1.7 billion deficit with the aid of only $395 million of federal stimulus funding.

Granholm will announce her budget proposal Thursday for fiscal year 2010-11, and she is likely to use all of the state’s remaining federal stimulus dollars, said Gary Olson, director of the nonpartisan Senate Fiscal Agency.

“I am expecting she is going to recommend the appropriation of (stimulus) money beyond what we have already received,” he said. “(President Barack Obama) in his budget last week had a recommendation for additional money for the states to help balance their budget.”

Olson said Obama’s budget proposal included about $500 million in additional stimulus funding for Michigan, and although this funding has not been approved by federal lawmakers, Granholm is likely to include those funds in her budget proposal.

Granholm’s spokeswoman Tiffany Brown said the details of how stimulus dollars will be used in the 2010-11 budget will be released in the governor’s budget proposal Thursday.

State Sen. Bill Hardiman, R-Kentwood, who sits on the Senate Appropriations Committee, said he does not think the additional federal stimulus dollars proposed by Obama will be approved.

“We doubt Congress will allocate more stimulus dollars because there is a very strong reaction against more spending,” he said. “I just don’t think we will have more stimulus dollars.”

It should not matter whether Congress approves additional stimulus spending, said Rep. Robert Dean, D-Grand Rapids, a member of the House Appropriations Committee.

“If we had those to depend on it would make it much easier,” he said. “But we definitely can’t depend on those for this budget cycle or in the future.”

The 2009-10 fiscal year budget used more than $1.5 billion of federal stimulus money to help eliminate Michigan’s $2.8 billion deficit. In the 2008-09 fiscal year, more than $1.8 billion of federal stimulus fuding were used to balance the budget.

Even with the aid of stimulus dollars last fiscal year, state financial aid funding decreased by more than 61 percent and about 8,200 MSU students were left without the Michigan Promise Scholarship.

Without that supplemental funding, the state faces a difficult budget situation, said MSU President Lou Anna K. Simon.

“We hope that (higher education) will be as well treated as anyone can be in this budget,” she said.

Staff writer Zane McMillin contributed to this report.

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