Budget crisis averted, but uncertainty remains

Times-Herald Newspapers

State legislators avoided a prolonged government shutdown last week with the passage of a temporary budget that will last until the end of October.

The Michigan constitution requires the Legislature to have a balanced budget in place by the start of the fiscal year, which is Oct. 1. But the stopgap measure wasn’t put in place until two hours after the midnight deadline, which caused a temporary government shutdown.

And it still leaves up for debate the areas targeted for cuts that so far have been most contentious among lawmakers.

Since serious deliberations began in September, Republicans and Democrats have gone back and forth over how to make up for a $2.8 billion revenue shortfall. About the only key point of agreement that has emerged is to cover about half the deficit using federal stimulus funds. For the rest, the question of what to cut or whether to increase revenues remains unanswered.

Senate Majority Leader Mike Bishop (R-Rochester) has been steadfast in his commitment to reaching a balanced budget solely through spending cuts, while Democratic representatives have cringed at what the cuts would mean to state services.

Speaker of the House Andy Dillon (D-Redford) has been receptive to Bishop’s ideas, but said the state needs to find new revenue sources to avoid eliminating or drastically reducing critical services.

It likely will take some budgetary legerdemain before the two sides are able to come to terms. House Democrats expect to seek new taxes for increased revenue next week, but Republicans so far have shown no inclination to budge on their stance.

Among the issues yet to be decided are of foremost interest to local elected officials: state revenue sharing funds and K-12 school funding.

State revenue sharing, which is derived from the state sales tax, has seen the proposed cut level shrink as the debate has worn on. Originally tabbed for a 20 percent reduction, the cut currently under consideration is 11 percent, but the two parties remain at odds.

In Dearborn, an 11 percent cut would equate to a little more than $250,000 while in Dearborn Heights the cut would mean about $140,000 less funding than last year’s levels.

In school funding, local districts are looking at a $218-per-pupil cut. That issue continues to be one of the most controversial matters, with Democrats denouncing the cuts as too damaging and Gov. Jennifer Granholm vowing to veto the measure if it is passed by the Legislature.