LANSING – Using some one-time money, reducing some proposed cuts and setting the stage for potential line-item vetoes, Governor Rick Snyder and Republican legislative leaders announced a target agreement for the 2011-12 fiscal year that essentially clears the way for the budget to be completed by May 31.

Under the agreement, the effective cut to K-12 public schools will total less than $100 per pupil from Snyder’s original proposal of $300 per student, though the reduction of that cut will not be purely through the state’s per-pupil allowance. In addition, the agreement calls for cutting the dollar amount of concessions Snyder originally demanded of state workers from $180 million to $145 million.

Snyder and legislative leaders also said the budget agreement sets a new standard in the state for budget writing.

“It is absolutely fiscally responsible and financially sound,” Snyder said at a press conference announcing the agreement. “There are no accounting gimmicks.”

While the agreement will use some one-time money, those funds will not go for ongoing expenditures but instead be used in one-time programs, Budget Director John Nixon said. For those areas receiving additional funds through the agreement, Mr. Snyder made a point of calling them one-time expenditures.

“There is no commitment to look at those kind of things in 2013,” he said. “The economy’s headed in the right direction, but we want to be responsible.”

The agreement also will set aside $255 million for the Budget Stabilization Fund, which would be the largest payment into the fund in nearly a decade.

“We are looking at this state as if the taxpayers are its investors,” said Senate Majority Leader Randy Richardville (R-Monroe), “and we are providing a return to those taxpayers.”

House Speaker Jase Bolger (R-Marshall) said: “This is a new era in Michigan. An era of responsibility, an era of accountability.”

Much of what was announced Thursday had previously been reported by Gongwer News Service.

The press conference held in the governor’s Capitol office also clearly showed there were still some disagreements and that compromises had to be made.

For example, Snyder clearly signaled, though he would not directly say, that he would line-item veto a provision that will be included in the higher education budget to require reporting on embryonic stem cell research. Additionally, Kurt Weiss, spokesperson for the Department of Technology, Management and Budget, said some other closely watched items, like whether the Mound Prison would be closed and whether cuts would be made to the clothing allowance or State Disability Assistance Program, would be up to the conference committees.

Presuming nothing stops legislative action on the budget next week, it will mark the earliest completion of the state’s proposed spending plan in years, and an impressive start to Snyder’s administration. But in the press conference, Snyder said there was still much work to be completed and when the budget agreement was combined with the tax plan, the Legislature completed work on a week ago, less than 50 percent of what he thought would be needed to reform the state was in place.

Awaiting the late afternoon announcement of the budget agreement, all the budget conference committees scheduled for Thursday cancelled. Several new meeting times have been set for next week. And the Senate, at this point, has also set a tentative meeting date of Friday, May 27, in order to complete the budget before the start of the Memorial Day weekend.

Nixon said with the additional revenue anticipated during the fiscal year by Monday’s Revenue Estimating Conference and non-lapsed funds that the state had close to $900 million in what it considered one-time funds. Of that amount, some $400 million would go into savings for long-term liabilities.

But Nixon said the state would not use those funds for ongoing operations. Instead, they would be spent in a one-time fashion.

Since most of the attention on the budget had focused on the state’s school aid funding, the largest share of the one-time money will go to school finances, $310 million.

But Nixon said the money would not go to the operational base of the schools. Instead, $160 million will go to help defray costs in the Michigan Public School Employees Retirement System.

Another $150 million will be distributed to districts to meet specified financial best practices. Snyder said those could include showing how the district had dealt with employee costs and benefits, and how it had attempted to share responsibilities and creating a dashboard to show how it was performing.

Nixon said the funds would be allocated on a per-pupil basis, even though they would not be part of the per-pupil allowance.

But the two funds combined would allow school districts to use the fund as part of their operating budget, Nixon said. “It’s about a $200 add-back into their allowance,” Nixon said.

In his budget proposal, Snyder had called for eliminating all categorical programs, but the budget will also allocate $13 million back into a small class size categorical and $7 million into other categorical programs, including funds for rural schools.

The budget will still cut 15 percent from the state’s higher education budget, Nixon said. And universities will have to hold tuition increases to no more than 7 percent or they would lose an additional roughly 7 percent of their state aid.

Bolger said the higher education budget would still include a requirement that universities conducting embryonic stem cell research provide a report on those activities to the Legislature. Asked how he would react to that, Snyder said, “You’ll get my feedback on that” at a later time. Asked repeatedly if that meant that he would line item veto the provision, he would not say.

Bolger also the state budget would include intent language that universities could not spend funds on health care benefits for same-sex couples and others. But the budget would not cut the funding for the universities by 5 percent if they did provide those benefits as the House had passed.

Snyder had called for no cuts to community colleges, but the budget as agreed includes a 4 percent, or $12 million cut on those schools. That’s much closer to the 3 percent cut passed by the Senate than the 15 percent passed by the House.

Another major change discussed by Nixon is a cut of $35 million from the concessions demanded by state workers. That would drop the total demanded from $180 million to $145 million.

Under the original plan, it was anticipated Department of Corrections workers would contribute $95 million of those cuts. How much they would have to contribute under the new total was not yet known.

But the agreement also calls for $55 million more in cuts to Corrections than Snyder originally anticipated.

Among other highlights of the agreement:

? The state will use $50 million to deal with projects that otherwise would have been covered by the state’s brownfield and historic preservation tax credits, which are set for repeal once Snyder signs the tax legislation.

? $15 million will be allocated to counties for their revenue sharing. Meanwhile, $15 million will go for what was statutory revenue sharing for cities, townships and villages and is the new incentive program where those communities following stipulated practices receive funding.

? $25 million will go for film industry incentives and Snyder said the program would need to be redrafted so that it did not guaranteed a 42 percent credit.

? $12 million will go for the graduate medical education program in the Department of Community Health and $8 million will go for Healthy Michigan funding. Both could have seen virtually no funding on the bills passed by the House and Senate.

? $133 million is allocated to a School Aid Fund reserve account f