Granholm targets legislature, says budget is ‘unfinished business’

Michigan Gov. Jennifer Granholm addresses reporters Oct. 1, hours after the state legislature failed to reach a balanced budget deal, sending the state operations into a two and half hour shutdown. (Photo by Todd A. Heywood/Michigan Messenger)

LANSING — A disappointed, yet defiant, Gov. Jennifer Granholm faced reporters Thursday afternoon, hours after the state shut down for business for two and half hours after the state legislature failed to meet a constitutional requirement to pass a balanced budget by Oct. 1. State lawmakers managed to pass a temporary spending measure giving life to the state’s operations until Oct. 31, which the governor signed around 2:30 a.m.

In prepared remarks, the governor slammed the budget measures passed late Wednesday night and early Thursday morning.

“Michigan’s constitution demands that a balanced budget be in place when our new fiscal year begins,” she told reporters. “But Michigan’s future demands more. Michigan’s future demands a budget that helps us diversify our economy to create the jobs we need; that keeps police officer and firefighters on the streets of our communities; a budget that helps our kids afford to go to college. The budget the legislature has passed failed to do all of these essential things.”

Granholm said she will use her veto pen “to shape this budget.” She laid out a list of three priorities which will guide the use of her line-item veto authority. Budgets which do not, in her opinion, work to diversify Michigan’s economy, educate Michigan residents or protect those at risk, will risk being vetoed. Granholm said she is not ruling out the possibility she may reject entire budget bills in the coming days.

“While I will not hesitate to act, the legislature also needs to return to the unfinished business of this budget with the urgency and honesty it demands,” she said.

She called for school superintendents, who could face millions of dollars in unexpected cuts, to act with her.

“The superintendents, the students, the parents, need to exercise democracy,” Granholm said. She encouraged them to contact lawmakers and oppose the cuts. “The voice of the people impacted by these cuts are powerful.”

Asked if residents should be angry that the state failed to pass a balanced budget on deadline for the second time in 24 months, Granholm said they should be.

“And I’m right there with them. This is enormously frustrating,” she said.

Granholm called on the legislature to pass several tax proposals she has floated, including a tax on some services, bottle water and soda, and tobacco and alcohol. She also said she supports a physician-provider tax, noting that the money such a tax would raise would be returned to the state by the federal government on a 3-to-1 ratio.

The legislature has used a series of one-time gimmicks to balance the current budget without revenue increases, she said, noting they had used federal stimulus funds to plug various budget holes, funding that will not be available next year. Granholm said lawmakers had a “menu of targeted revenue options,” from which they could choose to address the structural issues in the budget, rather than using stimulus funds.

“They gotta get that done,” Granholm said.

State Sen. Mike Prusi of Ipsheming, the top Senate Democrat, echoed Granholm in a statement released late Thursday afternoon.

There’s a window for us as Senators — Republicans and Democrats — to step up to the plate and show real leadership on a final budget solution. We don’t need to point fingers or wait for the House to do everything; all the tools are here in this chamber to get a compromise done. All we’re asking for is the Majority to work with us on a long-term fix that protects public safety, education, and health care. Their take-it-or-leave-it approach didn’t work, so let’s give a constructive compromise a shot.

Granholm said if legislators fail to act now, they will face a “cliff” or a “crater” in the upcoming 2011 budget, because the one-time stimulus funds will be gone, and the state is expected to see a continued decline in revenues from current taxes and fees.

Asked what she thought about using the remainder of the stimulus money to stop cuts to K-12 education, she responded tersely: “What happens next year?”

“They have to fix the problem,” Granholm said, referring to lawmakers.

As she was leaving the press briefing room, Granholm was asked what kinds of governmental reforms she would support. She said there needs to be a serious look at allowing local governments to share resources or even merge.