LANSING – A second full day of closed-door meetings between Gov. Jennifer Granholm and legislative leaders has led to a rare spark of optimism that the crisis over the 2007-08 budget and a looming government shutdown could be averted.

Senate Majority Leader Mike Bishop (R-Rochester) felt confident enough over the discussions that late Tuesday he named the Senate members of the conference committee on HB 5194 , the bill that could be the vehicle for a tax increase proposal.

Named to the conference committee by Bishop were Appropriations Chair Sen. Ron Jelinek, Sen. Tom George (R-Texas Twp.) and Sen. Mike Prusi (D-Ishpeming).

The House members must call a conference committee meeting, but a spokesperson for Bishop said a meeting may yet be called for Wednesday morning.

Even before Tuesday’s late announcement about the conferees, a number of officials were expressing some optimism that a shutdown could be averted.

Thursday is now seen as the latest in make or break days for an agreement, a number of sources said. By Thursday the state is supposed to have authorizations in place to allow for expenditures the following week for bonds and other payments.

Even as individuals hoped for the best, however, much of Tuesday was spent sparring by the different parties over the need for the state to impose a continuation budget to prevent a shutdown and default.

The top developments of the day:

NEGOTIATIONS: Discussions that had begun in earnest between Granholm and top legislative leaders on Monday continued through the day on Tuesday.

Both legislative Republicans and Democrats reported progress in the negotiations, but also said there is still a wide gulf to be bridged between the two parties before an agreement is reached.

Officials in Granholm’s administration also said progress was made. They did not elaborate.

Matt Marsden, Bishop’s spokesperson, said the fact that Bishop did name conferees to HB 5194 “should be seen as a sign of progress.”

Earlier in the day, Bishop said he would not name conference committee members until he could sense that there were some parameters on what the conference committee would discuss.

The bill was amended by the Senate on Sunday night to tie-bar it to a number of government reforms Republicans want, such as changes to how teacher health care said that since Senate Republicans took most the summer off, “If we get another month to put this off they’ll probably just use it to schedule a two week break for Columbus Day.”

Boyd continued to raise Granholm’s position that she would not sign a continuation budget without an agreement on a tax increase. But she also seemed to take a somewhat softer tone to the comments.

She acknowledged that practically speaking a continuation budget is necessary because negotiating and approving the final elements of all the budget bills will not be accomplished before the start of the fiscal year on Monday.

Still she said the Legislature wants 30 more days to do what it could not accomplish in seven months.

Bishop even raised a new wrinkle to the continuation budget issue on Tuesday, when he told reporters possibly a second 30-day continuation would be needed.

That did not sit well with some members of his own caucus. At least one told reporters he would only support a single 30-day continuation budget to the end of October.

MONDAY”S ACTION: One factor that seemed to fuel the sense of optimism is the House’s action on Monday night to pass more than $516 million in business tax loophole closings.

While the action was blasted by business groups and Republicans alike, some officials said passage showed the House could finally get down to taking some action on a budget resolution after failing for more than a week to pass a major tax proposal.

In fact, when the $516 million in tax loophole closures the House approved is tied to the nearly $1 billion in spending cuts the Senate enacted on Sunday, the two come close to a solution for the nearly $1.8 billion shortfall seen for the 2007-08 budget.

Of course, House Democrats reject the cuts Senate Republicans enacted, and Senate Republicans reject the business tax increases House Democrats enacted, but, one source said, “At least both sides have done something.”

That action, along with the ongoing negotiations, gives hope to some that a shutdown will be avoided.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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