DETROIT — Michigan’s top legislative leaders said Monday that they can balance the state’s budget before an Oct. 1 deadline, but it’s not clear if Democrats will get on board without targeted tax increases to save high priority programs.
Many Democrats are upset with the depth of proposed cuts to community health programs and the tax revenue-sharing payments that help local governments pay for police, fire and other services. The Democratic-led House would have to find savings elsewhere or approve targeted tax increases — and get the Republican-led Senate to go along — to restore those services.
Other possible stumbling blocks are the elimination of funding for Michigan’s main college scholarship program, reduced early childhood education funding and cuts to welfare benefits.
Michigan lawmakers are trying to erase a projected $2.8 billion shortfall from the budget scheduled to begin in about 10 days. Michigan’s government tax revenues have been hammered by the ongoing recession.
Money from the federal stimulus package will erase at least half the shortfall. Republican Senate Majority Leader Mike Bishop and Democratic House Speaker Andy Dillon would prefer to eliminate the rest through at least $1.2 billion in spending cuts, but it’s not clear if enough House Democrats are on board to approve that plan.
Democratic Gov. Jennifer Granholm also opposes the depth of some of the cuts.
“I think there’s a divide and there’s a fair debate that’s going on,” Dillon said of House Democrats, who hold a 67-43 edge over Republicans. “I think they respect that not everyone agrees with how to tackle the challenge before us.”
Dillon, asked about his standing with House Democrats, said he does not sense a leadership coup is building over his effort to enact spending cuts. Dillon and Bishop told reporters after a joint appearance at a Detroit Economic Club breakfast meeting that the cuts are needed because the state’s budget will be in even worse shape once federal stimulus money runs out in 2011.
But Dillon said tax increase votes are possible if the cuts aren’t approved. That could happen as early as this week, although Dillon would not specify which tax increases might be considered.
Some of the proposals floated recently by Democrats include a 1-cent tax on bottled water; expanding the 6 percent sales tax to sporting events and nonessential services; no longer exempting vending machine food and drinks from sales tax; and suspending the automatic inflationary increase in the personal exemption on Michigan’s income tax.
Senate Republicans already have approved a plan to balance the state budget through cuts, but they would review any tax increase proposal that House Democrats might send their way, Bishop said.
“We’re going to have to figure out in this state how to do things differently and deliver our essential services more efficiently,” Bishop said.
Joint House and Senate panels began taking votes on specific budget bill compromises Monday afternoon. A conference committee unanimously approved a relatively non-controversial community colleges spending bill that will come up for final votes later this week in the House and Senate. The bill keeps community college funding level with the help of federal stimulus cash.
The tough voting won’t begin until Tuesday at the earliest.
The Legislature might also vote to extend the current budget if lawmakers can’t agree on a new mix of spending cuts or revenue increases.