LANSING (AP) - Gov. Jennifer Granholm this week will lay out her latest spending plan for everything from K-12 schools and state universities to prisons and health care for the poor.

Budget director Mary Lannoye is scheduled Thursday to present lawmakers with the Democratic governor's roughly $40 billion budget proposal for the fiscal year that starts Oct. 1.

The state's main account, the general fund, is expected to have 2 percent more revenue than in the current year, and the school aid fund will be 3.2 percent higher. But tough decisions could loom for Granholm and the Republican-controlled Legislature because the higher cost of employee contracts, more Medicaid and welfare caseloads, and possible federal funding cuts could outpace any increases.

Ari Adler, spokesman for Senate Majority Leader Ken Sikkema R-Wyoming said spending levels for state departments and programs shouldn't automatically be higher than they are now.

"Can we afford to do that? If not, we will need to make tough decisions again," Adler said.

Few details were available about Granholm's upcoming proposal, though Lannoye said last month that it would be a tough year.

"We're talking hundreds of millions of dollars short," she said. "We're going to have some difficult decisions to make to make this all add up."

K-12 schools, however, could see an increase in funding because the school aid fund is generally considered to be healthy.

Also this week, the Senate is expected to vote on legislation that would shift responsibility for putting ballot issues before Michigan voters from the Board of State Canvassers to full-time secretary of state staff.