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Budget differences narrowing

Published October 23, 2007

Roughly a half-dozen key areas of disagreement remain among lawmakers trying to balance the state's budget before next week's deadline to avoid another potential partial government shutdown.

There's a lot of work to be done. Not a single departmental budget bill for the new fiscal year has cleared the Legislature.

But both Democrats and Republicans said yesterday they were hopeful differences would be worked out before Oct. 31, the end of a 30-day budget extension that now guides Michigan's government spending.

Lawmakers need to make more than $430 million in cuts to balance the budget, even though they've already agreed to raise the state income tax and expand the sales tax to some services.

Perhaps the biggest area of disagreement is over Medicaid, the federal-state health program for low-income people. Some Republicans have proposed ending Medicaid coverage for 19- and 20-year-olds and for adults who get coverage because they take care of children covered by Medicaid.

But Democrats don't want to end those benefits. They say it could further drive up costs for hospitals that have to take care of the uninsured, which could raise health coverage costs for everyone else. They'd prefer cutting reimbursement rates for doctors and others providing Medicaid-covered health care services.

Differences also remain over proposed fee increases for state natural resources and environmental departments, whether some state social services such as adoption should be privatized and how funding for K-12 schools and universities should be split up.

Money for the arts and zoo programs, particularly in Detroit, also could be an issue.

"All of those sticking points seem to be resolvable," said House Appropriations Committee Chairman George Cushingberry Jr., a Detroit Democrat.

House and Senate leaders continued meeting late yesterday afternoon to try and resolve the remaining issues. The Legislature has scheduled tentative extra sessions for Friday and Monday in case they are needed, and some lawmakers aren't ruling out the possibility of a weekend session this Saturday and Sunday to get the budgets passed.

Neither Democrats or Republicans appear to want another temporary budget extension like the one that wasn't signed until a partial government shutdown had begun in the early hours of Oct. 1.

Any delay could cause more cash flow problems for the state, and Republicans say that avoiding the cuts through one-time fixes or accounting maneuvers would leave them dealing with many of the same budget problems in a year or less.

"We're not even interested in a continuation budget at this point," said Matt Marsden, a spokesman for Republican Senate Majority Leader Mike Bishop of Rochester. "There is no reason not to get this done."

Despite the $1.3 billion in tax increases put in place, the budget remains tight, making it tough for lawmakers to figure out how much money they can set aside to help the state's lowest-funded K-12 school districts catch up with the highest-funded districts. The gap between the two can run as high as $5,000 per student.

And some lawmakers want to separate funding for the University of Michigan, Wayne State University and Michigan State University from the state's 12 other universities, noting they have more of a role in research.