House and Senate Appropriations members jumped into overdrive Tuesday in
parceling out how to cut $1.2 billion from the 2009-10 budget after the
chambers' top leaders agreed to that target. 

The developments Tuesday were a shift from discussions on a different
scenario that would have seen the House simply voting to adopt the
Senate-passed cuts.

But it still means that key members of the House and Senate
Appropriations committees will use the overall amount cut by the Senate
budgets of $1.2 billion and then negotiate which programs to slice. And
the setting of a target figure, while a fragile pact, represents a huge
step toward enactment of the budget.

Appropriations chair Rep. George Cushingberry Jr.
(D-Detroit) said of the Senate's $1.2 billion in cuts, "We're going to
try to take their numbers and see. We know we have to make some changes
and have to make some cuts." 

Senate Majority Leader Mike Bishop
(R-Rochester) said he and House Speaker Andy Dillon
(D-Redford Twp.) have asked subcommittee chairs to use the Senate
spending levels, which include the $1.2 billion in cuts, as targets in
negotiations about how each department's budget will look. 

"We have an agreement on process and that is to get these conference
committees moving and get some forward momentum on our ultimate goal,"
Mr. Bishop told reporters, referring to his talks with Mr. Dillon. "What
we did agree upon was to get this off dead neutral and move it forward
by charging our subcommittee chairs with the responsibility of starting
the committee process, talking about the cuts that we have, using those
as the target to see if we have an agreement. If we have an agreement,
we're going to move these budgets."

Mr. Dillon would not confirm for reporters that $1.2 billion is the
target, but said lawmakers would be working over the coming days to
negotiate cuts. He said Democrats were still fighting to maintain
funding for critical areas such as Medicaid, early education, revenue
sharing and the Promise Grant. 

"Number one, we don't want a shutdown," Mr. Dillon said. "It's moving
this process forward in a more progressive way. We want to make sure
we're funding our priorities."

Meanwhile, Governor Jennifer Granholm
issued layoff notices to about 52,000 state employees, although her
spokesperson called the move "a technicality." 

"A similar technical requirement was met in late August when general
notices were sent to the represented groups alerting them of possible
temporary layoffs October 1," Ms. Boyd said. "Again, we expect and are
working toward a budget resolution in advance of October 1."

The letter sent to state employees says "reaching a consensus on the
budget has been extremely difficult this year given that the national
recession and the upheaval in the financial markets have driven state
revenues down to a 40-year low when adjusted for inflation. I assure you
the administration is working diligently to have a budget in place to
avoid temporary layoffs. These have been trying and uncertain times for
you and all of us in state government who take pride in serving the
citizens of Michigan. It is our hope that the budget situation will be
resolved soon, and we promise to keep you updated on our progress in the
days to come."

Mr. Dillon said he spoke with Ms. Granholm Tuesday morning and "she
knows the strategy." Asked if the governor has said she will veto an
all-cuts budget, Mr. Dillon said it's up to the governor to decide on a
veto if she thinks the Legislature is going too far. 

Earlier in the day, Mr. Cushingberry, citing a longtime axiom in
Lansing, said, "I hope the governor will respect that she proposes and
the Legislature disposes."

Ms. Granholm has proposed raising $684 million in revenues through tax
increases and the elimination of tax exemptions while also cutting $862
million in spending.

Ms. Boyd affirmed the governor was in discussion with lawmakers on the
budget all day, but would not comment on specifics related to those
negotiations, including $1.2 billion being the target for budget cuts.

But Ms. Boyd did say, "We do believe many of the Senate cuts go too

She said the governor is looking to preserve basic services, such as
health care for vulnerable residents, and that the administration is
working on a budget that reflects that. 

Ms. Boyd added the governor still believes in eliminating some tax

Discussions are ongoing as to what a supplemental could look like if the
House proposes revenues to restore cuts later. Mr. Cushingberry said
there would have to be a promise from the Senate that it would vote on
revenues before the House would act on a supplemental.

But Mr. Bishop said he has made no such commitments and that there are
currently no votes within his caucus to support a tax increase.

To that, Mr. Cushingberry said, "I don't think he's counting his members
like we have."

Mr. Dillon said Tuesday morning that he would name conference committee
members before the day concluded, but he had not yet done so as of press
time. Appropriations members are meeting in the less formal workgroup

For instance, Rep. John Espinoza
(D-Croswell), chair of the Department of Agriculture budget, said the
Senate budget was higher than his so that leaves him with two options.

Mr. Espinoza said he could make changes to spend more general fund
dollars in the department and possibly do away with dairy inspection
fees that could be difficult for the industry or keep spending where the
House set it and share the remaining general fund dollars with other
budgets that are farther apart from agreement.

Meanwhile, Senate Minority Leader Mike Prusi
(D-Ishpeming) ratcheted up his comments about the possibility of the
House Democratic caucus supporting a budget that cuts $1.2 billion,
instead of cutting less and adding revenue to preserve some programs.

Mr. Prusi, in remarks on the Senate floor, said Senate Democrats remain
steadfast against the Senate Republican cuts to college scholarships,
revenue sharing, Medicaid and early childhood education.

"Those priorities still stand with this caucus regardless of any deal
that is cut in the back room with the promise of some magical revenue
appearing after the budget is put to bed," he said. "We are willing to
make difficult cuts, we are willing to make tough decisions, we are
willing to work with all sides to get to a resolution of these issues
that are so critical to Michigan as we allocate the state's budget; but
we will not be left out of the process, and we will not support budgets
that do not contain priorities that have been demonstrated and discussed
by this caucus throughout the intervening months."

Senate Democrats, despite their minority status, will wield influence
because the budgets cannot take immediate effect without at least four
Democratic votes to get the required 25 for a two-thirds majority.
Absent immediate effect, the budget bills would not take effect until
sometime in late March, essentially depriving the state of spending
authority for the first half of the fiscal year.

Mr. Bishop also said he and Mr. Dillon have agreed to pass a
continuation budget to avoid a government shutdown if they cannot get a
budget passed before October 1.

"We've already agreed that if we cannot get the budget going here what
we'll do is we'll pass a continuation budget that will give us some more
time," he told WWJ-AM. "But I think that we have all the elements in
place to get this thing done by this week or next."

Of Mr. Bishop's comments about a continuation budget, Mr. Dillon's press
secretary said in a statement, "The House, Senate and governor all
believe we can resolve the budget crisis without a government shutdown.
There are very serious negotiations going on about how we preserve vital
services like Promise Scholarships and fire and police protection to
keep our families safe. No one benefits from a government shutdown. I
believe all parties are committed to resolving the fiscal crisis."



Rudy Redmond

Manager, KCP Initiative

(517) 373-9700