LANSING - Michigan lawmakers spent the first day of a monthlong window to reach a new budget deal as divided as they were Wednesday, when differences led to a brief government shutdown.
Democrats want more tax money to reduce cuts in education, health care, and local services such as police and fire protection.
Republicans continue to say they won't support tax increases to help address a $2.8 billion deficit.
Democratic Gov. Jennifer Granholm tried yesterday to persuade legislators to raise enough money to restore the Promise college scholarship and ease cuts to K-12 schools and local governments and said she'll use her veto power if necessary.
"I am determined to use my power in this process to give the people of Michigan a fiscally sound budget with the right priorities - diversifying our economy to create jobs, educating our citizens, and protecting those who are at risk during this crisis," she said.
Republicans who control the Senate, however, don't plan to send her budget bills that contain cuts they think she might veto.
Ms. Granholm can veto entire budget bills but also can veto specific spending she thinks is too high or too low.
GOP Senate Majority Leader Mike Bishop (R., Rochester) said the governor knows Republicans who control the chamber 21-16 won't support tax hikes.
"She doesn't have revenue votes in the Senate. There are no votes in the Senate that will get her over the line" to the 19 votes needed to pass legislation, Mr. Bishop said.
While a temporary 30-day budget is in place for general government programs such as prisons, Medicaid, and universities, there's no interim spending plan for public schools.
Michigan's next payments to school districts go out Oct. 20.
State Budget Director Bob Emerson said a school budget needs to be in place by Oct. 10 so state officials have time to set up the correct payments.
A $218 per-pupil cut approved by a bipartisan conference committee didn't gain support in the Democratic-led House late Wednesday.
Many House Republicans voted against the bill and hope more federal stimulus money can be used to reduce the cuts.
Senate Republicans said relying on more federal money would make the budget hole worse in 2010-11. They also disputed criticism that they haven't made education a priority.
"The schools ought to be thankful that they have less than a 3 percent cut," said Sen. Alan Cropsey (R., DeWitt). "Every place else in state government is taking much more cuts than what the schools are. ... We don't have the money, and they know we don't have the money."
Lawmakers met behind closed doors yesterday, coming out to vote to make changes in a bill involving wetlands. Then they adjourned until next week.
Democratic House Speaker Andy Dillon of Wayne County's Redford Township has said Democrats could begin looking at tax increases or other revenue sources to pay for the college scholarship program and lessen cuts that Senate Republicans want.
But it is unclear when Democrats will begin voting on changes that would lead to more revenue.
Among the options being considered are taxing doctors and using the money raised to get more federal Medicaid dollars, reinstating an estate tax for estates worth more than $2 million, and freezing a tax credit for low-income workers that is set to increase.
Most doctors who treat Medicaid patients would get more from higher reimbursement rates than they'd pay in, Mr. Emerson said.