Still No State Budget Agreement

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Michigan's government budget stalemate continued Thursday, but behind-the-scenes talks continued toward a possible vote by state lawmakers on a tax increase proposal.

The state's new budget year begins Oct. 1. So far, there is no agreement on how to fill an estimated deficit of up to $1.8 billion.

Gov. Jennifer Granholm and many Democrats have pushed for a tax increase to help erase the deficit and boost services including education and health care. Republicans have been resistant to voting on a tax increase without first doing more to cut state government spending.

Democrats in the House have introduced bills that would increase the state's income tax rate from the current 3.9 percent to 4.6 percent. If lawmakers go that route, the increase may be temporary until voters have a chance to weigh in the issue.

Voters could be asked as early as November on whether to raise the state's sales tax from the current 6 percent to 7 percent. Another possibility for voters might be a graduated income tax, which would charge higher rates to people who earn more money.

But lawmakers were running out of time to get either of those options on the November ballot. The deadline for doing so is this week, and two-thirds of both the House and Senate would have to vote in favor of putting a proposal on the ballot.

Michigan is several weeks behind its normal timeline for adopting a new state budget.

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