By Mary Drier (Contact / Staff Bio)
June 13, 2009 - 11:33 a.m. EST

TUSCOLA COUNTY — As the state cuts its budget, county commissioners worry the trickle-down effect could become a flood of cuts for them and other municipalities.

“When you’re dealing with the state, you’re always holding your breath and waiting on pins and needles to see what is going to happen,” said county Controller Mike Hoagland. “As the state looks at a continued looming deficit, I don’t think anyone will be unscathed by their cuts.”

Despite steady state budget cuts over the last few years, a deficit continues to loom. It’s estimated the state’s 2010 budget, which takes effect Oct. 1, could have a $1 billion deficit, and the 2011 budget a $2 billion deficit.

“I bet by 2012 there won’t be any revenue sharing for anyone. The way things are going I don’t think any programs that used to be untouchable... like education, will remain that way. I can see everything taking a hit, and some a hard hit,” said county commission Chair Jerry Peterson. “The state is facing a structural deficit. That has to be addressed. The cuts that have been made just skated around it. I think real cuts... hurting cuts are going to have to be made to turn things around.”

Plus, adding to the problem are the Chrysler and General Motors bankruptcy filings, which are expected to further erode the economy.

“It will be interesting, and scary, to watch the impact of that,” said Hoagland. “That will be felt throughout the state’s economy in a ripple effect to so many different economic aspects.”

County commissioners are concerned about what impact the state’s continued economic troubles will have on revenue sharing’s future.

The state started rolling forward taxes over a three-year period from December to June in 2004 to help balance its budget. By doing that, a pool of money was created for counties to draw from until they met the criteria to go back to revenue sharing.

Because Tuscola County has the lowest operating millage of any of Michigan’s 83 counties, it was the first last fall go back to receiving revenue sharing, and other counties are scheduled to start receiving it, too. Some counties will have revenue share funding of several millions of dollars due them.

When the state changed the due date for taxes, and shifted revenue-sharing methodology, the plan was there would be enough money generated by then to have enough money to resume revenue sharing payments to counties.

That was five years ago. Since then, the state’s finances are in worse shape now than before.

“There are a lot of changes coming. With cuts, the state shifts responsibilities to others, mostly counties, and without any funding to help,” said Commissioner Tom Bardwell. “Before this is over, there are going to a lot of long and disappointed faces all the way to Lansing.”

Hoagland noted the state can make changes at any time.

“I’d say all bets are off at this point,” said Hoagland. “County revenue sharing was cut and changed before, and now there is talk of cuts of revenue sharing for villages and townships.

“I don’t think anything (financially) is safe with the state at this point.”

Revenue sharing is Tuscola County’s second largest revenue source behind property tax.

“Property tax is also declining,” Hoagland said. “We’re fortunate in the Thumb. We had a lot of farmland, and that is increasing in value.”