LANSING – Republican legislative leaders and Democratic Gov. Jennifer Granholm reached an agreement Tuesday on next year’s budget.

“I am proud to say that we have haggled and wrestled and exchanged friendly words, and some not-so-friendly. But we have emerged with what I think is the most education-friendly budget in the history of Michigan,” Granholm said during a news conference with Senate Majority Leader Ken Sikkema and House Speaker Rick Johnson.

Sikkema and Johnson said they were pleased to be wrapping up the budget well before it takes effect Oct. 1.

“You have a new governor getting her arms around the budget and you have a new Legislature. We wanted our priorities funded; she wanted her priorities funded, and it made it tough,” Sikkema said.

“In some respects, it’s amazing that it’s July 15th and we’ve got an agreement on the budget,” he added. “It’s a tribute to a bipartisan spirit and effort.”

The deal will keep the Merit Award Scholarship for college-bound high students at $2,500. Granholm originally had proposed reducing the scholarship to $500 to increase state funding for Medicaid.

Instead of tapping tobacco settlement money, the deal has the state add money to its Medicaid budget through higher fines on bad drivers. The bill authorizing the higher fines passed the Senate Tuesday and was returned to the House for approval of minor changes.

In other initiatives, the deal will:

_Put an undisclosed amount of money into a program that will provide laptop computers for all sixth-graders in the state. The program is a continuation of a program started by Johnson and will be supported by federal dollars.

_Restore preschool and early childhood education funding to $72.8 million, as the governor recommended.

_Retain the way students are counted in school for the purpose of receiving state money. The current system tends to help schools whose enrollments are rising rather than those who lose students during the school year.

_Maintain funding for the Michigan Economic Development Corp., which some Republican lawmakers had wanted to cut.

_Cut revenue sharing to local governments by 3 percent across the board, rather than forcing municipal and township governments to absorb larger cuts than counties.

_Put aside enough money to cover the increased number of welfare and Medicaid recipients caused by the poor economy.

_Provide $50 million in new Medicaid dollars, mostly from the federal government, as bridge financing to help Detroit Medical Center weather financial difficulties and enable Detroit Receiving and Hutzel Women’s hospitals to keep offering their current level of services.

_Set aside $10 million to finance new biological and pharmaceutical research and development and lure back some of the high-tech workers displaced by Pfizer Inc. in Kalamazoo following its acquisition of Pharmacia.

_Add $5 million to funding for the Life Sciences Corridor, raising total funding to $25 million.

_Add money to the higher education budget so state universities that have traditionally been underfunded get a fairer shake. Under the deal, Grand Valley State University may see an increase, while Oakland, Saginaw Valley and Central Michigan universities will see smaller cuts than other state universities.

The governor said she would like to see universities who got a break under the agreement to look hard for ways to keep down tuition increases.

Sikkema echoed that, saying there will have to be some response from the four universities reflecting the extra dollars. “The Legislature is going to be very, very reluctant” to approve more money in the future if the largesse isn’t reflected in smaller tuition hikes, he said.

The deal also includes establishing a savings account in the school aid fund with federal funds the state will receive for the current and coming budget year.

Granholm last month proposed setting aside $98.4 million for a new rainy day fund for the school aid fund. Budget leaders agreed to put $75 million into the new reserve fund and $75 million into the state’s existing Budget Stabilization Fund.

They also will put $50 million into the Medicaid Trust Fund. Granholm said she hopes the $200 million total will be enough to persuade rating agencies to retain the state’s high bond rating, which makes it cheaper for the state to borrow money.

The governor still must get $250 million in concessions from state employees, either by having them give up a 3 percent pay raise and accept benefit cuts or by laying off workers. Granholm said negotiations with state employee unions are continuing.

On Monday, Granholm and legislative leaders announced they had reached a compromise under which 17 of 34 road projects Granholm wanted to delay to save money were restored.

Michigan residents won’t see a general tax increase under the deal announced Tuesday. But they will pay higher fees starting in October to drive through state parks and to get a driver’s license if they let it expire before renewing it.

Granholm also said the budget relies on $1.5 billion less in one-time revenues than the current budget.

The House adjourned shortly after the news conference, but the Senate remained in session to work on several budget bills before them and in conference committee.

The Senate approved, on unanimous votes, the budgets for the Family Independence Agency, the Michigan State Police, the Department of Military Affairs, the judiciary, Department of Agriculture, and the Department of Consumer and Industry Services.

Both chambers scheduled long sessions for Wednesday, in hopes of passing remaining budgets and polishing off the $37.9 billion state budget for the 2003-04 fiscal year. Lawmakers want to finish work on the budget this week and begin their summer recess.

Leave a comment

Your email address will not be published.