LANSING The University would receive an increase of $5.4 million in state funding next year under Gov. John Engler”s proposed budget, more than $17 million less than it requested.

The increase translates into a 1.5 percent increase over this year”s funding, bringing per-student appropriations up to $9,939 from $9,646. The proposal, which was presented yesterday by State Budget Director Mary Lannoye, would give the University $363.7 million in total funding.

The University could get an additional $5.4 million on top of that amount if the Legislature goes along with Engler”s proposal to repeal the state”s tuition tax credit. The tax credit rewards parents of students attending universities that keep tuition increases under the level of inflation, although it has not been successful because of low inflation rates.

A repeal of the tax credit, Lannoye said, would allow the state to increase funding to state universities another 1.5 percent, bringing the total across-the-board increase to 3 percent.

“We”d always like more, but we”ve got to recognize that there”s less revenue this year because of an economic slowdown,” said Rep. Michael Switalski (D-Roseville), a member of the House Appropriations Committee. “Hopefully there will be a pick up in revenue that will allow us to increase the funding.”

Glenn Stevens, executive director of Presidents Council of the State Universities of Michigan, said the proposal is a good starting point, considering that economic forecasts remain unclear.

“It”s quite clear that education fared very well. It”s a very good beginning in the budget,” Stevens said.

Engler”s proposal calls for a total increase of 2 percent in higher education spending if the tax credit is not repealed. The University of Michigan would not see the remaining 0.5 percent, which is distributed based on the tier system that gives the state”s 15 public universities one of five funding floors. The University, which belongs to the top tier, already is above the $9,000 per-student funding minimum.

“The higher education part looks inadequate to me, said Rep. John Hansen (D-Dexter), whose district includes North Campus. “I don”t think colleges as a whole will be pleased with the budget.”

Although the proposal calls for less of an increase in higher education spending than recent years, Lannoye said education “remains the No. 1 priority of Governor Engler and the Michigan Legislature.”

The $38.2 billion total budget calls for a $1.2 billion or 3.3 percent increase over this year”s budget. “This is a conservative spending plan,” Lannoye said.

“The January revenue estimates were unwelcome news,” she said.

Many lawmakers agree the higher education aspect of the budget proposal will likely be the part most altered by the Legislature.

“There will be some shifting, and we may also find some new revenue sources. Last year we put some money from the tobacco settlement into higher education,” said Sen. Alma Wheeler Smith (D-Salem Twp.), the ranking Democrat on the Senate Appropriations Committee and a member of the higher education subcommittee.

But, she added, “I don”t know if we”re going to do that this year.”

Sen. Harry Gast (R-St. Joseph), who chairs the Senate Appropriations Committee, said he supports repealing the tuition tax credit.

“It”s presumed by the administration that that the tax credit goes back to the universities in the form of a budget increase, so consequently they are giving it to the people that are educating their sons or daughters,” Gast said. “On that basis it is a lot more salable than if it was just going back to the state to use to fund corrections or something like that.”

Sen. John Schwarz (R-Battle Creek), who chairs the higher education subcommittee, also supports a repeal.

Smith pointed out that the governor made the same proposal to repeal the credit last year. The repeal, although supported by most Democrats, was rejected by the Legislature.

“It will definitely be on the agenda and they”ve got our votes,” she said. “So then in this instant Senator Schwarz has to go over to his side and find seven votes.”

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