Senate Approves State Budget

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The state Senate Tuesday approved a measure that would eliminate half of this budget year's $800 million deficit by selling part of Michigan's future tobacco lawsuit settlement.

The legislation, which passed 23-14, heads back to the House because the GOP-led Senate voted to securitize another $5 million after Democratic Gov. Jennifer Granholm vetoed a $5 million reduction in advertising for the Michigan Lottery.

The measure is expected to reach Granholm's desk soon because it is part of an overall deal between the governor, Senate and Democratic-controlled House to balance this year's budget without a tax increase or cuts to K-12 public schools.

Fourteen Democrats and nine Republicans voted for the tobacco securitization measure, which has been criticized as a one-time budget fix. Eleven Republicans and three Democrats voted against it.

The deal provides about $415 million up front to help with immediate financial problems, but the state will give up its rights to what would be larger settlement payments due in future years.

The Senate has yet to take up a separate budget-balancing bill that would make available up to $100 million from a fund intended for college loans. The money is surplus, which means it can be used for other purposes without taking money away from existing or planned tuition grants or student loans.

Granholm and lawmakers also have yet to deal with a potential $1.6 billion shortfall in the budget that starts Oct. 1.

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