There are few rabbits left in the hat.

- Governor's Emergency

Financial Advisory Panel

Six-term Democratic Governor G. Mennen "Soapy" Williams (1949-60) once said of Michigan's chief executives: "Each and every one of us stands on the shoulders of our predecessors."

In recent decades it could be said: "Each and every one of us sinks in the deficits of our predecessors." Current Democratic Governor Jennifer Granholm is now in the deepest gubernatorial hole ever, not all inherited.

She did indeed inherit a deficit from Republican Governor John Engler (1991-2002), who inherited one from Democratic Governor Jim Blanchard (1983-90), who inherited one from Republican Governor Bill Milliken (1969-82).

Blanchard and Milliken cochaired Granholm's 12-member bipartisan Emergency Financial Advisory Panel that in its "Michigan's Defining Moment" report Friday said:

"Michigan faces both a cyclical and structural dilemma. Over the next 18 months, state policy makers are looking at approximately $3.5 billion of services and programs unsupported by revenues."

As panelist Tom Clay of the respected Citizens Research Council of Michigan said in plainer language: "The state faces a fiscal train wreck."

In 1982, Milliken, Michigan's longest-serving governor, lamented in his 14th and final year, "two back-to-back national recessions… have left depression conditions in Michigan."

Now, says Milliken, Granholm faces "a one-state recession" and "the gravest" dilemma of any Michigan governor.

How grave?

For starters, as noted by the panel, the current fiscal year will be the seventh consecutive in which state revenues have fallen short in funding state programs and services; Michigan has had six consecutive years of net job losses, the longest stretch at least since the Great Depression of the 1930s; and its per capita income is now five percent below the national average - our lowest point since 1933.

The panel, conveniently named by Granholm to do a quickie onemonth assessment after her 2006 reelection campaign in which Republicans contended she was engineer of the train wreck, said:

"A convergence of forces imperils Michigan's state and local governments. The combination of tax cuts without corresponding spending cuts, failure to confront overdue government policy and structural reforms, a pattern of using one-time money to handle real structural deficits, and the extreme stress placed on the state's manufactures has produced the crisis. It has been developing for a long period of time and will take uncommon courage, vision, and actions hewn from facts to resolve."

The panel called for "policy makers at all levels" - who else but Granholm and the Legislature? - to "accept the mantel of stewardship and shed the robes of partisanship."

Ringing rhetoric - but fact is, the solution will be slugged out in partisan trenches under a Capitol dome where there is a Democratic House and a Republican Senate.

The panel, as predicted in this and other spaces, did not recommend specific taxes, but did indeed offer a cover for increases that Granholm will recommend.

The panel was void of a true economic balance because it lacked conservative voices, but it nonetheless was wise in concluding that Michigan:

+ Cannot economically grow its way out of the current financial crisis facing state and local government.

+ Should not rely solely on budget cuts to balance state budgets this year and next.

+ Must restructure taxes in a manner that would immediately increase revenues, but should not solely tax its way to balanced state budgets.

+ Must fundamentally reform government and the delivery of public services.

On the last point, it is hardly a quick fix to the current crisis, but the panel correctly said consideration should be given to "encouraging, and if need be requiring, local units of government and school districts to share or consolidate administrative services and deliver them more cost effectively."

In short, while dealing with the current emergency, take steps to cut future costs for taxpayers.

George Weeks retired last year after 22 years as political columnist for The Detroit News. His weekly Michigan Politics column is syndicated by Superior Features.