Senate spars over budget

Dems, GOP can't agree on deficit resolution

Gary Heinlein and Mark Hornbeck / Detroit News Lansing Bureau

LANSING -- With a state shutdown looming only 11 days away, Senate Republicans and Democrats spent Wednesday swapping accusations and dire predictions about what severe cuts or a government stoppage would do to essential state services.

Bottom line: There was no agreement on how to erase a $1.75 billion deficit and no immediate prospect of resolution of the budget that is supposed to be put in place by Oct. 1.

Senate Republicans, who accused Gov. Jennifer Granholm and other Democrats of using a possible state closure to pressure lawmakers to pass a tax increase, drew up a list of disastrous consequences should a shutdown occur.

Included on the list: School closings, ceasing of emergency police services, loss of medical services to the poor, and damage to the state's credit rating for decades to come.

"The governor is using the threat of a government shutdown to leverage her tax hike," Senate Majority Leader Mike Bishop said.

"This is the most irresponsible thing she can do."

Senate Democrats, not to be outdone, accused Republicans of stubbornly insisting on $1 billion in draconian budget cuts that would harm residents. They put out their list of what those cuts would mean, including wiping out medical care for 16,200 young adults from poor families; closing three prisons and two prison camps; and slashing public transit for seniors.

"There's no way we can have the kind of Michigan that will compete for jobs and have the kind of communities we want with this level of cuts. I'd be surprised if very many Republicans want to go that far, which may be why they haven't put it up to a vote," said Tom Lenard, spokesman for Senate Democratic Leader Mark Schauer, D-Battle Creek.

Granholm was more upbeat, saying she's "a little more encouraged" that the state's fiscal crisis will be resolved.

"Every day I'm a little more encouraged. Any movement is good movement," the governor told reporters at a brief press conference Wednesday

Granholm is willing to agree to some budget cuts, but says most of the deficit should be closed with tax increases. If a resolution isn't reached by Oct. 1, nonessential government services could cease.

Bishop, at a press conference just minutes after the governor's, lambasted Granholm and her fellow Democrats failing to come up with a solution.

"I have no idea what to expect on any given day," Bishop said.

He said the Senate will meet Sunday to deal with essentially empty tax bills sent to it by the House this week. Legislative rules require bills to lie over five days before they can come up in the second house; Sunday is that day.

He wouldn't say how much of a tax increase Senate Republicans, who control that chamber, may be willing to accept.

Republicans say they won't consider a tax increase until they are convinced that they've trimmed as much from state spending as possible.

Democrats believe that reducing the budget by more than $300 million would seriously harm services.

The state income tax is 3.9 percent; Democrats want to raise it to at least 4.6 percent, where it stood in 1986.

Republicans have said they won't go higher than 4.3 percent, but there is no guarantee that GOP members would actually support that rate if it were put to a vote.

Going to 4.3 percent would raise about $660 million, and Granholm reiterated that it's not enough. Still in play, however, is a plan to extend the sales tax to services that are untaxed -- such as lawn care and dry cleaning.

The income tax was at 4.3 percent in 2000; its all-time high was 6.35 percent, from 1983-85.

Granholm said this week that she will veto any continuation budget presented to her by the Michigan Legislature, unless it includes a tax increase. A continuation budget would allow the government to keep spending at current levels and would buy some time to pass new budget bills.

Administration officials said Wednesday there's not enough time to pass a new state budget by Oct. 1.

Bishop said the House and Granholm should approve the continuation budget, without the veto threat, to avoid interruption of government services.

Five Republican members of Congress from Michigan wrote a letter of support to their Lansing colleagues Thursday, urging them to stand tough against higher taxes.

"A huge new financial burden on Michigan's families and their job providers will not bolster our economy, nor will it create jobs," said Rep. Mike Rogers of Brighton.

"In fact, the massive tax increase the governor wants will slow our state's sagging economy even more, pushing Michigan out of the nation's economic basement and further down into the sub-basement."

The others were Reps. Thaddeus McCotter of Livonia, Tim Walberg of Tipton, Fred Upton of St. Joseph and Joe Knollenberg of West Bloomfield.

You can reach Mark Hornbeck at (313) 222-2470 or mhornbeck@detnews.com.