As they bicker, strife grows
GRANHOLM SAYS SHE HAD TO VETO; BISHOP CALLS IT ‘EXTORTION’
By CHRIS CHRISTOFF
FREE PRESS LANSING BUREAU CHIEF
LANSING — The Capitol crackled with defiance, dismay and doctors in white smocks Tuesday, as new skirmishes in the state budget war erupted on several fronts.
Outside, hundreds of doctors with signs and bullhorns rallied for and against legislation to impose a 3% tax on all physicians.
Inside, Gov. Jennifer Granholm defended her Monday veto of $51.5 million for 39 of the state’s highest-spending school districts, including 26 in suburban Detroit. She said she had no choice because the school budget the Legislature sent her was unbalanced.
“There will be additional cuts, perhaps soon,” she warned, as state economists met to assess the state’s worsening finances.
Senate Majority Leader Mike Bishop, RRochester, denied Granholm’s charge that $60 million in revenue was missing to pay for a nearly $11-billion school budget. He called Granholm’s veto “extortion” but pledged not to raise taxes.
Clearly, the gulf between the two most important people in the process was deeper by day’s end.
School officials caught in the middle complained that students were being held hostage and blamed both the governor and Legislature. Meanwhile, Bishop sent Granholm six more budget bills with a warning not to veto any items in the bills. But Granholm hinted that she would and said more money is needed to fund college scholarships, help cities and support Medicaid.
Veto threats loom for budgets
Granholm presses for new taxes, fees
By CHRIS CHRISTOFF and KATHLEEN GRAY
FREE PRESS STAFF WRITERS
LANSING — The ink from Gov. Jennifer Granholm’s veto of $51.5 million for 39 school districts was barely dry Tuesday when she received six more budget bills, and hinted that more vetoes are coming.
State budget director Bob Emerson cautioned that all school districts may face more cuts of as much as $120 per pupil this year, as tax revenues continue to weaken.
Granholm’s veto sent shock waves through the Legislature. She laid blame on Senate Majority Leader Mike Bishop, R-Rochester, and pressured lawmakers to approve more revenue to fund schools and other programs that were slashed in the new budget bills she received Tuesday — college scholarships, revenue sharing to local governments and Medicaid payments to doctors, hospitals and nursing homes.
Bishop released the six budget bills Tuesday after holding them for more than two weeks after the Legislature approved them. He warned Granholm not to veto line items, saying Senate Republicans would not restore them.
Granholm, surrounded by 18 of the state’s top education lobbyists, said that without more money, many school districts face insolvency. She called for a public campaign to urge the Legislature to approve new taxes and fees that she and House Democrats support.
Among them: a freeze in the personal income tax exemption (which is scheduled to get an inflationary increase); a reduction in tax credits for businesses; an increase in the tax on non-cigarette tobacco products; a cut in tax credits for filmmakers, and new liquor license fees for bars to remain open after 2 a.m. and on Sunday mornings.
Granholm said the state needs to make systemic reforms for the short and long term. On Tuesday, the shortterm impact put many lawmakers face-to-face with fiscal crisis in their local school districts.
“In a panic, hysterical about what these cuts mean. That was my phone call from my superintendents,” said Rep. Lesia Liss, D-Warren, whose main school district, Center Line, stands to lose $570,000.
Rep. Marie Donigan, D-Royal Oak, said she was frustrated that legislators can’t compromise, as sales tax revenues decline and leave even less money for schools and other essential services. The Royal Oak school district stands to lose $1.5 million under Granholm’s veto.
“This is scary stuff,” Donigan said.
Rep. Hugh Crawford, R-Novi, represents three school districts — Northville, Novi and Walled Lake — that would lose more than $8.3 million in state funding because of Granholm’s veto.
“She’s playing games and didn’t have to do that,” he said. “I’ve never been exposed to doing business this way.”
Crawford said he has no plans to vote for new taxes but would be willing to look at a freeze on the Earned Income Tax Credit, which is used by low-income taxpayers.
“I have a granddaughter who is going to college, and I wasn’t happy about taking away her scholarship,” he said, referring to the $4,000 Promise Scholarship eliminated by the Legislature. “But it’s going to be incumbent on schools and cities to restructure.”
Three districts in state Rep. Chuck Moss’ district — Birmingham, Bloomfield and West Bloomfield — all suffer deep cuts under the veto.
“It’s getting more … difficult to watch these desperate, cynical measures to get more taxes,” said Moss, R-Birmingham, instead suggesting eliminating the 1% pay increase scheduled for state employees and reducing their benefits.
The easiest short-term solution wasn’t mentioned Tuesday: another dip into $184 million in remaining federal stimulus money lawmakers were hoping to save for next year.
