Mich. expects deep budget cuts even with fed help

Gov. Granholm expects deep cuts to Mich. budget even with help from economic stimulus package

LANSING, Mich. (AP) -- Michigan Gov. Jennifer Granholm was reassured Thursday when she heard President-elect Barack Obama unveil his economic stimulus plan, but warned the federal help won't save the state from deep budget cuts.

In his comments at George Mason University in Fairfax, Va., Obama made an urgent pitch for a mammoth spending proposal to prop up the failing national economy.
The situation is even more dire in Michigan, which has the nation's highest unemployment rate and a domestic auto industry struggling to survive. The state treasurer and directors of the Senate and House fiscal agencies meet Friday morning to estimate how much less tax revenue Michigan will bring in than expected because of the deepening recession.

Granholm expects the news to be grim. Her administration in February will put out a proposal for next's year's state budget, and economists estimate it will have to be hundreds of millions of dollars less than the current spending plan. Granholm said last month that does not plan to raise taxes during the final two years of her term.
"I believe that every aspect of the budget is going to see cuts. Every aspect," the governor warned in a Thursday phone call to The Associated Press from Virginia, where she had gone to hear Obama unveil his stimulus plan.
"Even with the excitement that this recovery and reinvestment plan generates, it's not going to totally fix the problem for state budgets across the country," she said. "It's not a budget-fixing plan. It's an investment plan for people."
Granholm, a member of the incoming administration's transition economic advisory board, has pinned her hopes for a state recovery on the development of new alternative technology and alternative energy jobs, such as the manufacturing of car batteries to power future plug-in hybrid cars and wind turbines that can replace existing power sources.

She said Thursday the help that Obama wants to provide in the way of tax cuts and investments in alternative energy will help her achieve that goal.

"I think he's going to make a significant commitment to creating jobs in that sector," she said. "The idea of putting people to work and reducing our dependence on foreign oil, and energy efficiency, that's sort of one sector of jobs that would be created."
Obama's plan to invest construction money in schools and university buildings and roads and bridges also will help Michigan, as will his plans to put more money into worker retraining and health care programs for the poor, Granholm said.
Michigan can't count on that help until a stimulus package gets through Congress and onto Obama's desk for his signature. But the governor was heartened by Obama's decision to offer incentives to create jobs, especially environmentally friendly ones.
"All of that job creation investment is going to be extremely beneficial to us as we try to diversify" away from the auto industry, she said. "I believe firmly that this will create jobs in Michigan this year if it's passed quickly."

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