Michigan leaders wrestle with expected $6B deficit from coronavirus economy crater

LANSING, Mich. (FOX 2) - One of the best ways to understand how the COVID-19 crisis has created Michigan’s current recession is to look at vehicle sales.

In 2019 almost 17 million units were sold but last month in the middle of the pandemic, it was about seven million units That’s a huge economic ouch.

The same ouch was felt by state bean counters who predict the loss of revenue from the sour economy will create about a $3 billion hole this year and another $3 billion next year.

It will be up to the two GOP legislative leaders and the governor to find a way to file in the budget hole with three options: cutting state services, raising taxes and hoping for a bailout from the federal government.

Michigan Budget Director Chris Kolb had a chance to remove an income tax hike from the negations as an option, but he would not take it off the table.

"At this point what we have to do is look at every option we have and make a plan that fills this hole," he said. "But the only way we can fill it and we are expecting to get, is federal help. And that is the way we are going to get through this.

But there is no guarantee the president and Republicans will send in extra cash. The governor has already slapped temporary layoffs on 31,000 state government employee but the savings is only $80 million.

Can the budget director make a guarantee to state civil servants that there will not be permanent layoffs once things are all said and done?

"Right now there is no playbook to deal with this," Kolb said. "But that is not what I am foreseeing, but everything has to be looked at. It is way too early for us to say what is, or isn't."

On a good news front, state officials were told today it is likely Michigan school kids will be back in the classroom in the fall because they are not getting the virus. And University of Michigan forecasters also feel there will not be a second wave of the virus the fall.