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Lansing – Gov. Rick Snyder signed a $54.5 billion state budget Wednesday that grows state government spending by about $1.4 billion next fiscal year, but does not include a long-term solution for Michigan’s $1.2 billion road funding deficit.

The Republican governor expressed optimism that he and the GOP-run Legislature would work out a deal on road funding later in the year.

“We do need to improve transportation, and we do need a long-term solution,” Snyder said at a bill signing ceremony in Lansing.

Republicans lawmakers have boasted that the budget plan dedicates $400 million in general revenue toward roads, although that includes $113 million the state already spends to match federal funding for highways.

“It’s good to see we’re making a commitment, we’re tightening our belts, putting money toward roads,” Snyder said.

But the road funding plan largely relies on one-time surplus revenue to boost spending on road repairs.

Lawmakers have been unable to reach a compromise on how to raise an extra $1.2 billion for repairing the state’s roads and bridges.

The Republican-controlled House passed a road funding plan last week that would generate $1.16 billion after four years by largely earmarking existing income and sales tax revenue and redirecting the state’s economic development funds toward roads.

Republican senators, however, have mixed feelings about the House plan to rely on growth in future general tax revenue that is used to fund other areas of state government, such as prisons, health care and municipal revenue sharing.

“It relies too much on general fund,” said state Sen. Wayne Schmidt, R-Traverse City. “... I think we need to look at how we’re going to do it on a much more long-term basis.”

The House plan contains about $119 million in tax increases to the owners of electric and hybrid vehicles and raising the 15-cent-per-gallon diesel tax to the 19-cent-per-gallon levy that is placed on unleaded gasoline.

Sen. Jack Brandenburg, R-Harrison Township, welcomes the House’s approach of relying on existing revenue sources to solve the state’s road funding woes.

“I like the fact that they’re basing it on future growth,” Brandenburg said. “Just take the tax increases out of it.”

The House plans to go on its summer recess Thursday and has scheduled six session days between then and Labor Day.

GOP Senate leaders had vowed to remain in session for most of the summer to work on the road funding issue, but are not holding sessions next week.

The Senate will return to the Capitol on June 30, said Senate Majority Leader Arlan Meekhof, R-West Olive.

Senate Republicans have yet to settle on their own plan in the wake of voter defeat of the Proposal 1 sales and gas tax increase on May 5, Meekhof said.

“It took 17 years to get the last proposal in front of us, I’m not in a hurry,” Meekhof said Wednesday. “We’ll be thoughtful and deliberate.”

Senate Democrats have voiced opposition to the House plan, largely because it eliminates a $123 million tax credit for the working poor and redirects the money to road repairs.

“Looking at the House plan, that’s something Senate Democrats could not get behind,” said Sen. David Knezek, D-Dearborn Heights.

Most public schools in Michigan will see their base state funding increase $70 to $140 per student next school year under the budget bill Snyder will sign (click here to search your local school district funding).

The $13.89 billion School Aid budget sets a new state record for spending on K-12 schools and higher education.

But the education spending plan leaves unsettled Snyder’s request for a special fund to help debt-ridden Detroit Public Schools and other financially distressed schools.

Lawmakers left $50 million unappropriated in the School Aid budget that could be used to pay down the Detroit school district’s $438 million in debt or give all Michigan schools an extra $33 per student later in the fiscal year.

The budget plan contains a modest 2 percent spending increase for four-year public universities if the schools cap tuition increases at 3.2 percent. On Tuesday, Eastern Michigan University’s Board of Regents rejected the $1 million increase in state aid in favor of a 7.8 percent tuition increase that will generate an estimated $10 million in added revenue.

Snyder’s signature of the budget bills Wednesday marks the fifth consecutive year he and the Republican-controlled Legislature have agreed to a budget in June — nearly four months before the new fiscal year begins on Oct. 1.

“We’re several months ahead, so we should be extremely proud,” Snyder said.

clivengood@detroitnews.com

Staff Writer Gary Heinlein contributed.

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