Mich. gov. finishes signing budget before deadline

Michigan Gov. Jennifer Granholm said the budget she finished signing into law Friday will hurt the state's efforts to recover from the economic downturn.

The Democratic governor again called for GOP lawmakers to relent in their decision to eliminate a college scholarship program and to cut payments for health care providers who treat Medicaid patients and local police and fire protection.

"These Senate Republicans have taken what I think is an extreme position in regard to this budget," Granholm told reporters in a conference call. "The Democrats have compromised, the Republicans have not."

Matt Marsden, a spokesman for GOP Senate Majority Leader Mike Bishop, said the budget was passed with bipartisan support and doesn't need any additional tax increases.

He added that Senate Republicans are ready to start working on next year's expected budget shortfall by making government and schools run more efficiently and changing tax policy to better reflect the economy. Bishop, of Rochester, plans to release a list of ideas next week.

"We have to stop crying and yelling and screaming about this past budget year and who did what to whom," Marsden said. "This budget year is over with. The budgets are signed."

Since she began signing the 15 budget bills earlier this month, Granholm has issued 75 vetoes to specific programs for a total of $127 million in cuts. That includes $52 million cut from wealthier school districts that now face a drop in revenue of up to $600 per student. All school districts are losing at least $292 per student.

"If there was something in the budget that we didn't have enough money to fund completely, I vetoed it," Granholm said. "If there were special earmarks, mistakes or bad policy, I vetoed them."

In the six final bills she signed Friday, Granholm eliminated money for the Michigan State Fair in Detroit. Lawmakers had added money to keep the fair going for one more year, but that is gone unless her veto is overridden.

The governor also wants state police to find ways to inspect school buses. Lawmakers cut the inspection money, and schools are worried they face insurance or liability issues without the police oversight. Granholm urged lawmakers to add more money to the state police budget to restore the inspections.

Although she indicated she might veto items she thought were underfunded to try to get more money added, she dropped that strategy after Bishop warned that Senate Republicans wouldn't replace any of the money that was cut. Granholm had to sign the bills by late Saturday to avoid another government shutdown when an interim budget expires.

The new state budget exceeds $40 million, but about half is from federal sources, including $1.4 billion in federal stimulus spending.

The general fund and school aid fund share nearly $1.9 billion in cuts, including an 8 percent decrease in reimbursement rates for health workers who see Medicaid patients and an 11 percent drop in payments to local governments.

Republican lawmakers say they had to cut the programs Granholm wanted protected to deal with a $2.8 billion shortfall. Just this week, they voted down a House bill that would have taxed doctors 3 percent to draw in more federal dollars to pay physicians treating Medicaid patients. They say higher taxes will just hurt businesses and workers already struggling in a bad economy.

But Granholm said the cuts are forcing the state to stop investing in education, health care and public safety, and leaving many schools and local governments with looming deficits.

Democrats who control the House have done little so far to add the money Granholm wants. Although many voted against the cuts, they've been reluctant to restore the money since the Senate opposes any changes.

Lawmakers have three weeks to decide whether to let stand an overall $127-per-student cut to schools and the $52 million slashed from wealthier districts. Schools will lose the equivalent of $165 per student regardless, since that's in a budget bill Granholm signed last week.

The governor hasn't given up on getting more money for education, scholarships, Medicaid, and police and fire protection. She and state budget director Bob Emerson have been urging a few Republican senators to ignore Bishop's opposition and vote for additional funding for public education and local governments.

Most state departments are getting 10 percent less under this budget, and state aid to college students is cut 61 percent. Michigan has fewer state employees per citizen than 44 other states, with fewer workers in this budget to fight wildfires, oversee neglected and abused children, and inspect migrant housing.

More people were added to the budget to process unemployment claims, however, as the state deals with a 15.3 percent unemployment rate. And 55 of 100 state troopers laid off this summer will be reinstated.

The state has had to resolve more than $10 billion in deficits since 2003, and state revenues are now the lowest they've been since 1964 when adjusted for inflation, Granholm said.

She wants to see changes made to Michigan's tax structure by the end of December so the state next year can avoid the same kind of wrenching budget cuts it just experienced. Emerson said next year's shortfall could be $1.6 billion.

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Associated Press writer David Eggert contributed to this report.