A day after Governor Jennifer Granholm outlined her proposed 2009-10 budget two contrasting events demonstrated the odd duality of the document: on the one hand Congress began action on the final version of the stimulus plan which could flood the state with money and a top university warned of significant negative effects if the budget proposed is adopted.
All day long, state officials watched Congress debate and vote on the stimulus package (see related story) as they also attempted to analyze what it could mean for Michigan.
But officials at Michigan State University, whose Board of Trustees was meeting, said the proposal to cut university funding by 3 percent and to significantly cut funding for the Cooperative Extension Service and the Agriculture Experiment Station (both of which are housed at the university) would mean either a tuition increase or the loss of hundreds of jobs.
Those two contrasts were also emphasized by the two executive directors of the Senate and House Fiscal Agencies. Gary Olson and Mitch Bean said Ms. Granholm made the most dramatic budget presentation of her tenure but that the stimulus bill could change everything.
Should a stimulus bill be signed into law by President Barack Obama on Monday, Mr. Bean said he expected administration officials could have a proposed supplemental budget available for the Legislature by the end of the week.
A budget spokesperson for the administration said there was no specific timetable on presenting a supplemental budget except that it will be done expeditiously.
And Mr. Olson said much of the debate over the budget will center over what import to give to the stimulus. Will lawmakers decide to forego cuts because of the stimulus money or push for greater cuts because of future potential deficits after the stimulus money runs out, he said.
But no one should doubt the cuts Ms. Granholm outlined were real, the two said.
"This was unlike any budget she has presented," Mr. Olson said. "These are very serious cuts."
Mr. Bean said: "These were pretty straightforward cuts." It was, he said, a "pretty bold budget."
And both Democrats and Republicans have lashed out at the proposed cuts.
But while most the focus has so far been on the cuts outlined by Ms. Granholm, Mr. Bean said there will be criticism as well for the $231 million in revenue increases she has proposed. Those include ending automatic annual indexing of the personal deduction in the income tax and boosting liquor and tobacco taxes, and so far they have not drawn much comment.
The administration also anticipated $500 million in enhanced federal Medicaid funding.
Mr. Olson said, assuming that figure was justifiable, that the state would probably get much more money just in Medicaid funding. That money is designed to protect individuals already receiving Medicaid benefits and not to expand it, he said. In fact, he said had Congress directed the money be used to expand the Medicaid program, he would have argued the state should not take the money because it would have added to future potential deficits.
He also said if the state does get several billion dollars in additional Medicaid funding, that could save the state general fund money. Mr. Olson said he would argue that the state should look at preserving some of the money, possibly in the Budget Stabilization Fund, to help manage future budgets.
Mr. Bean said lawmakers will have to keep in mind that strings will be attached to the stimulus money. Even so, officials should be able to engineer a proposal that could keep some funds in reserve for future budget years.
Meanwhile, while Ms. Granholm has called on universities to not raise tuition, MSU officials said the budget she has called for will force a tuition increase. Either that, they said, or force the layoff of as many as 700 workers.
The university could also impose a mix of job cuts and tuition increases, officials said, though how much of a tuition increase the university could ask for was not specified.