Legislators seek ways out of Michigan fiscal crisis

9/21/2007

LANSING - Michigan House members began voting on another proposal to raise the state's income tax last night, an effort to resolve a budget crisis projected for the fiscal year that begins Oct. 1.

The proposal would raise the state's income tax from 3.9 percent to 4.6 percent.

Other votes possibly could include extending the sales tax to some services. Some spending cuts also may be voted on.

House Democrats were trying to woo Republican votes for the income tax by tying it to several cost-cutting moves, possibly including the elimination of lifetime health benefits for lawmakers, a reduction in the use of state vehicles, and other changes to benefit levels for state employees.

The state has a projected $1.75 billion deficit for the fiscal year that starts next month.

A partial government shutdown is possible unless a solution is found soon.

It appeared last night that whatever bills the Democratic-controlled House might pass, the Republican-controlled Senate wasn't on board.

Matt Marsden, a spokesman for Senate Majority Leader Mike Bishop, said there had been no agreement reached between leaders of the two chambers several hours after House Speaker Andy Dillon announced the House would vote.

That means the Legislature likely will meet on Sunday, possibly to try to reach a compromise.

It's becoming more likely that lawmakers will have to temporarily extend the state's budget year with a continuation budget for the first time since 1980.

The Republican-controlled Senate has passed a 30-day extension of the state's budget, but it doesn't include any tax increases. Democratic Gov. Jennifer Granholm has said she would veto the budget extension unless it's tied to a revenue increase.