Dear Colleagues:
 
I want to first thank you for your continued patience and support during these challenging times and to say how deeply grateful and blessed I am to work alongside such dedicated employees. 
 
I also want to brief you about the new comprehensive budget agreement and what to expect in the weeks ahead.  The agreement (see attached summary) includes a 30-day continuation budget that keeps government running without interruption and protects the work you do that is so important to citizens; and it allows the Legislature to finalize the 2008 departmental budgets, which I will sign into law later this month.  This plan includes $1.35 billion in new revenue that will allow us to keep moving our aggressive economic plan forward to diversify Michigan's economy.  The additional revenue will help bring more companies to Michigan that will create good-paying jobs in cutting-edge industries like alternative energy and advanced automotive manufacturing; and it will help us train workers for existing job vacancies. 
 
The agreement also calls for $440 million more to be sliced from the budget, so we will have some additional belt-tightening to do.  But the good news is that we were able to prevent massive cuts to health care, education, and public safety; and Michigan will finally be on solid financial footing. 
 
In the weeks to come, we will implement government reforms that will help us live within our means while still delivering the same great service to the citizens of Michigan.  And as we take these next steps to identify efficiencies in state government, your department director and I will make sure you are in the loop about our progress. 
 
Again, thank you for all that you do to serve the state with Excellence, Integrity, Teamwork, and Inclusion.  I sincerely appreciate the work that you do and the sacrifices that you make in service to the great state of Michigan and for our ten million citizens.  I am looking forward to building the Next Michigan - with you - the best public servants anywhere.
 
Sincerely yours,
Jennifer M. Granholm
Governor
 
 
Summary of the Comprehensive 2008 Budget Plan
 
CUTS - to put Michigan's fiscal house in order now, while protecting health care, education, and public safety from being slashed:
 
-  The plan will require $440 million in cuts for fiscal year 2008 - the details will be determined in the weeks ahead.  This agreement prevents massive cuts to health care, education, and public safety.
 
REFORMS - to save taxpayer money in the long-term, keeping Michigan competitive and keeping future spending in line with revenue:
 
-  Allows school districts to shop for competitive and quality health insurance plans so as to maximize value in public employee health care and save taxpayer money.
 
-  Creates incentives for healthy behavior for Medicaid recipients, lowering co-pays for people who quit smoking and stay in shape, and saving taxpayer dollars in the long-term.
 
-  Requires a common calendar for school districts within each intermediate school district.
 
-  Creates government efficiency commission to target waste and red tape and make sure that the state is fulfilling all promises to local governments.
 
-  Eliminates "double dipping" so that state employees are no longer permitted to "retire," start collecting retirement benefits, and then return to work for the state or for a state contractor.
 
REVENUES - to protect health care, education, and public safety in this tough economy, and fix the budget deficit:
 
-  Extend sales tax to certain non-essential luxury services including guards and armored cars, private investigators, massages, skiing, landscaping, limos and cabs.  Takes effect December 1, 2007.
 
-  The income tax is restored to 4.35 percent, slightly lower than the rate for most of the 1990s.  The tax takes effect October 1, 2007, and the rate will begin going back down in 2011.  Even after restoring the income tax to 4.35 percent and the addition of service taxes, Michigan ranks 27th among 50 states - clearly the middle of the pack in tax burden.
 
-  Together, this combination of income tax and service taxes will cost the typical Michigan family less than $1 per person, per week - just about the cost of a can of pop.  And it protects the state from massive cuts to health care, education, and public safety that would have jeopardized Michigan's high quality of life and hurt our economic future.