State prepares for shutdown as budget deadline looms

Mark Hornbeck and Karen Bouffard / Detroit News Lansing Bureau

Lansing -- With minutes to go before a midnight deadline state lawmakers failed to reach agreement on a budget deal, making a government shutdown likely.

A lockdown in the House, failed votes on tough issues and political gamesmanship punctuated the negotiations at the Capitol.

In rapid-fire votes throughout the day, Promise Grants were dealt an unpopular death blow, health care programs for the poor were slashed. But lawmakers couldn't agree on how deeply to cut school aid and revenue sharing for cities, counties and townships.

The House took no action late Wednesday night. The Senate passed the Corrections budget and voted to give a number of bills immediate effect, meaning they wouldn't have to wait until 90 days after the session ends to become law, while others failed an immediate effect vote.

Senate Republicans brought up an income tax bill with no intention of passing it in an attempt to show that Senate Democrats who voted against budget cuts also can't muster votes for a tax increase. The vote failed 33-2.

Lawmakers have been struggling to agree on nearly $1.3 billion in cuts. Federal stimulus funds or tax and revenue increases will be used to plug the rest of the hole.

The state began preparing for a partial shutdown -- the second in three years: Employees were warned they might not have to come to work today and vendors were told they might not be paid until a budget is in place.

Gov. Jennifer Granholm told 51,000 employees by letter Wednesday afternoon they were on temporary layoff as of 12:01 a.m. today unless a budget agreement could be reached in time. State workers were told to monitor news reports and the state's Web site for updates throughout the night to see if the Legislature completed its task of passing a budget to close a $2.8 billion deficit in the fiscal year that starts today.

Lawmakers have been struggling to agree on nearly $1.3 billion in cuts. Federal stimulus funds or tax and revenue increases will be used to plug the rest of the hole.

As a fallback plan the House passed a temporary budget bill that would pay the state's operating expenses for 30 days should the Legislature fail to adopt a budget and send it to Granholm for her signature. The Senate approved the continuation spending last week, but another vote is required to put it into effect immediately.

Granholm told lawmakers earlier in the day she would begin the shutdown at 2 p.m. unless the Senate gave immediate effect to the interim budget. But the Senate balked, fearful that putting the temporary spending in place would take the pressure off completing the budget and give Granholm the green light to veto budget cuts that had passed.

Barbs bared on both sides

The stalemate triggered strident exchanges between aides to Senate Majority Leader Mike Bishop, R-Rochester, and Granholm.

"She's desperately trying to interject herself back into control," said Matt Marsden, spokesman for Bishop. "What motivation does the House have to pass the tough cuts they must make if there is a continuation budget?"

Liz Boyd, spokeswoman for Granholm, said: "It's irresponsible of the Senate majority leader to put us in this position. They are holding the bill hostage for what they want politically, and that is wrong. This is not the time or place when we're shutting down state government."

A continuation spending plan would put off the deadline for passing the budget to Halloween.

"Halloween will soon be approaching and it's scary," said Rep. John Proos, R-St. Joseph.

The long day also saw fissures between members of the same party. House Appropriations Chairman George Cushingberry Jr. of Detroit chided some fellow Democrats during a floor speech for being "mamby pamby" because they refuse to vote for tax increases that could soften some of the painful cuts.

The House Tax Policy Committee convened in the evening to consider tax bills but recessed without doing so.

"There are a lot of moving pieces (in the budget) and if it's necessary to consider legislation in Tax Policy we are available to do that," said Committee Chair Kate Ebli, D-Monroe. She declined to say what tax measures might be considered.

Some discussion late in the day focused on approving interim spending for a couple of the most difficult budgets while the other bills would be sent to the governor's desk. Granholm has expressed her disapproval of some of the budget measures, but stopped short of vowing vetoes.

Throughout the day, the legislators furiously tried to pass 15 budgets that fund state departments. Twelve have passed both chambers.

"We made good progress on some tough budgets," said House Speaker Andy Dillon, D-Redford Township.

The House leaders essentially locked members in beginning at 10:40 a.m., allowing no one to leave while they were taking votes.

Mary Dettloff, a spokeswoman for the Michigan Department of Natural Resources, said if a budget resolution is not reached, campers at state parks wouldn't be vacated until Thursday.

"Our plan is to just sit tight," Dettloff said late Wednesday. "If there is no budget, we do have staff assigned to each park that will politely ask people to leave, then lock up (the parks)."

Park staff did not expect major problems with a possible shutdown since attendance "generally, this time of year, is pretty light," Dettloff said, adding that if parks close, reservations for that period would be refunded.

Busy budget day

In voting Wednesday:

• The Senate approved the contentious Community Health conference report which includes severe cuts to mental health services and Medicaid payments to doctors as well as the elimination of 14 health care education and disease prevention programs under Healthy Michigan. The House passed the Community Health budget earlier with the minimum 56 votes.

• The Senate narrowly passed, 19-18, the higher education conference report, which includes elimination of the Promise Grant scholarship program for 96,000 college students. The House earlier had passed the higher education budget, 57-51, one more vote than needed.

• The State Police conference report failed twice in the Senate over provisions that would allow the state to buy a new headquarters building that's built in Lansing. The Senate deadlocked with a 17-17 vote on the State Police budget after Sen. Cameron Brown, R-Sturgis, described it as a "$70 million palace" the state neither needs nor wants. The report also would restore 55 laid-off police troopers.

• A House-Senate conference panel on transportation, the last conference committee to come to committee agreement, put a cap on the state's potential involvement in building a second Detroit-to-Windsor bridge in a conference report approved Wednesday morning. The budget included in the report would limit the state's contribution to $2.5 million, and requires that a traffic study and proposal be completed by May 1, 2010.

The conference report reduces gross transportation funding of $3.26 billion, including $93.5 million less in state transportation funding, reflecting an ongoing reduction in fuel taxes and vehicle registration fees collected in the state.

About $5.6 million in funding is included for rail passenger service, a $4 million reduction and about one-half to three-quarters of operating assistance needed to fund Amtrak rail service for a year. The reduction includes a $1.2 million cut in state general transportation funding.

The Senate approved the transportation report by an ample margin. But Majority Floor Leader Alan Cropsey, R-DeWitt, immediately motioned for reconsideration, with no objection, so the matter has been put on hold. Later, the House passed it unanimously.

• The Senate passed the corrections conference report 23-14 after passing a bill earlier this afternoon to extend the sunset on a boot camp program that prepares inmates for parole in 90 days, rather than a year. The budget was predicated on savings from the program.

The budget includes a gross appropriation of $1.9 billion, a reduction of $98.5 million from the previous year. There is also a negative appropriation of $38.2 million that Corrections would be required to make up by reducing overall costs by $841 per prisoner.

The conference budget also increases by $4.3 million the appropriation paid to counties for the County Jail Re-entry Program.

The bill has passed the Democratic-controlled House.

The House moved a supplemental spending plan, voting 66-42 for a $260 million bill to restore Promise Grant scholarship money for college students, reduce revenue sharing cuts to 3 1/2 percent and restore some health care cuts. But there was no revenue provision in the bill to carry out those moves.

Democrats have said they will try to pass revenue bills after the cuts are approved to restore some of the deep cuts in popular programs. Ultimately, the budget bills must be signed by Granholm, who has expressed disapproval with several of the spending bills, but has stopped short of pledging a veto. Granholm can veto individual bills or use her line item veto power to strip individual items out of the bills.

mhornbeck@detnews.com (313) 222-2470 Detroit News Staff Writer Mark Hicks contributed.