Governor Granholm had another meeting Thursday with the Legislature's Republican and Democratic leaders, but it seems little progress was made toward a deal to retire a $1.8 billion dollar shortfall in the budget for the coming fiscal year.
The governor and Democrats want to save the Michigan Promise college scholarship, and avert big cuts to local governments. Republicans say that requires the governor to come up with other cuts to balance the budget without raising taxes.
"We're going to have to hunker down through a very difficult time in our state's history, weather this storm, and we'll come out on the other side with a smaller, more-efficient, leaner government," says Republican Senate Majority Leader Mike Bishop.
Governor Granholm's budget director Robert Emerson says there's a long way to go to a deal that would bridge a shortfall that's almost 10 percent of the current budget.
"The problem is significant, and there are significant differences," he says. "But people are trying to work through it."
The deadline for getting the budget approved by the Legislature and signed by Governor Granholm is two months away.
Meanwhile the head of the Senate Fiscal Agency says revenues could fall off "a cliff" if one-time federal stimulus dollars aren't saved for future budgets.
A Senate Fiscal Agency memo warns that the true size of Michigan's budget deficit for 2010 is masked by federal stimulus funds that are available to the state. Without that money, the shortfall balloons by almost a billion dollars, to $2.7 billion.
Gary Olson says some stimulus money should be used to balance the budget for the fiscal year which begins October first. But he says it might also be a good idea to bank some of that money for later, because if the state uses all that one-time stimulus money to balance its budget in the coming year, bigger deficits occur in 2011.
Olson says legislative leaders have been working with these numbers in their closed-door budget discussions.