Schools frustrated with funding veto
By LORI HIGGINS
FREE PRESS EDUCATION WRITER
Gov. Jennifer Granholm’s veto of $51.5 million in funding for select districts means some school employees will lose their jobs, some districts will deplete their savings and others will find themselves heading quicker into a deficit.
The veto — and the subsequent finger-pointing that took place Tuesday in Lansing — also produced harsh comments for Granholm and the Legislature.
“It’s frustrating and disappointing that we’re playing politics with kids,” said Brian Whiston, Dearborn Public Schools superintendent, whose district is to lose $5 million. “I’ve got to educate these kids this year, right now.”
Dearborn and 38 other districts statewide — 26 of them in metro Detroit — are among the state’s highest funded. They have been allowed to receive the special money to maintain their high funding levels since Proposal A was enacted in 1994 with the intent to equalize funding for districts.
In Dearborn, the loss of $5 million is on top of the $165per-pupil cut all districts in Michigan must deal with and another $1.5 million Dearborn is to lose in funding for at-risk students. Whiston said layoffs are a certainty, though he’ll be soliciting input from employees on how to make up the loss. Whiston said as many as 150 jobs could be on the line.
The West Bloomfield School District already was to end the school year with a deficit. The loss of $1.5 million will speed that along, said Joey Spano, district spokeswoman. She and others say Granholm and the Legislature are equally to blame for the situation.
“Every parent and every citizen in the state of Michigan should be outraged at this. It’s a dysfunctional system,” Spano said.
Superintendents in Livonia Public Schools, which is to lose nearly $5 million, and Royal Oak Neighborhood Schools, which is to lose $1.5 million, anticipate they’ll have to dig deep into their reserve funds to cover the loss. Livonia Superintendent Randy Liepa said he welcomes Granholm to come to his district, review his budget and tell him how he can make cuts.
“There has to be some explanation to the parents in my community,” Liepa said.
Editorial
Lansing’s failure of leadership reaches the schoolhouse door
As Michigan’s elected leaders continue their diatribes over the state budget, now 10 days away from the next deadline, the dire consequences have begun to hit home.
On Monday, Gov. Jennifer Granholm vetoed nearly $60 million of spending in the School Aid Fund budget. Senate Majority Leader Mike Bishop immediately denounced the cuts, which fall disproportionately on the state’s most affluent school districts, but vowed to let them take effect before he and his Republican Senate colleagues authorize a penny of the additional revenue Granholm insists is required to restore them.
What is coming into view now is the sort of state you get when leaders attempt to fix a long-term budget imbalance with short-term changes in only one side of the ledger — a. state that trashes schools, cripples hospitals and doctors who treat Medicaid patients, jeopardizes local police and fire services, and breaks promises made to its college students.
The funds Granholm vetoed yesterday are only the leading edge of more widespread cuts in K-12 aid. Because tax revenues continue to fall short of previous estimates, the governor warned that another $120 per pupil may need to be cut, starting perhaps as early as next month. That’s on top of the $165 per-pupil cut included in the budget bill Granholm signed.
Now you can argue, and many people will, about Granholm’s chief line-item veto target: the extra payment that some of the higher-spending school districts have gotten for the last 10 years, an adjustment that was made when the state had ample dollars and which those schools had every right to assume had become a permanent part of their annual grants. But nothing is guaranteed in a budget this devastated, and Granholm had few other places to turn.
Those who insist Michigan cannot afford any new taxes may well get their wish. The House has appropriately thumbed its nose at an irresponsible, Senate-produced package to raise roughly $100 million this year.
Meanwhile, the Senate will not act on any House-produced tax increases. So these cuts Granholm ordered Monday look likely to stand.
That’s brutal news to Michiganders, who have long identified K-12 education as a top priority. With 24 school districts already on the financial edge, the state may not have enough emergency financial managers to go around. Outright closures may occur.
Without some additional taxes — or a slowdown in some programmed tax breaks — the news will get worse, and not just for schools. The Senate has sent Granholm the final six budget bills she needs to sign to prevent a state shutdown Nov. 1, along with a message from Bishop that any lineitem vetoes she makes will not be voted on again.
That’s fine. The more the governor saves now with line-item vetoes, the fewer cuts will have to be made later.
Granholm noted Tuesday that freezing the personal deduction on the state income tax could yield $55 million. Other stopgap measures could produce significant dollars without increasing the general burden on hard-pressed taxpayers.
But Michiganders would be better off now if both sides turned their full attention to long-term changes in the way our state raises and spends money, such as containing employee benefit costs and adopting a tax regime that captures revenues from every segment of the state’s changing economy.
Even the best long-term reform package — and no one’s holding their breath on that — may not be able to repair the wounds occurring right now.
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