Lansing leaders watch auto developments

By Rick Pluta, Michigan Public Radio Network

Lansing, MI – Lansing, MI (MPRN) - Political leaders in Lansing are trying to anticipate how General Motors and Chrysler's restructuring plans will affect government programs and spending.

Layoffs, reduced salaries, and production slowdowns in the auto industry are expected to reduce tax revenues and hurt funding for state services.

At the same time, demands for public assistance are expected to grow as layoffs add more people to the ranks of the unemployed.

Michigan already faces a budget deficit of $785 million in this fiscal year, and about $1.5 billion in the fiscal year that begins October first.

But policymakers and economists agree that a bankruptcy filing - even a short-term restructuring - by Chrysler, General Motors, or both, would have an even more disastrous impact on Michigan's economy and the state budget.