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Lansing — State officials have begun “contingency planning” for a potential government shutdown in case Democratic Gov. Gretchen Whitmer and Republican legislative leaders don't resolve a budget and road funding impasse by the end of September.

Budget Director Chris Kolb on Friday asked other state department directors to identify critical functions within their departments that must continue and those that could be temporarily halted if there is no budget in place when the next fiscal year begins.

“While we remain optimistic and hopeful that we will reach a budget agreement with the Legislature prior to Oct. 1, we must be prepared if that does not happen,” Kolb said.

But Whitmer was more aggressive in a letter and tweet video released Monday that emphasized this was the first time in nine years Michigan students were poised to start school without an education budget in place.

"Michigan's kids deserve better than this," she said in the video.

Former Gov. Rick Snyder, a Republican, and the GOP-led Legislature had completed budgets by June each of the past eight years, a streak that was quickly broken in this new era of divided government.

Michigan’s Republican-led House and Senate already approved their own fiscal year 2020 budgets that include education funding, but have not yet sent a final plan to Whitmer, who said she won’t sign a budget without a real plan to fix the roads.

Whitmer’s budget proposed $507 million for K-12 schools under a new weighted distribution formula that would provide extra funding for students with more costly educational needs, including at-risk, career tech and economically disadvantaged kids.

The Senate budget proposes $410 million in new classroom spending, while the House budget would boost school spending $226 million. Republican lawmakers said their proposed spending increases would still result in record spending on public education.

The Senate version amounts to a per-pupil increase of between $120 and $180 per district, while the House-passed budget translates to between $80 and $180 per district.

School districts can plan while the governor and lawmakers work things out, with the House's budget being "at worst" the minimum education increase, Rep. Aaron Miller, a Sturgis Republican who chairs the House K-12 subcommittee, said last week.

There are more than 45,000 full-time employees in state government, and many could face layoffs in the event of a shutdown. 

Kolb’s email asked directors by the end of this week to list the number of their employees who would be sent home versus those who perform “essential functions” and should stay on the job in a complete or reduced capacity.

The Michigan Constitution requires a balanced budget by Oct. 1. The government has not shut down since 2009, when Democratic then-Gov. Jennifer Granholm and Republican Senate Majority Leader Mike Bishop missed the deadline by several hours.

At the time, the state was required to send out temporary layoff warnings to all state employees 30 days before the end of the fiscal year. That is no longer required, but the state will likely inform workers and unions of possible layoffs by mid-September if there is not yet a deal in place, said budget spokesman Kurt Weiss.

Kolb’s letter is the first of its kind in a decade.  

“Again, I want to emphasize that we remain hopeful that a budget agreement can be reached prior to Oct. 1, but we are taking the necessary planning steps now as a precaution to ensure that state government is fully prepared should negotiations extend past September 30,” Kolb told directors.

The contingency planning email went out less than a half-hour after a meeting between Whitmer, Senate Majority Leader Mike Shirkey of Clarklake and House Speaker Lee Chatfield of Levering ended without any agreement. 

Whitmer in March proposed a 45-cents-per-gallon fuel tax hike to increase road and bridge repair spending. GOP leaders have balked at her gas tax plan and on Friday floated several alternative ideas to the governor.

But with the Legislature returning from summer recess this week, there are no signs of an imminent deal.

Republicans “presented me with a plan that will cut public education and resources and won’t raise a fraction of the revenue we need to fix the roads,” Whitmer said Monday in a letter to teachers unions and other public education groups.

GOP leaders want to remove the sales tax on gasoline to ensure all taxes paid at the pump are used to fix roads. Doing so would cut funding for schools and cities, but a budget previously approved by the House proposed filling that hole by cutting administrative spending in other departments.

“Nothing we have discussed would cut the record funding Republicans have provided for schools," Shirkey said Friday, rejecting Whitmer’s public characterization of the plan they proposed in private.

Other funding ideas floating around Lansing include a smaller gas tax increase, a teacher pension debt swap proposal that could free up cash, more revenue options for local road agencies and a sales tax on transportation services such as Uber and Lyft.

All sides say they hope to avoid a shutdown, and Whitmer has signaled she’d be willing to sign a temporary continuation budget if they are negotiating in good faith but don’t have a deal finalized by Oct. 1.

“The Senate majority leader and I have been meeting with her all summer long,” Chatfield said Friday. “Real progress is being made, so I’m optimistic we will have this problem tackled before it’s too late.”

joosting@detroitnews.com

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