Introduction

The 2007 Michigan budget crisis occurred when the Michigan Senate and House could not come to an agreement on the new budget plan. The House was controlled by the Democrats, who, like the governor, Jennifer Granholm, wanted to raise taxes to solve the budget deficit. The Republican-controlled Senate wanted to cut spending to reduce the deficit. The state faced a government shutdown that began on October 1, but reached a final agreement within several hours, ending the shutdown.

Agreement Reached

On 1 October, 2007, Michigan's government website, michigan.gov, stated that an agreement had been reached and all temporarily laid-off workers were to return to posts the following day:

"AGREEMENT IS REACHED

State legislators have reached a comprehensive budget agreement to end a government shutdown. State government will be open for business on Monday, October 1 and all state employees should report for your next scheduled shift.

The budget agreement includes reforms and new revenues that will fund the vital work of state government and help Michigan avoid the types of structural budget issues that have contributed to recent financial problems.

The notice of temporary layoff you received on Friday, September 28, 2007 is no longer in effect. Again, all state employees are expected to report for work at the beginning of your regularly scheduled shift on Monday, October 1, 2007."<hr>
However, this is only an agreement and a official budget bill still needs to be passed. Under the current bill the Michigan State government plans to cut $300 million dollars in spending. As well as to increase income tax to %4.4 and the addition of the %6 sales tax to a broader range of goods and services. The agreement is only good for four weeks and a budget bill needs to be passed by then, otherwise the Michigan state government will be facing another shutdown in November.