LANSING, Mich. (AP) -- Despite their earlier objections to budget-balancing "gimmicks," Michigan lawmakers and Gov. Jennifer Granholm are again using one-time fixes to fill large chunks of state government's deficit.
Recalculating or deferring deposits into pension systems for state employees and school teachers likely won't cost taxpayers too much more in the long run.
But other moves, including the delayed payment of $165 million to public universities and community colleges, will make the problem worse in the state budget starting Oct. 1 -- when Michigan already may grapple with a tax revenue shortfall of $1.6 billion.
Both Democrats and Republicans criticize fund shifts, accounting changes and other temporary fixes but often find them politically easier than raising taxes or cutting spending. Though this budget year is no different, consensus is building that the state needs new tax revenue -- at least in the next fiscal year.
In the meantime, lawmakers and Granholm, a Democrat, have agreed to transfer nearly $170 million from special funds into the state's strapped general fund, taking:
--$50 million from a new jobs fund that spends money from a settlement with tobacco companies to lure business startups and other ventures to the state. Democrats want some of the money restored next year.
--the $20 million endowment of Michigan's AmeriCorps-type program for 18- to 25-year-olds who spruce up state parks, clear trails and rake beaches. The program, part of which budget officials say has not run in years, is funded by the endowment's interest earnings.
--$35 million in liquor taxes that counties tap for substance abuse treatment programs and public safety. No promises have been made to repay the money. But counties may be allowed to draw money from a separate pool, possibly adding to the state's spending obligations down the line.
Even with the agreed-upon accounting and other one-time changes -- which save about $780 million -- there still is a $500 million deficit in the budget year that ends in four months. Under a deal reached Friday night to avoid a tax increase this budget year, legislators may rely heavily on another one-time fix to pay remaining bills: tobacco securitization.
The state would sell future payments it gets from tobacco companies in exchange for a lump sum up front, acting like the lottery winner who takes a lump sum now instead of more money spread over 30 years.
"These one-time fixes certainly don't give me any confidence that the state will pull out of this morass any time soon," said Tom Hickson, lobbyist for the Michigan Association of Counties.
The maneuvers usually only work once because the money will be gone in the future. Some steps also can cause more debt later.
"We're just about out of gimmicks. It makes it virtually inevitable that we're going to have to balance the budget through raising some revenues," said Sen. Gretchen Whitmer, a Democrat from East Lansing, likening some budget steps to running up credit card debt. "Pushing our expenses into the next year essentially means you're committed to raising the revenues to pay for it next year."
Republicans generally have resisted higher taxes. But, notably, some are open to considering a tax hike in the 2007-08 fiscal year -- as long as there are what they call real, long-term spending changes, including legislation designed to lower the rising health care costs of school and government employees.
"We're going to have to increase revenues somewhere," said Senate Appropriations Chairman Ron Jelinek, a Republican from Three Oaks. "My personal philosophy is I will stand for that. But I can't go to my constituents and say we're going to raise your taxes so we can add new programs."
Fifteen universities and 28 community colleges normally would get $165 million in state aid in August. Under budget agreements, they will get the money in October when the new fiscal year begins. Universities also will lose funding outright this year, prompting warnings of double-digit tuition increases.
State government's cash position is dire.
A report released last week shows that Michigan exhausted nearly $3 billion from its major reserves between 2000 and 2003 so it could spend more than was coming in from tax revenues -- which shrunk because of a sluggish economy and tax cuts.
Michigan has carried over a cash deficit for the last four years, according to the nonpartisan Citizens Research Council of Michigan. The state earned $137 million in interest on its reserves in 2000. This year, taxpayers will pay an estimated $66 million to finance short-term borrowing.
Depleting reserves and using one-time accounting maneuvers have eroded the cash position to the point that Michigan is borrowing up to its constitutional limit and delaying payments to K-12 public schools, said Craig Thiel, director of state affairs with the research group. He said that limits what Granholm and lawmakers can do to balance the budget.
Sen. Michael Switalski of Roseville, the chamber's top Democrat on appropriations issues, cited how one fix -- refinancing $35 to $40 million worth of school bonds -- will cost an extra $10 to $15 million later.
"These one-time shifts are adding more and more debt to us," he said.