Michigan government budget stalemate brewing as lawmakers leave Lansing for 2-week break

Budget stalemate lingers as lawmakers take break

LANSING, Mich. — Michigan lawmakers and Gov. Jennifer Granholm may be headed for a long, bitter battle over the state budget when the Legislature reconvenes in mid-April.

Lawmakers started a two-week spring break Friday. They leave Lansing with no consensus on how to erase a projected $1.7 billion deficit in the budget for the fiscal year starting Oct. 1.

Most lawmakers appear to be against Granholm’s proposal to raise more than $500 million by extending a slightly lower sales tax to services that are not now taxed. Granholm’s proposal to save money through a retirement incentive package has stalled. Many lawmakers are reluctant to vote for spending cuts, especially to education and public safety programs.

It’s a recipe for gridlock that already has the Democratic governor and legislative leaders from both parties concerned. A complicating factor is that many lawmakers are up for re-election this year, so they’re worried about votes that could come back to haunt them in November.

Granholm, who can’t run for re-election because of the state’s term limits law, noted Friday that in an election year “everybody freaks out” when taxes come up for discussion.

“I can’t wave a magic wand,” Granholm told the Michigan Public Radio Network. “I cannot push the vote button for these legislators. … They don’t want to do the tough things, and everything I’m asking them to do is tough because there is no easy way out. We cannot get this done unless we take some really hard steps, and it’s hard for them to do in an election year.”

Granholm said lawmakers would be better off taking the tough votes now rather than risking a government shutdown roughly a month before the November general election. Most legislators are seeking re-election or trying to win a nomination to run for a new job, including Democratic House Speaker Andy Dillon — a gubernatorial hopeful — and Republican Senate Majority Leader Mike Bishop, who wants to be the state’s next attorney general.

State leaders have missed the Oct. 1 budget deadline twice in the past three years, including a four-hour, partial government shutdown in 2007.

Both the Republican-led Senate and Democrat-led House took some preliminary budget votes this week before leaving Lansing. Most of the budgets rely on cuts, although some of the proposed spending reductions aren’t specific and aren’t deep enough to balance the budget.

Republicans couldn’t get Democrats to join their efforts to rescind a 3 percent pay raise for union-represented state employees scheduled to take effect Oct. 1. The failure to rescind the pay raises will cost the state about $45 million in the general fund and roughly $80 million overall.

Granholm wants to coax up to 47,000 already-eligible state and public school employees to take retirement this year. Employees would get better benefits if they leave. Those who stay on the job would face higher pension contribution costs. The retirements and other changes could save the state an estimated $265 million in the upcoming budget year.

But Granholm’s proposal hasn’t gained enough support to come up for a vote in either chamber, in part because it’s opposed by labor unions representing school and state employees.

Legislative leaders say they will keep working on a retirement incentive package over the two-week break. Bishop said lawmakers have no other option but to do something to save money, and the impasse was frustrating him as the reforms stalled this week.

“We’re on a runaway ship right now headed for a collision course,” Bishop said. “(Lawmakers) know the revenues aren’t there, yet there’s no interest to control the spending. I don’t know what it’s going to take. That’s the frustration. What will it take to snap out of this denial?”