Michigan began shutting down its government at midnight last night due to not being able to balance the state budget.
Michigan law will not allow the government to run without a balanced budget.
Michigan began the shutdown of government services at 8 P.M. last night by informing more than 1,000 campers in state parks they had to leave. This was followed by fewer state police on the highways and lottery sales stopped.
At 4:18 this morning Democratic Gov. Jennifer Granholm called off the partial government shutdown.
"This budget agreement is the right solution for Michigan," Granholm said in a statement. "We prevented massive cuts to public education, health care and public safety while also making extensive government reforms and passing new revenue. With the state back on solid financial footing, we can turn our focus to the critical task of jump-starting our economy and creating new jobs."
But at what cost to Michigan tax payers when Michigan already has the nation's highest unemployment rate. In August it was 7.4 percent in August.
The state Legislature passed a combination of tax increases and government restructuring bills. After this Gov. Granholm signed a 30-day extension on the budget.
Michigan's income tax rate increased from 3.9 percent to 4.35 percent.
Michigan's six percent sales tax will now apply to some services. Some of the services include ski tickets, administrative and investment services, consultants, warehousing and storage, interior design, commercial landscaping and janitorial services.
By raising the income tax it will give an additional $765 million to the state. The bill was written so the rate will gradually drop back to 3.9 percent between 2011 and 2015.
Extending the sales tax to some services starting Dec. 1 will bring in an estimated $614 million for the 10 months remaining in the fiscal year at that point, or about $750 million annually, state Treasurer Robert Kleine said.
The deal came after a marathon legislative session that covered parts of three days. There has been nothing but political posturing for months as the Democrats and Republicans did not want to compromise with each other. Michigan has a Democratic controlled House and a Republican controlled Senate.
With elections coming in 2008 and 2010 some of the Democrats who are vulnerable did not want to vote for a tax increase. Some of the Republicans fear recalls if they would support a tax increase.
This has been a major problem with Michigan is the Democrats and the Republicans not being willing to work together.
