Michigan has one of the worst-performing economies in the nation, and its fiscal outlook for 2010 is gloomy, to say the least. Next year’s state budget is likely to be a mess:

Revenue is expected to remain tight, and the $1.5 billion in federal stimulus money that’s propping up this year’s general fund and School Aid Fund budgets drops to a combined $394 million in fiscal 2011, according to the Michigan Economic Recovery Office, which oversees the stimulus funds. That poses a major challenge especially in an election year.
And early last week, the state House had sent to the Senate a measure to use $184 million in fiscal 2011 stimulus funds this year to help school districts, leaving even less in fiscal 2011.
The governor’s office already has asked departments to put together plans for a 20 percent reduction in the general-fund portion of their budgets for the 2011 fiscal year, said Megan Brown, Granholm’s deputy press secretary.

There are alternatives to Jennifer Granholm’s tax increases and ham-handed budget plans, or to continued federal bailouts. The Mackinac Center for Public Policy’s fiscal guy, Mike LaFaive, has plenty of ideas. In the meantime, fiscal conservatives around the country take note: Michigan represents the destination that all too many politicians are taking their state and localities. You don’t want to go there — the fiscal state, I mean, not the beautiful Lady of the Lakes.