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Stopgap Budget Keeps Michigan Gov't Alive

Updated at 3:17 a.m. Eastern.

Michigan's brief partial government shutdown ended early Thursday morning after lawmakers voted to adopt a temporary 30-day budget.

The move avoided temporary state worker layoffs and state office closures. It also delayed tough decisions on more permanent spending cuts in one of the nation's most economically battered states.

The continuation budget is headed to Democratic Gov. Jennifer Granholm.

The move came just less than two hours after officials started a partial government shutdown. Lawmakers had failed to pass a permanent budget before the midnight Wednesday deadline.

The shutdown was a couple of hours shorter than the last one in 2007.

A deal to fill a nearly $3 billion shortfall with federal recovery dollars and more than $1 billion in cuts fell through late Thursday, as many lawmakers discovered they couldn't stomach deep cuts to schools and local services such as police and fire protection in the stricken state.

Michigan already is struggling with the nation's highest unemployment rate, a shrinking auto industry, a high rate of home foreclosures and an economy that soured long before the national recession hit. The number of people receiving food stamps and unemployment checks keeps going up, and it's the only state where the Census Bureau found poverty rates rose two years in a row.

Pennsylvania is the only other state without a budget deal enacted. Leaders there reached a tentative deal nearly two weeks ago, but have been unable to get the votes to put all the pieces in place. Only Michigan and Alabama have fiscal years that start Oct. 1, and Alabama has passed its budget.

Michigan is having a tough time finding money for everything from prisons to universities and in-school health clinics for adolescents. It's not a new trend. State revenues have grown just 1.3 percent annually during the past decade when federal funds are left out, according to the nonpartisan House Fiscal Agency.

University funding has dropped 22 percent during the past seven years when adjusted for inflation, forcing up tuition rates. Yet the higher education compromise lawmakers passed Wednesday eliminated the popular Promise Grant scholarship, which gave college students up to $4,000, and cut other student financial aid to the bone.

About 51,000 state workers headed to bed unsure Wednesday night whether they'd have to show up for work Thursday. The temporary budget will keep them in the office. The administration had issued temporary layoff notices earlier in the day and told state contractors they might not get paid.

The interim budget originally was Senate Republicans' idea. But as House Democrats on Wednesday tried to restore programs such as scholarships and library money, GOP lawmakers feared Democrats only wanted the stopgap to win more time for tax increases.

"The continuation budget was there as a safety valve in case we didn't finish," Republican Senate Majority Leader Mike Bishop of Rochester said before the temporary measure was taken. Having one in place would only give Granholm "30 more days to pressure the Legislature to adopt something she wants."

Granholm spokeswoman Liz Boyd disagreed, saying Bishop and Democratic House Speaker Andy Dillon of Wayne County's Redford Township failed to get the votes to pass a budget deal that included deep cuts and no new revenue.

"They're unable to get approval on budgets based on agreements they agreed to — not us," Boyd said. "The prudent thing to do, the responsible thing to do, would be to put that continuation budget on the governor's desk so that we can operate government."

As legislative leaders attempted to find common ground, school and local government leaders grew increasingly nervous contemplating just how much in cuts they'd have to absorb.

Revenue for cities, villages and townships has dropped by nearly a quarter in the past eight years, and mayors statewide said absorbing a proposed 11 percent cut in the new budget would force them to lay off police, close parks and shut off some city services.

Michigan is even in danger of losing millions of federal dollars for Medicaid and similar programs if it can't come up with its share of matching funds.

House Appropriations Chairman George Cushingberry warned lawmakers they had to make a choice between hurting education, health care services and public safety or finding more money.

"You can't have it both ways," the Detroit Democrat told House members.

But Republican Sen. John Pappageorge of the Detroit suburb of Troy criticized Democrats for talking about raising more revenue.

"What you're saying is we're going to take money from our citizens," he said. "Guess what? They don't care for that."