Is it 2007 all over again?

Democratic House Speaker Andy Dillon and Republican Senate Majority Leader Mike Bishop appeared together at a meeting of the Detroit Economic Club on Monday and had what the Detroit Free Press called a “kumbaya moment,” promising that “the state budget, including $1.2 billion in cuts, will be done by the Oct. 1 and a government shutdown will be avoided.”

But we heard those same promises two years ago at this same time, and from the same people, when last minute budget negotiations failed to prevent a state government shutdown on Oct. 1. And those promises continued right up until the moment the government actually shut down.

On Sept. 30, 2007, the Grand Rapids Press reported, “Dillon said early Saturday morning that he was confident a budget pact would be approved by the House and Senate for Granholm’s signature, thus averting a shutdown.” The next morning, all but the most crucial state services were shut down after the negotiations failed.

The shut down only lasted a few hours, but if anything the problems this time are even greater than they were in 2007 and the factions may be even more bitterly divided. In 2007, even the Republicans were willing to entertain the possibility of extending the sales tax to some services in addition to products, something they have shown no willingness to do now (and if that had happened in 2007, we would not be facing such a steep deficit this time).

In 2007, legislators were trying to fix a $1.75 billion deficit; this year, that deficit is nearly a billion dollars higher, but with federal stimulus money able to fill some of the gap. What’s left over is the need to either cut $1.2 billion from the budget, raise revenues by $1.2 billion, or some combination of the two. But so far, the Republicans have been entirely unwilling to consider any revenue increases.

The sides are now pretty clearly drawn. Dillon is essentially siding with the Senate Republicans; he says that he doesn’t support the massive cuts they voted for but he has agreed to bring that whole package to the House without any promise that the Senate would vote for any revenue increases to help make up any of those cuts. That has some House Democrats crying foul. As the Free Press reported:

State Rep. Fred Miller, D-Mt. Clemens, said there is not support among the House Democratic caucus for the Dillon-Bishop agreement to cut at least $1.2 billion in state spending by Oct. 1 with the intention of seeking more revenue later to restore some cuts.

Asked if he trusted Dillon on that strategy, Miller said, “The Andy Dillon I know, I do trust. This strategy I don’t trust.”

Miller said the proposed cuts are “literally a matter of life and death,” because they would reduce Medicaid payments to hospitals and nursing home enough to put some on the brink of closure.

Granholm says she is also opposed to such steep cuts and wants to increase revenues by around $600 million in order to lessen them, but she hasn’t said she would veto a budget that did not include that. But it is entirely possible that we will be left here next Thursday, Oct. 1, with the House refusing to accept the full $1.2 billion in cuts, the Senate refusing to accept any tax increases and Granholm not even having a budget to sign.

And to make things worse, the projected deficit for next year is expected to be about the same, but without any federal stimulus money to fill the void. And all of this is due not to vast increases in spending but to vast decreases in revenue. As we reported recently, the average taxpayer in Michigan paid 9.5% of their income to the state; today that average is 7.3%.

If the tax burden were restored to 2000 levels, it would be more than enough to balance the budget without such drastic reductions in services that so many depend upon in these harsh economic times. But the Republicans have made it very clear that they will not allow that and they have the votes to stop it in the Senate.

So despite all the rosy talk, do not be surprised if 9 days from now we are mired in yet another government shutdown.