School Funding Facing New Threat

Governor Jennifer Granholm says schools may lose another $28 per student in state funding if proposed tax increases for cigarettes and liquor fail. Lawmakers have until July 1 to decide on the hikes.

A letter went out to schools on Tuesday warning the districts about the possible cuts. With just days left in their academic year, which means schools may be forced to scramble to cut next year's budgets even more.

Granholm wants to raise the tax on all tobacco products from $1.25 per pack to $2 per pack to generate an additional $97 million for the current fiscal year. She is also proposing increasing the price of $10 bottle of liquor by 50 cents to bring in $20 million for this budget year.

The House has approved a cigarette tax hike, but the governor says it's not enough.