CHICAGO - Gov. John Engler of Michigan signed the state's $8 billion general fund fiscal 1993 budget into law last week after the state Senate approved a final piece of the package on Wednesday.

The Legislature had passed all but the state's $445 million general government services budget by June 30, a deadline that Gov. Engler and legislative leaders had set even though fiscal 1993 does not begin until Oct. 1.

On Wednesday, the state Senate passed the government services budget, and on Thursday and Friday, Gov. Engler vetoed $67 million of spending before signing the $8 billion general fund and $21 billion all funds budgets into law.

A statement released Friday by state Budget Director Patricia Woodworth called the budget "honest" and said it "meets the state's most critical needs without raising taxes." The statement pointed out that the budget reduces the state's reliance on one-time revenue measures to $284.5 million, compared to $691 million in the current fiscal year and $1 billion in fiscal 1991.

"This is strong evidence that the structural deficit is being eliminated," the statement said.

Nick Khouri, the state's chief deputy treasurer, said the one-time measures include $220 million from an income tax accrual change and $45.5 million from a freeze in revenue-sharing payments to local governments.

He also said the budget is based on revenue growth of 6%, which is 3% higher than the state is expecting for the current fiscal year.

"We think the budget is based on realistic revenue assumption that assumes the [economic] recovery will continue," Mr. Khouri said.

The fiscal 1993 budget would leave the state with a $37.1 million deficit, and would retain $21 million to $46 million in Michigan's budget stabilization fund, according to Ms. Woodworth's statements.

Rating agency officials said they would have no comment on the budget until they have a chance to review it. Michigan's GO debt is rated AA with a negative outlook by Standard & Poor's Corp., AA by Fitch Investors Service, and A1 by Moody's Investors Service.

Some rating officials did express concern, however, about the impact on the fiscal 1993 budget if voters pass a 30% five-year property tax cut in November. The reduction plan, proposed by Gov. Engler, would reimburse school districts out of the state's pocket at a cost of about $300 million a year.

Mr. Khouri said that if passed, the cut would have no impact on the fiscal 1993 budget because school reimbursement would begin in fiscal 1994.

State officials have said the budget was completed three months early to give lawmakers time to campaign in their reapportioned districts before the Aug. 3 primary election. In addition, the Engler administration and legislative leaders agreed on budget targets in June.

Steve Serkaian, a spokesman for House Speaker Lewis Dodak, D-Birch Run, said the lack of new money "to fight over" due to the recession also contributed to the budget's swift passage.

He said Mr. Dodak would not comment on the governor's veto actions until this week.

In a press release, Senate Majority Leader Dick Posthumus, R-Alto, called the budget "a prudent spending document."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.