Lansing Update: March 23, 2007

In this issue of Lansing Update:

1. Budget Anxiety Heightened Following New Cuts, Executive Order

Budget Anxiety Heightened Following New Cuts, Executive Order

Efforts to balance the state’s nearly $1 billion budget deficit will continue as Senate Republicans this week ushered through the upper chamber $630 million in spending cuts, including a $34 per-pupil cut in state aid for schools, which the executive office termed “unacceptable.” The ideological difference toward balancing the budget is likely to linger for the coming weeks as the Democratic-controlled House of Representatives declared the cuts “dead on arrival.”

A series of budget moves that shook the State Capitol began when the Senate Appropriations Committee passed Executive Order No. 2007-3 (EO) cutting some $345 million from the current year’s state budget, just minutes before the full Senate voted to kill Governor Granholm’s plan to balance the budget with a two percent tax on services [Link no longer available —Ed.]. Following approval of the budget-cutting EO and defeating the Governor’s tax increase plan, the Republican-controlled Senate proceeded to pass legislation that balances the current year’s $940 million budget deficit with hundreds of millions in spending cuts.

The EO promulgated by Governor Granholm and approved by the Senate Appropriations Committee includes actual cuts of approximately $180 million, with the remaining $164 million coming from delayed payments to universities and community colleges. A partial-list of departmental cuts includes the following:

• $29.4 million—Department of Human Services
• $33 million—Department of Community Health
• $73 million—Department of Higher Education
• $67 million—Department of Corrections
• $7 million—Department of State Police

In their effort to make up the current fiscal year’s remaining deficit, Senate Republicans passed program cuts that will affect the Department of Community Health, Department of Human Services, revenue sharing, the state’s school aid fund as well as its general fund. Some of those cuts include the following amounts:

$377.4 million—School Aid Fund

• $262 million—Public School Employees Retiree System
• $57.4 million—Per-pupil foundation dollars ($34 per student)

$63 million—Department of Community Health

• $21 million—Non-Medicaid assistance to Detroit-Wayne County Community Mental Health program
• $10.9 million—Adult Home Health Care
• $14.2 million—Healthy Michigan Fund
• $7 million—Medicaid provider reimbursements
• $6.4 million—Health care co-pays, increased deductibles and premiums

$35 million—Department of Human Services

• $11.8 million—Day care services
• $5.4 million—Anticipated case-load funding
• $5 million—Child care
• $4.6 million—Shifting foster care placement to private providers

$39.9 million—Revenue Sharing

• $12 million—City of Detroit

Budget action will continue in the coming weeks as the House Appropriations Committee must also sign off on the budget cutting EO, which must be approved by both appropriations committees within 10 days of being issued for it to become law. The House of Representatives is now confronted with hundreds of millions of dollars in additional Senate-passed budget cuts, which seem unlikely to pass in the Democratic-controlled House before both parties attempt to reach a compromise.

The severity of the budget dilemma forced Speaker of the House Andy Dillon (D-Redford) to cancel this year’s legislative spring break for House members.