michigan government shutdown

DETROIT (Reuters) - Michigan Governor Jennifer Granholm ordered government offices to shut on Monday if the state's divided legislature cannot come to terms on a budget that would include higher taxes.

Granholm, a Democrat, said she was "hopeful" a compromise could be reached between state Republicans who control the Senate and the Democratic-controlled House that would avoid a costly state government shutdown.

"Productive negotiations are now underway that could head off this government shutdown while there is still time. We have made significant progress in the last 48 hours," Granholm said Thursday evening in a televised speech from her office.

The government shutdown would deal another blow to a state economy already hurt by deep job losses in the auto sector and a slumping property market.

It would also come within a week of another economic disruption caused by a United Auto Workers union strike against General Motors Corp. that highlighted the uncertainty facing the state.

Granholm said she would not sign a budget that relied on spending cuts alone to close the estimated $1.75 billion budget deficit facing the economically distressed state.

In response, Senate Republicans urged Granholm and the Democratic House to pass a 30-day continuation budget that would allow time for the negotiations to continue into the new fiscal year that begins on Monday.

Granholm indicated she opposed any temporary spending measure that would take the pressure off lawmakers and wanted a full $41 billion budget for the state.


And college leaders aren't only looking forward with nervousness, they're likewise looking anxiously back ― to ensure the restoration of about $138.7 million included in last year's appropriation for universities, and $25.8 million for community colleges, delayed because of the budget crunch until the start of the new fiscal year October 1.

"It's so fluid right now," says Gregory Rosine, senior vice president for university advancement and legislative affairs at Western Michigan University. The university expected to receive a mid-October payment of $11 million in deferred state funds, in addition to another $11 million or so from the upcoming year's appropriation. Right now it's unclear how big a check Western Michigan can expect next month, though it's safe to say it's probably in the $0 to $22 million range.

"We're talking about $22 million � that's a lot of money," Rosine says. "We put a budget together on the assumption and set tuition on the assumption that we were going to have this deferred payment come back to us."

"In order for us to go forward into the academic year, we would like to have a good idea of what our budget is going to be, what our appropriation from the state is going to be. And the longer that remains uncertain, clearly the more difficult it is to plan," adds Steve Webster, vice president for governmental affairs at Michigan State University.

College officials say their institutions, which are able to collect tuition directly from students without a state intermediary, have no plans to immediately shut down in the event of a government shutdown (which, Webster says, he thinks is unlikely to happen). But even assuming lawmakers do agree on a budget ― most likely at this point a short-term budget ― bigger issues may still lurk in the background.

Democratic Gov. Jennifer M. Granholm's recommended budget originally included a 2.5 percent increase in funds for higher education ― but that increase was predicated on an increase in revenue. And with lawmakers unable to agree on tax increases ― the two main proposals being to expand the sales tax base so that it includes some service industries, and to increase the income tax from 3.9 to 4.6 percent, the latter being the level before a series of tax cuts under recent Republican Gov. John Engler's administration ― it's probably safe to say that college leaders aren't counting on any funding increases, Rosine says.

The "best-case scenario," says Michael Hansen, president of the Michigan Community College Association, is that the colleges "get their delayed payment restored and no increase this year." Asked about his thoughts on the chance of a government shutdown, Hansen says that while "it's not over 'til it's over," the tone of the discussions in Lansing is worrisome. "The sides are now bracing for a shutdown and trying to figure out who benefits politically from that," Hansen says. "That's the most disgusting thing I've ever heard, if the situation has devolved into who gains politically by a government shutdown."

James J. Duderstadt, president emeritus and University Professor of Science and Engineering at the University of Michigan, says that he expects the legislature will come up with a solution before Monday ― but only on paper and not in practice.

"Probably what they're going to do is find some way to paper it over," he says ― with state leaders writing what looks like a balanced budget only to come back in another few months to announce cuts. "My belief, and it's shared by a lot of people, is that what you're seeing right now is the endgame of a bitter political battle which is very likely to lead to the same thing it's led to in the last several years, which is just postponing the serious issues ― like getting an adequate tax base."

Duderstadt traces funding woes for Michigan higher education to the 1980s, when Japanese imports first posed serious threats to Detroit's automobile industry and universities lost about a third of their state support. While appropriations bounced back a bit during the 1990s, when demand was high for American-made sports utility vehicles and equity markets were booming, tougher times and lower taxes have since combined to hurt public higher education, Duderstadt says.

Per-student higher education appropriations at Michigan's public universities have fallen from $6,840 in 2000-1 ― $8,154 when adjusted for inflation ― to $5,852 in 2006-7, according to the Presidents Council for the State Universities of Michigan. And while the state ranks 26th in terms of per-student appropriations, again according to the Presidents Council data, Michigan was the fourth-slowest state in terms of increasing its higher education spending in the past decade.

