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Deal reached on Michigan's 2011 budget

CHICAGO (Reuters) - Michigan will cut spending and not resort to tax or fee hikes to balance its upcoming fiscal 2011 budget, according to details released on Wednesday of an agreement between Governor Jennifer Granholm and legislative leaders.

"The agreement cuts state spending, attacks the state's structural deficit, and continues reforms in government," the Democratic governor said in a statement. "These changes are essential if we are to maintain our critical investments in job-creation and education and provide the services citizens need during this time of economic transition."

She added that about $600 million in general fund spending will be chopped.

Republicans who control the state Senate trumpeted the lack of fee and tax increases.

"This budget resolution is a statement that the people of Michigan aren't willing to support any new taxes or fees," said Senate Majority Leader Michael Bishop, a Republican from Rochester Hills, in a statement. "People are fed up with government, and they want us to move forward with real, concrete solutions to turn the state around, and this budget is a first step."

The budget for the fiscal year that begins October 1 also includes an estimated $60 million in state employee retirement savings, no cuts to revenue sharing to local governments and a tax amnesty program, according to Senate Republicans.

Michigan was hit hard by the recession and the state consistently has had one of the highest monthly jobless rates among the states.

(Reporting by Karen Pierog)