Four more days

*When efforts to broker budget compromises on the floors of the House and Senate failed, our lawmakers essentially punted: the two houses sent gutted, but still incompatible, versions of an income tax bill to conference committee, where a handful of lawmakers will get to try again.*

As talk of government shutdown and continuation budgets swirls in Lansing, leaders in the state Legislature were unable to put together a compromise on new tax revenue that would allow the state to continue functioning. Despite all-night sessions, House Republicans were unwilling to get behind a plan to raise the income tax to the level in effect before 1994; House Democrats were reluctant to go out on a limb with no Republican support and never mustered the votes to pass the bill despite their new majority. At the same time, a plan floated by the Senate Republican leadership to make a smaller increase to the income tax failed to gain support in that caucus, making common ground harder to find.

In the end, the House passed a gutted version of the bill, "HB 5194":http://legislature.mi.gov/doc.aspx?2007-HB-5194, that did not include the increased rates for the income tax. The Senate responded by passing a version that made no mention of tax rates at all, but "tie barred" the bill to a whole host of bills which contain the spending "reforms" Republicans have been demanding - including changes to the school retirement system, school health care pooling, and many other measures. (The "tie bar" means that the bill in question, even if passed, would not become law unless all the other bills were passed as well.) This was widely seen as an opening shot in the latest round of negotiations. The House obliged, declining to accept the Senate's version and sending it straight to conference committee, where a handful of picked members from each house will try to hammer out a compromise.

What to expect from the conference committee, when representatives of the House and Senate leaderships and the Governor have been negotiating for weeks, is not quite clear. Lawmakers may be hoping that deadlines will focus the mind: a new fiscal year begins on Monday, October 1st, and without a budget the state will have no spending authority. The Governor's office has been noisily making preparations for a government shutdown. Republican legislators have been pushing the option of a short-term "continuation budget" to fill the gap (and take the pressure off them) but Gov. Granholm says she will veto any stop-gap budget if it does not include new revenue. This brings us full circle to the key question: what is "the price of revenue?":http://www.miparentsforschools.org/node/83