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LEGISLATORS HOPEFUL OF BUDGET E.O. SOON, WORKING ON PROPOSED CUTS With the state's fiscal year now more than half-over, legislative leaders and their caucuses are working as quickly as they can to develop proposals to bring to Governor Jennifer Granholm <http://www.gongwer.com/index.cfm?link=bio.cfm&nameid=6701&locid=1> later this week to solve an estimated $785 million budget deficit. Officials are also hopeful Ms. Granholm will soon issue a budget-cutting executive order that would start the process of paring down that deficit. No one would outline what cuts, and level of cuts, the different caucuses will propose and how much in federal stimulus money the state will use to keep the budget balanced. Discussions are still underway with Senate Republicans and House Democrats, the two majority caucuses, on what to propose and why. However, a spokesperson for Senate Majority Leader Mike Bishop <http://www.gongwer.com/index.cfm?link=bio.cfm&nameid=17501&locid=1> (R-Rochester) said he would be willing to accept that the entire $785 million deficit be made up in cuts in the leader's proposal. That willingness recognizes that accepting federal stimulus money means some budgets could not then be cut, which would put the pressure on other budgets to absorb the entire amount, but Matt Marsden also said that Mr. Bishop believes that taking the cuts now will put in the state in a better fiscal position in several years when no federal stimulus money is available for the budget and the state could still face ongoing financial problems. Mr. Marsden also stressed that while Mr. Bishop is willing to balance the budget with all cuts, which is not yet the position of the Senate GOP caucus. Caucus members are still reviewing what level of cuts they could accept and how much in stimulus money they would be willing to use. House Speaker Andy Dillon <http://www.gongwer.com/index.cfm?link=bio.cfm&nameid=105001&locid=1> (D-Redford Township), who continued to keep silent about details of the budget options being considered, said the leaders were hoping to get a consensus on the executive order this week, but added it may spill over into next week. Getting an executive order this week may be a bit optimistic, one Senate Democrat said, but getting one soon is critical. Last week, sources and officials indicated that Ms. Granholm offered an executive order that would cut some $80 million. While that amount is about one-tenth the amount needed to be cut or balanced, it starts the process towards resolving the budget. Asked if Ms. Granholm should propose a bigger executive order at this time, Sen. Michael Switalski <http://www.gongwer.com/index.cfm?link=bio.cfm&nameid=16901&locid=1> (D-Roseville) said a larger EO could delay the process for winning agreements on the rest of the budget resolution. Both Senate Republicans and House Democrats met in caucuses Tuesday to discuss proposals. In part because caucus discussions were underway, a quadrant meeting that had been planned for Tuesday was delayed. Mr. Marsden said appropriations subcommittee chairs are discussing what level of cuts they think their budgets can withstand and how much in federal stimulus money would need to be used to keep the budget in balance. Mr. Bishop is not pushing the caucus to itself call for all cuts in its recommendation on the $785 million deficit, Mr. Marsden said, but to have the caucus recognize that the more stimulus money that is used this year will make less available for the 2009-10 budget and beyond. The state still must anticipate making cuts in future years, he said. Mr. Bishop is willing himself to call for cutting the budget $785 million because the state would still have to make that level of cuts if no stimulus money were available, Mr. Marsden said. Mr. Dillon's silence on the budget proposals included no comments on how much is being targeted for use of the federal stimulus funds to fill the holes in the budget relative to how much would be accomplished in budget cuts. The two extremes, however, are balancing the current-year budget all with cuts, which Mr. Dillon said would mean taking 50 percent out of all discretionary spending outside of areas like education and health care (which cannot be reduced), or using all of the stimulus funds to fill the holes but which would leave the state with an unfunded cliff in the 2010-11 budget when the federal dollars dry up. He said unspecified structural changes in the budget will be needed. Mr. Dillon also said his hope is to get the 2009-10 budget completed by the end of June, which he said would give the state three months to deal with any "mistakes" that may have gone into the budget-writing. "Any objection to that?" he asked. The hole in the 2009-10 budget is a daunting $1 billion, which he said rivals in difficulty the $1.8 billion that was cut two years ago because it comes from a smaller spending base and the state is farther along in the fiscal year. All sides were still working on Tuesday on the options they want to put on the table for spending cuts this year