LANSING – A restrained 2008-09 Michigan budget proposal that still makes some key additions in areas such as education, job training and social services, went before lawmakers from Governor Jennifer Granholm on Thursday and for the first time in several years the administration’s proposal was not greeted with outright hostility.

Which is not to say that lawmakers were all pleased with the $9.86 billion general fund ($44.03 billion in total spending) proposal. But following the trench warfare that marked 2007 as lawmakers and the administration ground through on their way to tax increases and the 2007-08 budget (a siege that effectively began with the budget presentation made in February 2007), lawmakers seemed satisfied that the budget did not act as the opening salvo to new conflict.

In her message to the Legislature that accompanied the budget, Granholm said the budget continues the state’s efforts to reform government and invest in education and other services “that make us competitive as a state.”

In comments to reporters, Granholm said the budget was an attempt to deal with issues that were important to both Democrats and Republicans and to tone down the controversy that had marked budgets in previous years.

“This budget, of all the budgets I’ve had the privilege of proposing as governor, this budget is the best,” Granholm said. “It is structurally sound, it has no new taxes, no new fees and invests in the things citizens value.”

“I wrote this in the spirit of collaboration and cooperation. That’s why it contains things both parties want to see and I hope it gets a receptive response in the Legislature,” Granholm said.

Perhaps nothing more clearly demonstrated that shift in attitude than the administration’s decision to drop what has become its annual fight over eliminating the tuition grants, which are geared towards students attending private colleges. In the past, Granholm had said the grants were not needed since most of the students attending private colleges in the state came from upper-income households.

At least two different Republican lawmakers asked Budget Director Bob Emerson during his presentation if there were no cuts in the tuition grants and expressed their gratitude when he assured them there were not.

Thanks in large measure to the tax increases along with spending restraints and an unexpected surplus from the conclusion of the 2006-07 budget, Emerson told the joint meeting of the House and Senate Appropriations Committees that the proposed budget had made a major step towards eliminating and controlling the state’s structural deficit.

This budget did not include any call for tax increases either directly or by closing loopholes. It did not call for fee increases. Most of the one-time revenue in the budget will come from refinancing current debt, and Treasurer Robert Kleine told the committees that except for refinancing of some tobacco securitization bonds the refinancings should not extend the length of the state’s total debt.

“This such a contrast to last year and the last six years,” said Sen. Michael Switalski (D-Roseville), the Democratic vice-chair on the Senate Appropriations Committee. “We’re not trying to paper over shortages, or use one-time money. It’s right in the ballpark and actually able to add some modest increases for some programs that haven’t seen them in years.”

Senate Appropriations Chair Sen. Ron Jelinek (R-Three Oaks) said the state “is certainly in a better position to get our budget balanced in a more appropriate time.” (Both the Senate and House Appropriations Committees have called for the budget to be completed in June. In contrast, the current budget was finished at the end of October, at the end of a 30-day continuation budget because the spending plan was not completed by the September 30 end of the fiscal year.)

Where in the past, Republicans may have labeled some elements of the budget dead on arrival, Jelinek said there was nothing like that in the current budget proposal.

House Appropriations Committee Chair Rep. George Cushingberry Jr. (D-Detroit) said he was proud the governor had the courage to do what hasn’t been done for 18 years and propose an increase in public assistance grants, because “the people at the bottom need an increase.”

He also complimented Granholm on providing a real economic stimulus package in advancing a $1.8 billion proposal for capital outlay at state universities, parks, buildings, military training facilities and airports, along with transportation projects. Cushingberry argued the federal stimulus package also should target investment into infrastructure or efforts to drive down gas prices, instead of just sending out checks to people who will likely use it to pay off their debt, since as a nation personal debt has grown over the past several years.

Cushingberry said he also has concerns the federal budget contains cuts to Medicaid, including reductions to hospital and doctor payments and funding to states for the program.

“If they follow through with cuts to Medicaid we won’t be looking at a surplus,” he argued, adding that while he was glad to see the country realize everyone is in a recession, not just Michigan, “If the national scene goes the wrong way we will be back here again talking about further deficits.”

But the top Republican on the House panel, Rep. Dan Acciavatti (R-Chesterfield), said the state is going to face problems down the road simply because the governor’s 2009 proposal uses one-time revenues, does not include much in terms of structural changes to government that will save money down the road and because the state faces more spending pressures in 2010 and beyond.

“Will this budget put Michigan in the right position? That’s the first question I’m struggling with. I don’t think it does,” he said.

And he argued Mr. Cushingberry’s recession comment was wrong: Michigan is facing a unique situation of job and population loss that is contributing to its struggles and having a competitive tax and regulatory structure is important.

However, Acciavatti extended an olive branch to Democrats, saying that he believed there would be time for more discussions on how to move the state forward.

There would be questions and changes made to the budget and Emerson said the administration expected that as the budget moved forward.

In the presentation, among the first concerns raised on the proposal were on the state pre-funding retiree health care costs, the allocation of revenue sharing increases, how Granholm’s proposal for smaller high schools was being funded and whether it was ignoring smaller school districts, and whether the administration was walking away from an agreement to help control costs for families trying to communicate with family members in prison.

Legislators were told to ask questions of Emerson and not make statements. Jelinek was asked if that was in keeping with the move towards greater bipartisanship and he said no, he wanted to avoid a “four-hour diatribe.”

The budget with federal funds, School Aid Funds, restricted funds and the general fund totals $44.032 billion, about $1 billion more than the current fiscal year. That proposed expenditure total is also $664 million less than the total of all revenues available to the state.

The $100 million contribution to the Budget Stabilization Fund that the budget proposes is the first in five years, Emerson said. He told committee members that it would not help prevent future budgetary problems and that a quick examination of Michigan’s history would show that. There was $1.2 billion in the BSF during the last years of former Governor John Engler’s administration and the state spent it all in the last 18 months of that administration as the state went into its long-term fiscal problems.

Granholm said the budget does hel