EAST LANSING, Mich. — Gov. Jennifer Granholm said Tuesday she wants to balance the upcoming budget by cutting about half the $1.2 billion Senate Republicans have suggested while raising about $550 million in expanded taxes and fees.
Many of the ideas had been mentioned previously but Tuesday was the first time the Democratic governor issued a written copy of her proposal. She said her plan has been on the table since Aug. 6 and includes phasing out an unpopular business tax surcharge over three years. The Republican-controlled Senate finished passing its own budget-balancing plan in June.
But Democrats who control the House still are discussing how they want to tackle a $1.8 billion shortfall in the state general fund and a $900 million gap in the school aid fund in the budget year that starts Oct. 1.
Granholm said no one wants a repeat of the 2007 state government shutdown. She spoke with reporters after the grand opening of a new IBM center at Michigan State University.
“The Senate has a plan. We have a plan,” she said. “We now need for the House to move their plan. … Once that is done, then everybody has their parameters staked out and we can move forward.”
Granholm said it was her understanding that House Speaker Andy Dillon, a Democrat from Wayne County’s Redford Township, planned to start moving new budget bills Wednesday. But Dillon spokeswoman Abby Rubley said Tuesday that no budget bills were on Wednesday’s House agenda.
“The governor should know that showboating a proposal that has no chance of passing is not a way to solve the state’s fiscal crisis,” Dillon said in a statement. “All parties need to put theatrics and demands aside and get back to the hard work of negotiating a budget solution.”
A spokesman for Republican Senate Majority Leader Mike Bishop of Rochester said the governor making her revenue plan public helps “move the ball forward” on negotiations, but added he doubts some of her proposals will get a warm welcome.
“A half-billion dollars in new revenues is certainly not the course chartered by Senate Republicans,” Matt Marsden said.
Granholm repeated her concern that the Senate plan includes “dangerous” cuts to vital services and to programs counted on by Michigan families, such as the Michigan Promise college scholarships.
“The Senate has proposed massive cuts to firefighters and police officers around the state. We don’t want to do that. There’s a difference in priorities,” she said.
Several Michigan business organizations said Tuesday they want lawmakers to cut spending and improve government efficiency rather than raise taxes. The coalition called for pooling government employee health care plans and raising their share of the costs, cracking down on Medicaid fraud, consolidating school administration and making other changes.
Granholm said she’s proposing $572 million — 12 percent — in general fund cuts in the upcoming budget year, mostly by trimming spending in most state departments and cutting revenue sharing funds for local governments. She also would cut $627 million in the following budget year.
To balance next year’s budget, she’d raise $546 million in tax revenue by slicing 12 percent from some business tax breaks — including a popular film credit — and hike the cigarette tax rate from $2 a pack to $2.25 while doubling taxes on other tobacco products.
She wants to place a 1-cent tax on each bottle of water sold in Michigan, lower a tax credit for the working poor, increase liquor license fees, and expand the 6 percent sales tax to service contracts, vending machine sales and live entertainment, including sporting events.
She would phase out the Michigan Business Tax surcharge over three years, starting in 2011.
Budget director Bob Emerson said Tuesday he thinks Senate Republicans could go along with some tax increases.
“Some of them have expressed to me a desire not to do it all with just cuts,” he said.
He added that the House, Senate and administration are working hard to plan for the 2010-2011 budget year by proposing additional cuts and doling out the federal recovery money over two years, instead of using it all in the next budget year.
The administration has proposed using $973 million in federal recovery funds in the next budget year, leaving $482 million for the year after.
Granholm also is calling for $546 million in additional revenue in 2010-1011.