Furthermore, Duderstadt says, "We have not had, in Michigan higher education, a significant capital outlay bill since 1995, for over a decade now."

But Erik Guenard, dean of business services at Gogebic Community College, in Michigan's Upper Peninsula, says he sees in the state's pro- economic development attitude reason for optimism ― and he expects Gogebic to get its $700,000 in deferred appropriations back in any budget breakthrough. "I do feel pretty good about it because the state right now has been talking about turning the economy around and the only way to turn the economy around is through education of the citizens," Guenard says.

"We want to be seen as a state that is on the move, that is using three research universities to fuel the economic engine," says Terry Denbow, vice president for university relations at Michigan State. "We are concerned about the image and reputation of an entire state."

"The bottom line is that Michigan is calling a timeout that it doesn't have ― and there's always a penalty for calling a timeout that you don't have."

So I live in the spectacularly horrible state of Michigan [I've lived here all my life so I have the right to bash it; I know so cynical] and well lately things have been total and complete crap here. We're the worst state for gas prices, worst state for economic recovery, top of the list for unemployment and if that doesn't get my point across, we're basicaly number one in foreclosures on homes and our roads need major maintenence.

Yea living here pretty much sucks. I'll admit it I want to leave here as soon as possible, because I hate it that much, but now with our stupid governor elected back into office, we're hours away from a total government shutdown. What will that do to our already dying state? ALOT.

It's sad to hear that after how long now in the capital arguing over a budget, they still haven't gotten one together. I mean can a state survive without a government? They might as well just throw us back to the Canadians and be done with it. We're just about to sink ourselves to the middle of the earth anyways and it really angers me that I'm not allowed to have a say in things because I'm still only 17. I want to have a voice with issues in our state but for that to happen, I have to have a 4.0, straight A's a brain, organization, law school all that jazz. Which, knowing myself, will NEVER happen.

I know this is completely far fetched [and probably makes absolutely no sense so far] but, I wish that average people actually having to survive in this poor economy would get a say in the matter of our state and the workings behind it. No that's just left to the smart people. Yeah, I know there are a bunch of people out there who could give a hoot about these things, but I'm trying to take a stand for those who want to have a voice, but their voice is silenced by the fact that they're not old enough, smart enough or rich enough.

The Ambassador Bridge will remain
open to serve the public as other Michigan government controlled highway
operations prepare for possible state shutdown. In fact, Ambassador Bridge
will boost employees and bridge staff to respond to additional traffic if
government controlled crossings are impacted by the Michigan budget
challenges. The Bridge's portion of Gateway Project construction will
continue on schedule and according to contract, even if MDOT work is
affected by the state budget.
"The traveling public and international commerce should know the
Ambassador Bridge embraces its responsibility and obligation to accommodate
our customers," said Dan Stamper, Ambassador Bridge president. "As a
taxpayer, employer and corporate citizen, we are watching and sincerely
hope for a positive resolution of the budget from state leaders. Until
then, we want the traveling public to have confidence in the border and
will have our dedicated employees ready to accommodate any effect on the
other government crossing."
"Our private sector status is a real plus during these trying times in
Michigan government," Stamper observed. "That's why we have invested $500
million in border improvements and why we are moving forward with the
Ambassador Bridge Enhancement Span well ahead of the time it is needed."
As North America's most traveled commercial crossing, the bridge
between Windsor and Detroit is privately owned by the Detroit International
Bridge Company and the Canadian Transit Company. Private investment by the
Ambassador Bridge has provided the ability for MDOT to obtain federal
matching funds for the $225 million Gateway Project and investment for the
Enhancement Span would offer two billion dollars to Michigan for road
projects. The new span will generate 3,700 new jobs without further
burdening Michigan's taxpayers.
"With a backdrop of economic challenges and Michigan budget woes, the
Ambassador Bridge is making a real contribution to business confidence at
the border," said Stamper. "We are focusing our efforts on building a
better bridge and we support Michigan's elected officials as they invest
the state's resources where they are most needed."
About the Ambassador Bridge
Built in 1929, the Ambassador Bridge stands between Detroit, Michigan
and Windsor, Ontario as an international symbol and link between the two
countries. It is privately owned by the Detroit International Bridge
Company and The Canadian Transit Company. The Gateway Project is a major
economic development project that creates high paying local jobs by
connecting area freeways to the Ambassador Bridge and Detroit's Mexicantown
neighborhood. It includes reconstructed freeways, new interchanges for I-75
and I-96 and connections to I-94, and a state-of-the-art pedestrian bridge
connecting east and west Mexicantown and is a partnership of Ambassador
Bridge, MDOT and FHWA. The owners believe in the development and wellness
of the local community where their business is operated and continue to
support a variety of local organizations.