Mich. governor to unveil cuts, possible tax hike Thursday in final budget plan

Mich. gov to unveil cuts, possible tax hike

LANSING, Mich. — Michigan Gov. Jennifer Granholm will roll out her final budget plan Thursday amid a chorus of calls for more spending from some groups and lower taxes from others.

The Democratic governor hasn’t said if she’ll propose raising or shifting taxes as a way to deal with a deficit of at least $1.6 billion in the budget year that starts Oct. 1.

But it seems likely. Granholm has proposed saving about $450 million annually by trimming teacher and state worker benefits, cutting prison costs and requiring that some school services be privatized. But that still leaves a gaping hole.

Granholm spokeswoman Liz Boyd declined to give details Wednesday, but did give a few hints.

“It’s not an all-cuts budget,” Boyd said, noting the governor intends to protect spending on job creation, education and assistance for those in need. The plan also will address the structural deficit, she said.

Republican lawmakers have warned they’re unlikely to support any tax increases, making deep cuts likely if they get their way. They say higher taxes will damage the state’s already weak economy.

“Everyone is struggling right now,” Battle Creek Sen. Mike Nofs said Wednesday. “Families have squeezed their budgets, businesses have squeezed their budgets. To ask any of those groups to step up with more revenues, I don’t think is right.”

It will be the final budget proposal of Granholm’s eight-year term, and she’s taking the unusual step of delivering the message herself to a joint session of the House and Senate Appropriations committees at the Capitol. Budget director Bob Emerson will speak on specific programs.

“As in every year, this budget will cut state spending in recognition of the fiscal realities we face,” Boyd said.

Michigan’s overall budget has increased slightly in recent years, but that has been largely because the federal government has sent the state more money, most recently from the federal stimulus plan.

But the amount the state raises from its own taxes has declined, forcing general fund appropriations to shrink $2 billion over the past two years. The school aid fund also is taking in less money.

That has meant around $1 billion in cuts to state programs this year. Public school districts are getting at least $165 less per student. Most state departments were cut 10 percent and some departments have been eliminated. Less money is going to local governments for services such as police and fire protection and the Promise Grant college scholarship has been eliminated.

Granholm said last week in her State of the State address that she wants to bring back the Promise Grant and will present a creative way to pay for it. She also said she won’t accept cuts to public schools, and has indicated she’d like to see some decreases in business taxes.

Regardless of what Granholm proposes, it will be lawmakers who decide what to do about taxes and spending. The governor has asked that they send the budget bills to her desk by July 1. Last year the lack of a budget caused a short government shutdown and then the GOP-controlled Senate withheld the bills for weeks before sending them to Granholm for signing.

Lawmakers want to get the budget done earlier this year so they can spend time campaigning. But the July 1 deadline may be hard to meet given the tough decisions ahead, the governor’s lame-duck status and the wide spectrum of opinion on taxing and spending.