LANSING, Mich. — One of the nation’s most economically battered states began a partial government shutdown today as Michigan lawmakers failed to agree on a spending plan.
A deal to fill a nearly $3 billion shortfall with federal recovery dollars and more than $1 billion in cuts fell through, as many lawmakers discovered they couldn’t stomach deep cuts to schools and local services such as police and fire protection in the stricken state.
They also failed to finish work on a temporary budget and avert Michigan’s second shutdown since 2007.
In a phone interview yesterday evening before the midnight deadline, Sen. Liz Brater (D-Ann Arbor) expressed frustration over the jam in the legislature.
“We could have taken care of this months ago,” she said. “We knew the problem existed then, but this is unfortunately the way the legislature operates.”
The Senate finally voted at 1 a.m. to let the interim budget bill take effect today — the start of the fiscal year — rather than next spring. But it didn’t send the bill to Democratic Gov. Jennifer Granholm, and it wasn’t immediately clear what legislative leaders planned to do.
Secretary of state offices were set to close today and state parks prepared to ask visitors to leave if the impasse remained at 8 a.m., when government offices were scheduled to open. Essential services such as state police and prisons were to continue running.
“We have taken steps to put a shutdown in place,” Liz Boyd, a spokeswoman for Democratic Gov. Jennifer Granholm, said shortly after midnight. She added that the governor’s office was waiting on a possible budget resolution to keep government running before state offices opened today.
Michigan already is struggling with the nation’s highest unemployment rate, a shrinking auto industry, a high home foreclosure rate and an economy that soured long before the national recession. The number of people receiving food stamps and unemployment checks keeps going up, and it’s the only state where the Census Bureau found increasing poverty rates two years in a row.
Pennsylvania is the only other state without a budget deal enacted. Leaders there reached a tentative deal nearly two weeks ago, but have been unable to put all the pieces in place. Only Michigan and Alabama have fiscal years that start Oct. 1, and Alabama has passed its budget.
Michigan is having a tough time finding money for everything from prisons to universities and in-school health clinics for adolescents. State revenues have grown just 1.3 percent annually during the past decade when federal funds are left out, according to the nonpartisan House Fiscal Agency.
University funding has dropped 22 percent during the past seven years when adjusted for inflation, forcing up tuition rates. Yet the higher education compromise lawmakers passed yesterday eliminated the popular Promise Grant scholarship, which gave college students up to $4,000, and cut other student financial aid to the bone.
In an e-mail to the Daily last week, Rep. Rebekah Warren (D-Ann Arbor) wrote that she did not want to see the Promise Scholarship go.
“In these difficult economic times, we have an even greater responsibility to help our young people get the skills they need to compete for those good-paying jobs,” she wrote. “Cutting the Promise Scholarship is completely counterproductive and unacceptable — I will continue to fight to save this vital program.”
The lack of a budget deal left 51,000 state workers unsure as they headed to bed last night whether they’d work today. The administration had issued temporary layoff notices earlier in the day and told state contractors they might not get paid.
Granholm had angled to get the interim budget sent to her by the midnight deadline. It would mean 30 more days for lawmakers to put a more palatable deal in place and she probably wouldn’t have to cut much spending during that period.
The interim budget originally was Senate Republicans’ idea. But as House Democrats yesterday tried to restore programs such as scholarships and library money, GOP lawmakers feared Democrats only wanted the stopgap to win more time for tax increases.
“The continuation budget was there as a safety valve in case we didn’t finish,” said Republican Senate Majority Leader Mike Bishop of Rochester. Having one in place would only give Granholm “30 more days to pressure the Legislature to adopt something she wants.”
Boyd disagreed, saying Bishop and Democratic House Speaker Andy Dillon of Wayne County’s Redford Township failed to get the votes to pass a budget deal that included deep cuts and no new revenue.
“They’re unable to get approval on budgets based on agreements they agreed to — not us,” Boyd said.
Meanwhile, school and local government leaders grew increasingly nervous contemplating impending cuts.
Revenue for cities, villages and townships has dropped by nearly a quarter in the past eight years, and mayors statewide said absorbing a proposed 11 percent cut in the new budget would force them to lay off police, close parks and shut off some city services.
Michigan also is in danger of losing millions of federal dollars for Medicaid and similar programs if it can’t come up with its share of matching funds.
House Appropriations Chairman George Cushingberry (D-Detroit) warned lawmakers they had to make a choice between hurting education, health care services and public safety or finding more money. But Republican Sen. John Pappageorge of the Detroit suburb of Troy criticized Democrats for talking about raising more revenue.
“What you’re saying is we’re going to take money from our citizens,” he said. “Guess what? They don’t care for that.”
— Daily News Editor Matt Aaronson and Daily Staff Reporter Nicole Aber contributed to this report from Ann Arbor.