Mich. gov, GOP leader still far apart on revenue

Michigan Gov. Jennifer Granholm remains optimistic that some Senate Republicans will support more money for schools, but GOP Senate Majority Leader Mike Bishop said Tuesday he won't alter the Senate's only proposal for raising some extra cash.

"We sent revenues over to the House that we believe are far more palatable and far more sustainable than what she's proposed," Bishop told reporters. "If this governor wants revenue, she's going to have to take what she gets."

The Rochester Republican has accused the Democratic governor of manufacturing a school funding crisis to force lawmakers to increase taxes, and said he isn't going along.

Granholm insists a deficit in the school aid budget must be addressed now so schools won't face large cuts in the middle of the school year.

The governor last week signed into law a $165-per-pupil cut in school funding that lawmakers passed for the budget year that started Oct. 1. She also vetoed $52 million for 39 wealthier school districts that get as much as $4,000 more per student than the basic state grant of just over $7,000.

She issued an additional $127-per-student cut Thursday because she said school aid revenues are falling below projections. All districts now are facing cuts of nearly $300 per student, while the 39 districts could see decreases of up to $600 per student.

Granholm wants to restore the money she cut Thursday as well as the money for the 39 districts by raising the tax on tobacco products other than cigarettes, shaving 13 percent off certain business tax breaks and eliminating an inflationary increase in the state income tax personal exemption.

"There is a way to fill the hole," she told reporters at a news conference. "If we don't invest in these kids from the earliest days ... then we will have missed the boat."

She added that Bishop can't insist on his own way if the shortfall is to be addressed.

"Citizens want to see flexibility and creativity, and not just 'my way or the highway,'" she said. "It is not just one side calling the shots. ... I'm calling on all sides to compromise."

The GOP-led Senate has passed a bill that would eliminate a scheduled increase in a tax credit for low-income workers and use the money saved to begin rolling back a business tax surcharge and add $100 million to the school aid budget.

The Democratic-controlled House hasn't voted on the measure. Granholm doesn't like it because the $100 million is raised by delaying a tax credit increase for the working poor. And she said it's inadequate because school aid revenues are coming in lower than expected, leaving a potential $264 million hole in the $12.9 billion school aid budget.

Bishop disputes that, and says the governor should hold off on additional cuts until the state treasurer and directors of the House and Senate fiscal agencies meet in January to officially agree on how much revenue is coming in.

"For her to sit back and say there's a huge hole in the budget is a blatant misstatement," he said.

The governor has six still-unsigned budget bills on her desk covering general government expenses, human services, state police, community health, higher education, and energy, labor and economic growth.

The state is operating under an interim budget that expires Saturday, and Granholm said she will act on the bills by then to avoid another government shutdown.

She's expected to veto portions of some of the bills Thursday and Friday in a bid to get money to restore the Michigan Promise Grant scholarship program, lessen a cut in grants that local governments use for police and fire protection, and ease a cut in Medicaid reimbursement rates for health care providers.

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Associated Press Writer David Eggert contributed to this story.