LANSING (AP) – Michigan drivers could pay more for a license, college students may get smaller state scholarships and adult education students may have fewer classes to take if Gov. Jennifer Granholm’s proposed fiscal 2004 budget – her first – is adopted.

Shabina Khatri
Gov. Jennifer Granholm presents her state budget proposal for 2003-2004 yesterday in Lansing. Serious cuts to higher education were among her plans to cut state spending.

The $38.6 billion proposal, presented yesterday to lawmakers by Granholm and State Budget Director Mary Lannoye, deals with a $1.7 billion deficit by cutting $937 million, saving $122 million through keeping prison populations down and raising $403 million from fee increases, more federal dollars and fewer tax loopholes.

“We cut waste, we innovated, we made decisions based on the most vital services and the investments that are most critical to Michigan’s future,” Granholm told the House and Senate appropriations committees in a rare appearance for a governor.

$314.2 million for at-risk students will be left intact, although there will be no money for Golden Apple Awards, math and science centers, career preparation or gifted and talented programs.

The overall $38.6 billion budget, which includes federal funds, is 1.4 percent less than the current budget, which took effect last Oct. 1 and already has been cut twice to match lower-than-expected tax revenues.

The proposed $8.6 billion general fund budget, which covers nearly everything except K-12 education and transportation, is 2.3 percent less than this year’s budget, while the $12.4 billion aid budget is about 2.4 percent less. Most state departments are cut by anywhere from 1 percent to more than 30 percent.

“You simply can’t spend more than you make, month after month, year after year, without digging yourself into a deep hole,” Granholm said, in a poke at her predecessor, Republican Gov. John Engler, who left office Jan. 1 after 12 years.

“The days of spending beyond our means are over. As long as I am your governor, this state will live within its means,” she said.

The governor did not proposal any overall tax hikes, although she wants lawmakers to raise the diesel fuel tax from 15 cents to 19 cents, the same amount drivers pay on gasoline. That money would be used for road repairs.

She proposed two new lottery games to raise $50 million for schools and about $100 million in fee increases, including higher costs for driving licenses.

Under her proposal, the cost of a driver’s license would go from $13 to $25. The cost of chauffeur and commercial licenses also would rise.

The higher license fees would be used to run a state police trooper recruit school to add 100 officers to the ranks, keeping trooper strength at about 1,100 officers.

Granholm also proposes raising fees through new water pollution discharge permits, increasing fees for the groundwater and storm water discharge permits and expanding fees for solid waste disposal.

Much of the money would be used to expand environmental protection.

About 1.1 million children, seniors and disabled people whose health costs are covered by Medicaid would not see any reduction in services.

But healthy adults would lose their access to dental, chiropractic and podiatry services, except for dental emergencies. The number of days they could be hospitalized also would be limited.

Granholm defended the reduced services for 130,000 recipients, saying the reductions allowed her to give more people at least limited coverage and to return coverage to 40,000 adult caregivers who don’t qualify for Medicaid services themselves but care for children who do.

She also has applied for enough federal funds to triple the number of seniors who will qualify for prescription drug coverage, and recommended increasing mental health funding by 2 percent.

Her budget proposal was received favorably by most lawmakers, who said they recognize tough cuts are necessary. A few worried that the governor’s assumptions on how much more money new fees and other charges would raise could be too optimistic. But most said they plan to work with Granholm to pass her proposal.

“For the most part, we collectively have the problem. We collectively have to solve it,” said Senate Appropriations Committee Chairwoman Shirley Johnson (R-Royal Oak).

“This situation cannot afford the luxury of getting carried away with partisanship.”

Economist Tom Clay of the nonpartisan Citizens Research Council, based in Livonia, said the budget proposal contained less pain than many who rely on state funding feared.

“I expected the budget to be far worse in terms of very difficult recommendations that would create real problems for people,” he said. “It didn’t turn out to be.”

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