State Senate takes $300M from rainy day fund

BY THE MICHIGAN DAILY

Published October 3, 2001

LANSING (AP) The Michigan Senate will immediately pass a bill taking $300 million out of the state"s "rainy day" fund for school aid, the Senate majority leader said yesterday.

"We agree with the governor that "03 will be a very difficult year," said Majority Leader Dan DeGrow (R-Port Huron). "We want to protect "02 for education, which is our number one priority."

"We live in very uncertain times today. It could get worse. We hope it does not."

When the state holds its revenue estimating conference next week, DeGrow said he expects state budget officials to announce that the state School Aid Fund is short about $300 million in the 2001-2002 fiscal year, which began Oct. 1.

DeGrow said the withdrawal from the budget stabilization fund would leave the fund with $700 million, to be used only in tough economic times.

"We"re going to have some difficult times down the road," DeGrow said.

He said Senate Appropriations Committee Chairman Harry Gast (R-St. Joseph) will seek cuts of between 5 percent and 10 percent in departments" budgets for the fiscal year which began Oct. 1. He said the state is about $473 million short in its general fund for the current fiscal year.

Gast said the state is being hurt by its adoption of multiyear budgets, which depend on accurate revenue forecasts for a year or two in advance.

"We can"t project into the future," Gast said.

Senate Democratic Leader John Cherry (D-Clio) noted his party has long advocated the use of the budget stabilization fund.

"It seems as though the Republicans are a late arrival to this party," he said.

State Rep. Marc Shulman, chairman of the House Appropriations Committee, said he thinks the Senate"s budget proposal is premature considering a revenue estimating conference is scheduled for Oct. 12.

Shulman, a Republican from West Bloomfield, said he"s sent a letter to members of the House Appropriations Committee asking them to begin looking at cutting budgets. He says appropriations subcommittees will begin meeting on the state budget shortly after the revenue estimating conference.

"I don"t think there"s anything off limits at this juncture," he said.

DeGrow said it was vital for the Legislature to act quickly.

"It"s important we show our priorities quickly," he said. "It"s important that people get the message that we"re going to step up and deal with it."

Gast said Michigan school officials also should start thinking of ways they can trim their budgets.

Both DeGrow and Gast said there was no discussion of postponing tax cuts that take effect Jan. 1. Both the business tax and the income tax are scheduled to drop by 0.1 percent.