LANSING – A frustrated Gov. Jennifer Granholm said Tuesday during a radio interview that she hoped business leaders could succeed in moving the Legislature toward compromise on the state’s budget and revenue situation “where I have not.”

In the interview, Granholm said some change needs to be made to the state’s tax structure to help ensure funding for education, especially since the state and schools face another major hit when property tax revenues begin to drop.

Granholm began the interview on Lansing’s WILS-AM 1320 speaking optimistically about the chance for lawmakers to agree on programs to compete for federal “Race To The Top” funds.

But she acknowledged that the state faces another big drop in revenues when assessment reductions on houses finally catch up with the dropping real estate market. Anticipated drops in property tax revenues worry both local governments and schools. While sales tax revenues are the largest part of school finances, a significant portion is still paid by property taxes.

To help pull itself out of its economic malaise the state must invest in education, she said. And the state’s tax structure has to change to allow for consistent, long-term financing of education.

For the last month, Granholm has led an effort across the state to encourage educators, students, parents and others to push the Legislature to enact revenue changes to restore some of the cuts enacted with the 2009-10 budget.

Several times in the interview she expressed frustration with Senate Republicans and with Senate Majority Leader Mike Bishop (R-Rochester) for not being willing to work on some sort of compromise.

While not conceding that her effort had failed to move lawmakers, Granholm said she hoped that efforts led by the group Business Leaders for Michigan could gain some traction with Republicans.

The organization has called for changes in the state’s tax structure, but has also said that education has to be a top priority in the state.

That message coming from business leaders, she hoped, could move legislators “where I have not.”

And she said, “All I’m looking for is a little compromise” on the issue of revenues.

Tuesday, Bishop said nothing had changed on Senate Republicans’ position regarding school funding. He said school officials should brace for the additional cuts coming in the December 20 school aid payment from the state that will reflect the proration reduction ordered by Granholm.

In other matters, Granholm said she would support a proposal for a graduated income tax, but said it would be difficult to succeed because it would cost so much money to get the matter on the ballot and to run a campaign.

She did say the public could move for constitutional changes by supporting a constitutional convention. She has supported the idea of a con-con, which will automatically be on the November 2010 ballot.

Asked about Lansing Mayor Virg Bernero’s thoughts about possibly running for governor, she said a “robust primary” can be helpful to the party. A strong supporter of Lt. Governor John Cherry Jr.’s bid for the nomination, Granholm said she was certain Cherry would say of a bid by Bernero, “the water’s fine.”

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