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Mich. speaker: Lawmakers still apart on budget

With only a month left to strike a budget deal, House Speaker Andy Dillon said Tuesday that legislative leaders and the governor are still having trouble because they don't have enough federal stimulus money to fill large deficits over two years.
/ Source: The Associated Press

With only a month left to strike a budget deal, House Speaker Andy Dillon said Tuesday that legislative leaders and the governor are still having trouble because they don't have enough federal stimulus money to fill large deficits over two years.

Asked if tax increases are guaranteed, he told reporters, "Nothing's certain." It would be difficult to balance the books with spending cuts and recovery act dollars alone, the Democrat from Wayne County's Redford Township said, but he has not given up.

Dillon said House Democrats cannot accept Senate Republicans' proposed level of cuts in college scholarships, state aid to local governments and a state agency that handles health care. GOP Senate Majority Leader Mike Bishop of Rochester responded that Democrats should pitch their alternative if they have one.

"If revenue is what the Democrats want and the cuts we've made are unacceptable, then produce a plan that shows that," Bishop spokesman Matt Marsden said.

Democratic Gov. Jennifer Granholm and legislative leaders, who will meet Thursday for what Dillon described as "marathon" budget talks, not only are negotiating a budget for the fiscal year that starts Oct. 1. Dillon said they also want a "framework" for the budget starting in 13 months, hoping to avoid political complications that will come in 2010, an election year.

Dillon said negotiators are "pretty close" on the coming budget, which faces a $2.8 billion shortfall.

"It's really the '10-11 budget that presents a challenge," he said after a Capitol press conference during which he endorsed tax incentives to convert a closed Ford Motor Co. plant into an alternative energy business park.

But Marsden said, "It's disingenuous to say we're close to a resolution on something when we have yet to see a proposal from the other side."

Dillon said he will not try to pass his proposed overhaul of public employee health benefits in the next month. He previously had wanted to link his plan to budget negotiations. He said he still hopes a special legislative committee will act quickly on the health insurance proposal.

A restructuring of the state tax system also appears to out of the mix.

"To do something that comprehensive in a 30-day window is going to be a challenge politically," said Dillon, who suggested business groups supporting tax changes still could put their plan before voters in February.

Dillon, like Granholm, insists on at least partially funding the $140 million Michigan Promise scholarship program the GOP-led Senate voted to eliminate.

He said he would prefer to base the scholarship, which provides up to $4,000 per student for undergraduate education, on financial need to save the state money.

The 96,000 students eligible for Promise grants receive money after doing well on high school standardized tests or completing two years of college, regardless of their family's income.

"Breaking a promise is nothing anyone wants to do," Dillon said. "But we're seeing a lot of that lately in the private sector as well. We only have the dollars we have."

When stimulus cash runs out in January 2011, Dillon warned that K-12 schools, universities and Medicaid — which have been helped by the money — could experience budget cuts, too.