State legislators in Lansing have a lot on their plates as they search for an elixir to the state’s budget gap before the end of the month.

Amid this treacherous rush, lawmakers are forced to juggle the competing demands of a business community looking to attract more companies to a state with record levels of unemployment with an increasingly jobless public who rely on state programs like welfare and the Michigan Promise Scholarship to get by.

Since missing the Oct. 1 deadline and narrowly avoiding a long-term government shutdown by passing an interim budget, lawmakers have been working late into the night in the past few weeks trying to get a balanced budget in place before the end of the month.

One of the highly contested portions of these budget discussions will affect all Michiganders: taxes.

The Democratic-controlled House of Representatives and the Republican-controlled Senate both passed various bills last week that involve increasing taxes and repealing tax credits in order to fill the holes left in the pending budget for the 2010 fiscal year.

In general, the Republican-controlled Senate has favored cutting state programs as a solution, while the Democrat-controlled House is looking for ways to increase revenues, like raising certain taxes.

Last week, the House passed three revenue-raising bills with provisions to increase taxes on physicians by 3 percent, freeze the personal income tax exemption and eliminate credits that allow companies to avoid the Michigan Business Tax.

Rep. George Cushingberry Jr. (D–Detroit), chair of the House Appropriations Committee introduced one of these bills, House Bill 5384. Cushingberry said that by making the Michigan Business Tax applicable to more companies, the bill would raise funds for programs like the Michigan Promise Scholarship, which would be cut under the current proposed budget.

In an interview, Cushingberry said that in this situation, he disagrees with a common notion in politics and economics that by increasing taxes on businesses, lawmakers hurt the state’s appeal to companies. Cushingberry said that cutting Michigan Business Tax credits wouldn’t be a hindrance to business in the state, as less than 10 percent of a business’s decision to open its doors is based on tax credits.

“That is one of the minimal factors,” he said. "It’s a spurious argument.”

Liz Boyd, press secretary for Gov. Jennifer Granholm, said Granholm supports the bill, which would generate more than $116 million in revenue for important state-funded programs.

“Gov. Granholm believes that Michigan’s future demands a budget that helps us diversify our economy, attract new investments and creates new jobs,” Boyd said. “Michigan’s future demands a budget that keeps police officers and firefighters on the job and on our streets, and that helps our children afford a college education and protects people at risk during these tough economic times.”

But many GOP lawmakers, like Rep. Dave Agema (R–Grandville) disagree.

Agema said the Michigan Business Tax is both a deterrent for businesses looking to open shop in the state and a strain on existing businesses. Taxing during a recession only exacerbates poor economic conditions, he added.

“The Michigan Business Tax is one of the most onerous taxes in any state,” Agema said. “Businesses need to come here and hire people. That’s how we’re going to get our way out of this recession. And that’s going to have to be a profitable place for businesses to come, both in regulation and in taxes. Right now we’re not that state.”

The bill was passed in the form of a shell bill, according to Rep. Bill Rogers (R–Brighton).