One plan to eliminate the state's projected $1.7 billion deficit entirely through budget cuts would result in the state permanently withholding the $29.6 million in funding for the University that it was supposed to pay in August.

If the University doesn't get those funds, it could be forced to raise tuition in the middle of this academic year.

The state held the money back to make up for lower-than-expected revenues.

The plan - suggested by state Senate Republicans - is one of many methods being proposed to fill the shortfall. With the beginning of the 2008 fiscal year only 16 days away, pressure is mounting for legislators to find a way to balance the budget. If they don't, the state could face a government shutdown.

The withholding of the $29.6 million was suggested in a presentation given on Tuesday to the Senate Appropriations Committee by Senate Fiscal Agency Director Gary Olson at the request of Senate Majority Leader Mike Bishop (R-Rochester).

The presentation also suggested that the state could save money by reducing local aid to cities not mandated by the state constitution. The state gives $398 million not required by the constitution to Michigan municipalities. That includes $208.8 million for Detroit and $3.2 million for Ann Arbor that could be cut.

Cynthia Wilbanks, the University's vice president for government relations, refused to speculate on what budget moves the University would make if the legislature withheld the funds. She did say, however, that funding cuts would cause the University to re-evaluate its 2007-2008 budget.

"If our budget assumptions did not prove to be accurate than we would have to revisit those assumptions," Wilbanks said.

The state House of Representatives is set to meet today to vote on an income tax hike to raise revenue to fill the deficit for the fiscal year that starts on Oct. 1.

Other revenue options being considered include a luxury tax on items like concert and athletic tickets and a sales tax increase.

University administrators and lobbyists have been working with legislators to avoid a decrease in state appropriations since February, when lawmakers announced the state's budget shortfall. State appropriations go toward the University's general fund, which primarily finances salaries and research programs.

The legislature is slated to announce its 2008 fiscal budget by Oct. 1. If the state Senate and House don't develop a working budget by the beginning of October, the state government agencies would lose the ability to spend money. It's not yet clear what that would mean for essential services like prisons and state police.

The University won't receive any money until the budget is finished.

Wilbanks met with five state senators on Wednesday to discuss the University's need for state funding.

"I'm in touch with many legislators who want to make good on their promise to make the delayed payments to the University," Wilbanks said. "We continue to press the case for a budget resolution so we can have some budget stability."

The budget approved in July by the University Board of Regents assumes that the University will receive at least $320 million from the state for the 2008 fiscal year, the same amount of state funding the University received last year. State funding comprises about 25 percent of the University's budget.

Mike Boulus, the executive director of the President's Council, State Universities of Michigan, an association of the heads of the 15 public universities in Michigan, said state universities are developing contingency plans should they receive less money than they previously expected.

"There's a great deal of uncertainty about what to expect from the state legislature," Boulus said. "It's time for the Michigan legislature to do its job and protect its services to higher education."

State Rep. Pam Byrnes (D-Chelsea), whose district includes the University's North Campus, has sponsored two bills that would increase funding to the University.

One bill would grant additional state funding to the state's three leading research universities - the University of Michigan, Michigan State University and Wayne State University - while the other would allocate state funding on a case-by-case basis depending on how much research funding each university secures and other similar criteria.

Michigan Gov. Jennifer Granholm and House Democrats have supported a plan to increase funding to state universities by at least 2.5 percent, but many Republicans have voiced opposition to spending the money and increasing the state deficit.

The governor has proposed other ways to shrink the deficit, including a 2 percent tax on some items not already subject to the 6 percent sales tax. Her proposals have not passed.